President Joe Biden and China’s President Xi Jinping spoke in a phone meeting on Tuesday, their first communication with each other since Xi visited the U.S. for a summit meeting in November 2023.

A senior U.S. official told reporters the conversation was part of their agreement, from the November meeting in San Francisco, to “maintain regular open lines of communication to responsibly manage competition and prevent unintended conflict.”

Building on recent meetings that Secretary of State Antony Blinken and National Security Advisor Jake Sullivan have had with China’s foreign minister Wang Yi, Presidents Biden and Xi were expected to have talked about issues such as trade competition and national security, particularly in regard with technologies such as artificial intelligence and semiconductor manufacturing.

“Intense competition requires intense diplomacy to manage tensions, address misperceptions and prevent unintended conflict,” the U.S. official said.

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Technology Differences

China’s state news agency Xinhua, as reported by the South China Morning Post, said: “The two heads of state had a candid and in-depth exchange of views on Sino-U.S. relations and issues of common concern to both sides.”

It added, however, that Xi criticized the Biden administration’s efforts to block the transfer of advanced technology to China.

As technologies such as artificial intelligence rapidly develop, the U.S. is concerned that if China’s development of the same technology were to match the pace, it could be used against the U.S.

In January, the Biden administration called on U.S. cloud service providers such as Amazon.com Inc AMZN and Microsoft Corp MSFT to disclose names of foreign clients using their services to develop AI systems to ensure national security is not compromised.

Such concerns have formed the basis of legislation such as the CHIPS and Science Act, which seeks to bolster U.S. domestic development and production of next generation technology that will power AI models of the future.

CHIPS Act grants have already been handed out to semiconductor manufacturing companies such as Intel Corporation INTC, which is to receive around $8.5 billion in funding and GlobalFoundries Inc GFS, which was awarded grants of $1.5 billion. Further announcements are expected in the coming weeks.

Taiwan Discussions

Biden and Xi also spoke about the ongoing tensions over Taiwan, according to the Xinhua report, with Xi calling on Biden to stop selling arms to Taipei and not to support the island’s independence.

The U.S. president was reported to have told Xi that his position on Taiwan was unchanged: that he does not recognize it as an independent country, but opposes Chinese intervention.

The two leaders agreed that military-to-military talks should continue following a hiatus in communications after Nancy Pelosi visited Taiwan in 2022 when she was House Speaker.

U.S.-listed shares in Taiwan Semiconductor Manufacturing TSM were down 0.8% at $140.52 in early afternoon trade. However, the iShares MSCI Taiwan ETF EWT was up 0.3%.