As President Trump and China’s leader, Xi Jinping, prepare to meet next week to extend a fragile trade truce, a fresh espionage scandal has shown that behind their diplomacy is a fierce intelligence rivalry.
At its center is Jensen Huang, the Nvidia leader and an influential ally of Mr. Trump’s, who has acknowledged having an affair with a Chinese businesswoman whom U.S. intelligence officials suspect of spying for Beijing. China has denied the espionage allegation.
Under Mr. Xi, the Chinese Communist Party has built a more sophisticated and assertive spy service that regularly highlights the importance of technological security and of threats posed by the United States. At the same time, the Central Intelligence Agency has said that Chinese companies are a legitimate target for espionage in areas like artificial intelligence, semiconductors and biotechnology.
Nvidia’s computer chips power the global A.I. boom and sit at the center of Washington’s efforts to keep that technology out of China’s hands. That makes Mr. Huang, who has lobbied Mr. Trump to ease restrictions on the export of advanced chips to China, a prime target, analysts say.
“It is not at all surprising, given the centrality of Nvidia to U.S.-China tech competition, and the importance of tech competition in the overall U.S.-China rivalry, that someone like him would be a top target for Chinese intelligence collection,” said Sheena Chestnut Greitens, an expert on Chinese security at the University of Texas at Austin.
U.S. agencies concluded that the Chinese businesswoman, who goes by Alice Huang, was an asset of the Chinese Ministry of State Security. Nvidia has said that it is conducting an internal investigation. Ms. Huang has not responded to requests for comment.
“It is brazen, and yet I don’t think we should be surprised at all,” said Christopher K. Johnson, a former U.S. government intelligence officer who is now president of China Strategies Group, a risk consultancy. “Whenever the Chinese declare something a national strategic, whole-of-society priority, like they have done with chips and A.I., that implies they will use every tool available to them to work, buy or steal their way to that end.”
So far, the scandal has not apparently disrupted plans for Mr. Trump and Mr. Xi to meet next week in the southern Chinese city of Shenzhen. Mr. Trump said on Monday that he did not plan to bring the matter up with Mr. Xi. He has repeatedly downplayed reports of Chinese spying and cyberattacks on the United States, arguing that Washington does the same.
That is a contrast with the Biden administration, which confronted China in early 2023 about a spy balloon that was spotted drifting across the continental United States. Official relations between the countries froze for months.
Mr. Trump’s approach could embolden China to take bigger risks, said Dennis Wilder, a former U.S. intelligence analyst on China and a senior fellow at Georgetown University.
“The president’s whole laissez-faire attitude toward spying reassures Beijing that the political blowback from espionage operations will be very manageable,” he said.
Mr. Huang was until recently also expected to travel to Shenzhen. When Mr. Xi visited the United States in September, the tech executive was a guest at the White House state dinner. He had joined a presidential trip to Beijing in May at Mr. Trump’s invitation.
“The president has over and over dismissed Chinese spying by saying that everyone does it,” Mr. Wilder said. “The problem is that no one else does it to the very damaging effect that the Chinese can and do.”
In recent years, Chinese spies have been accused of targeting the phones of American presidential candidates, recruiting U.S. Navy sailors, cultivating political aides and planting malicious code in power grids and water systems that Americans rely on every day.
Beijing also a history of ruthless counterintelligence operations. From 2010 through 2012, the Chinese government killed or imprisoned 18 to 20 of the C.I.A.’s sources in China, crippling American spying there for years, The New York Times reported in 2017.
Espionage has repeatedly strained relations, at times erupting into diplomatic crises, as when a U.S. Navy surveillance plane collided with a Chinese fighter jet in 2001 near China’s Hainan Island, killing the Chinese pilot. Beijing condemned Washington for spying and held the 24 American crew members for 11 days.
A More Sophisticated Spy Agency
China’s lead intelligence agency, the Ministry of State Security, has transformed from a service that relied on gathering gossip at embassy dinner parties into a sophisticated spy shop that can go toe-to-toe with the C.I.A. with bigger budgets and modern tools like A.I.
Its political standing has risen as well. In 2022, Mr. Xi elevated the ministry’s then chief, Chen Wenqing, to the Communist Party’s Politburo, a council of the 24 most senior national leaders. He was the first spy chief in decades to ascend to that body.
The once-shadowy ministry has also stepped into public view, posting a stream of warnings on its WeChat social media account about foreign spies. It has publicized examples of Chinese nationals working for the government and a military contractor in Tokyo and Rome being recruited by C.I.A. officers to provide information about the government or the military.
At the same time, the United States has stepped up its intelligence gathering to include not just military and government targets, but also private Chinese companies, the deputy C.I.A. director, Michael Ellis, told a cybersecurity conference this year. Compared with past geopolitical rivals, China “poses a fundamentally different kind of threat to us because the competition is economic,” Mr. Ellis said.
The C.I.A. has also taken the unusual step of recruiting in public, producing a series of Mandarin-language videos urging disaffected Chinese officials to share secrets with the United States. (The Ministry of State Security’s WeChat account mocked the videos as “crude,” “farcical” and a sign of the C.I.A.’s “baffling incompetence.”)
China Pushes Back
In China, the case has drawn official denials and questions about what Beijing would stand to gain.
Ms. Huang had been an executive at a Singapore-based company called Megaspeed that buys advanced Nvidia chips. The United States began restricting sales of advanced chips directly to China in late 2022, but Chinese companies can lease computing power from data centers that use those chips in Southeast Asia, like the ones Megaspeed operates.
At the same time, China has also encouraged domestic companies to make do with less powerful domestically produced chips to promote greater national self-reliance, leading some analysts to question the significance of the Nvidia case.
“China does not want to import so many Nvidia chips,” said Shen Dingli, an international relations scholar in Shanghai. “They are trying to force Chinese companies to use Chinese chips from Huawei.”
The Chinese Foreign Ministry has rejected the espionage allegations surrounding Ms. Huang as “nothing but a smear against China.” On Chinese social media platforms, which are heavily censored, comments about Mr. Huang have centered on his extramarital affair.
Nationalist commentators in China have described the scandal as an effort that brings together American opponents of China, Mr. Trump, and artificial intelligence.
Ren Yi, a Harvard-educated Chinese blogger who goes by the pen name “Chairman Rabbit,” wrote: “Once again, anti-China politics weaves America’s disparate political causes together.”
Berry Wang contributed research.
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