China is moving to establish new rules governing how many advanced artificial intelligence (AI) chips domestic companies can purchase from foreign suppliers such as Nvidia, a step that could reshape Beijing’s approach to managing access to critical U.S. technology amid intensifying geopolitical scrutiny.
According to a report by Nikkei Asia on Thursday, citing two people familiar with the matter, China’s central government is drafting regulations that would cap the total volume of cutting-edge AI chips local firms are allowed to buy. Rather than imposing a blanket ban, the proposed framework would effectively permit limited sales by foreign suppliers, including Nvidia, under tighter oversight.
The move follows a decision by the Trump administration earlier this week to formally approve the sale of Nvidia’s H200 AI chips to China, reversing months of uncertainty around export restrictions. The decision was framed by U.S. officials as a calibrated approach that balances commercial interests with national security concerns.
However, the approval has drawn sharp criticism in Washington. Several U.S. lawmakers and former officials argued on Wednesday that allowing the export of advanced AI hardware risks undermining America’s technological advantage and could accelerate China’s military modernisation by enhancing its data-processing and autonomous systems capabilities.
Complicating the picture further, On Wednesday that Chinese customs authorities had informed frontline agents this week that Nvidia’s H200 chips were not permitted to enter the country. The instruction suggests a disconnect between high-level policy signals and enforcement on the ground.
Sources also told Reuters that Chinese regulators have summoned major domestic technology companies for closed-door meetings, where they were explicitly instructed not to purchase the H200 chips unless absolutely necessary. The guidance reflects Beijing’s broader push to reduce reliance on foreign semiconductors while managing the immediate needs of its fast-growing AI sector.
Taken together, the developments underscore the delicate balancing act facing both governments. Washington is seeking to protect strategic technologies without alienating powerful U.S. firms, while Beijing appears intent on rationing access to advanced chips, preserving room for limited imports even as it accelerates efforts to build a self-sufficient semiconductor ecosystem.
