David Sacks said China is only months behind the US in AI, not years, despite export bans

David Sacks, who leads crypto and AI policy under President Donald Trump’s White House, warned on Wednesday that China is no longer playing catch-up.

During an interview with Bloomberg Television, David said that despite US export controls, Chinese tech companies have made serious progress. He said Huawei Technologies is closing the gap on global rivals, and Chinese AI firms are advancing much faster than Washington expected.

He pointed directly to DeepSeek, a China-based AI company, which launched a major model earlier this year. That model proved to US officials that China wasn’t “years behind” like they thought.

“Before DeepSeek, people thought that Chinese AI models were years behind and we realized that they are only months behind,” David said. That quote hit hard because it flipped the entire belief system that backed the current round of semiconductor restrictions.

David Sacks says Biden’s chip rules caused unnecessary damage

David slammed the Biden administration’s AI diffusion rule, saying it was too extreme and pointless. That rule, which tried to limit how AI models could be shared or trained across borders, was dropped last month after Trump’s administration took over again.

David said what the US really needs is a smart, balanced export strategy—not one-size-fits-all restrictions that confuse allies and drive them away.

“The leading American semiconductor should not go to China, but we have export controls on that,” David said. “I don’t think that we need a new globalized regime on every single GPU transaction to achieve the objective.” He argued that US allies are already following security rules and are ready to work with American companies. But overdoing the controls could send them straight into China’s hands instead.

He warned that if Washington blocks too many chip sales to friendly countries, it might push those nations to use hardware from Huawei or other Chinese firms. That would open new markets for China, which the US used to dominate.

“If we are overly restrictive in terms of US sales to the world, I think that there will be a time where we kick ourselves and say, ‘All of a sudden Huawei is everywhere when we used to have the market to ourselves. Why didn’t we take advantage of that and lock it in?’” David said.

He didn’t stop with semiconductors. David also talked about crypto legislation, specifically the stablecoin bill that passed in the Senate on Tuesday. He said it’s an important step for US regulation because it gives the crypto industry something it’s been lacking—clarity. David believes the bill will encourage banks and other traditional finance players to start working with stablecoins more confidently.

He said the new law could strengthen the US dollar and bring more American institutions into crypto. But there’s still one big step left. House lawmakers now have to decide if they’re going to accept the Senate version of the bill or come up with a new compromise. Either way, the fight over stablecoin regulation isn’t done yet.

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