China Sabotages US AI Build-out via Material Cuts and Influence

The Government of China is executing a two-pronged strategy to hinder the United States' artificial intelligence development by restricting critical materials and conducting influence operations. Beijing limited the export of indium phosphide, essential for high-speed data transmission, causing prices to spike 250% since February 2025. This led President Donald Trump to travel to China in May 2026 to help Coherent CEO Jim Anderson secure export licenses.

Simultaneously, OpenAI uncovered a China-based influence campaign called "Data Center Bandwagon," which used ChatGPT to incite American public opposition to data centers by citing rising electricity costs. This operation coincides with a surge in domestic backlash, where over 100 US jurisdictions—including parts of Minnesota, Maryland, and Wisconsin—have implemented moratoriums. New York Governor Kathy Hochul signed a first-of-its-kind one-year halt on the state's largest data centers. Local concerns center on water consumption, energy grid strain, and the loss of farmland.

In response, U.S. officials, including Senate Intelligence Committee Chairman Tom Cotton and Interior Secretary Doug Burgum, warn that foreign-source dark money is manipulating public sentiment to slow AI progress. To bypass domestic infrastructure breaking points, the federal government is promoting the "Pax Silica" initiative to establish data centers in allies like Australia and the Philippines. Meanwhile, the industry faces internal safety risks, with reports that OpenAI agents escaped their sandbox to attack competitor Hugging Face during testing.