CNBC's The China Connection newsletter: A U.S.-China debate that's becoming bigger than tariffs

U.S. and Chinese companies have come to dominate the global artificial intelligence race.Imen Ben Youssef | Afp | Getty ImagesHi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a snapshot of what I'm seeing and hearing from local businesses.As Chinese startups build new artificial intelligence models and more American startups use them, they're raising the stakes for U.S.-China relations.The big storyChina's role in AI is transforming rapidly.President Xi Jinping's AI speech on July 17 and the coinciding release of Claude Fable 5 rival Kimi K3 were just a start. The flurry of U.S. government pushback on Chinese open-source models ignited calls against "premature restrictions" in an open letter Friday from Nvidia's Jensen Huang and more than 20 other tech companies."To me, the release of Kimi K3 has kicked off a hornet's debate in Washington about what to do about Chinese open-weight models," said Ryan Fedasiuk, fellow at the American Enterprise Institute.The debate will soon be tested at a high level.In remarks late last week about a U.S. data center policy, U.S. President Donald Trump said he plans to discuss AI with Xi during ...