China’s internet regulator is reportedly blocking major tech firms, including ByteDance and Alibaba, from purchasing Nvidia’s artificial intelligence chips — forcing them to cancel large orders and testing projects. The move undercuts Nvidia CEO Jensen Huang’s efforts to bridge Washington and Beijing after he secured looser export controls for his firm’s products. In response, Huang has said that he is in talks with President Donald Trump to find a way around the ban.

The timing of this announcement suggests that China may be seeking to increase its negotiating leverage rather than genuinely banning Nvidia from its domestic market, and the behaviour of Chinese companies supports this interpretation.

The Financial Times cites sources claiming that Chinese companies have enough domestic supply to meet their demand for advanced semiconductors. Yet these firms still bought twice as many of Nvidia’s H20 chips over Huawei’s slower Ascend processors in 2024. Despite government pressure, only a few state-backed companies have adopted Huawei chips, while most remain reluctant to switch. That’s because Nvidia’s chips continue to outperform Huawei’s, especially in memory bandwidth, which is critical for advanced AI training.

One interesting thing to note about the ban is that China’s newly prohibited RTX 6000D chip was never particularly popular with local companies. Reuters has already reported that Chinese companies viewed the chip as overpriced and underpowered — a product designed specifically for the domestic market in order to comply with US export controls, but one that failed to impress its intended customers.

Meanwhile, Chinese firms placed approximately $16 billion in orders for Nvidia’s H20 server chips early this year. Some observers could argue that the companies are just stocking up amid new bans, but, given that switching from Nvidia’s ecosystem to less mature Huawei platforms is costly and risky for developers, it doesn’t make sense to double down on Nvidia products if the goal is to quit them shortly afterwards. It therefore doesn’t seem like Chinese companies are preparing for total technological decoupling.

Joe Biden’s export controls were supposed to slow China’s AI development while protecting American technological superiority. Instead, they’ve accelerated Beijing’s push for self-sufficiency while creating perverse market dynamics. As analysts Kyle Chan and Ray Wang recently noted, we may be approaching a crossing point where overly restrictive US controls enable China’s advancing AI chips to outperform the deliberately downgraded American versions, shifting the competitive balance in Beijing’s favour.

Nvidia’s situation shows the political risks Western companies face in a world where China increasingly prioritises self-reliance. The company represents a vital link of mutual dependence between Beijing and Washington that remains necessary for maintaining some degree of geopolitical stability. While China will likely continue pursuing self-reliance accelerated by American restrictions, this chip ban serves a clear purpose. It is designed to increase bargaining power in ongoing trade discussions, not to signal complete technological decoupling.

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Miquel Vila is a political consultant specialising in international affairs. He is also the executive director of the Catalonia Global Institute.

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