Several Chinese companies including Alibaba, ByteDance and Tencent have reportedly accessed compute power from GB300 chips remotely through data centers in Asian countries including Thailand, Malaysia and Japan. Less than a week after another Chinese company, Moonshot AI, released a new model, a White House official accused the firm of using one of Nvidia's most advanced processors.
Irrespective of whether it is legal or exposes loopholes in the US export control regime, the episode shows that restricting direct access cannot prevent Beijing from tapping America's advanced computing power. As technology networks become more global, controlling the physical movement of chips doesn’t necessarily mean controlling their use too.
In recent years, Beijing and Washington have pursued strategies to reduce their respective vulnerabilities to each other. The United States has raised tariffs and restricted China's access to advanced technologies, coordinating with allies on export controls targeting strategically sensitive industries. Beijing, in turn, has sought greater financial and technological autonomy to reduce dependence on US-dominated payment systems and leverage its role in critical supply chains including rare earths to safeguard its economic and security interests.
China has made rapid technological progress. According to the 2026 Stanford AI Index, the performance gap between leading US and Chinese AI models has narrowed with America still producing more top-tier AI models and high-impact patents and China leading in AI publication volume, citations, patent output and industrial robot installations. The finding points at the rising Chinese ability to develop its AI sector indigenously and the limits of the US efforts to contain China's technological development.
The US hosts 5,427 data centers, more than 10 times any other country; almost every leading chip is fabricated by the Taiwan Semiconductor Manufacturing Company, making it dependent on a single foundry. America's own ambition to lead AI development, thus, relies heavily on international production networks.
Donald Trump's authorization to resume sale of the Nvidia H200 AI chips to "approved customers" in China was a calculated gamble. By giving Chinese tech giants access to a less advanced generation and embargoing the cutting-edge Blackwell chips, he intended to exert US influence on China's AI ecosystem and strengthen his bargaining position against Beijing in trade negotiations.
But by placing caps on the H200 deployment in the mainland and using them for training AI models, China continues to support its domestic AI growth while benefiting from American technology and avoiding long-term dependence on Washington, effectively blunting the leverage Trump is searching for. The response reinforces the perception that US attempts to constrain China's technological advancement has only accelerated the latter's determination to build a self-reliant semiconductor industry. Nvidia CEO Jensen Huang himself has blamed US withdrawal from the Chinese market for helping fuel China's semiconductor industry.
A White House report, accusing Chinese exporters of routing goods through more than 40 countries to evade US tariffs, earlier reflected the limits of Washington's effort to reduce its economic dependence on China, revealing that the United States may erect barriers to curtail the influx of Chinese goods into the country but it cannot prevent the China-linked supply chains from adapting.
The report itself acknowledges that some of the shift stems from “legitimate changes” in production, investment and sourcing. This indicates that not every China-linked product reaching the United States through a third country represents tariff evasion and that companies are genuinely moving production in response to geopolitical risks.
Recent research by the Peterson Institute of International Economics demonstrates that Chinese goods and services despite years of US tariffs remain deeply woven into US imports from third countries. While tariffs have reduced direct bilateral trade, they haven’t eliminated Chinese inputs across global supply chains. A Nikkei Asia survey also found that Chinese companies had expanded their global market share albeit tariff barriers.
At the same time, China remains connected to American demand. Even as bilateral trade has shrunk, Beijing's exports of electronics, computers and circuit-board assemblies to neighboring Asian countries have increased. As much of this production is tied to the US artificial intelligence (AI) boom, it has allowed Chinese manufacturers to benefit indirectly from Washington's AI investments. This does not necessarily mean that Chinese goods are being illegally routed into the United States, rather emphasizes the underlying trade relationship remains intact.
With studies already showing that Chinese inputs entering the US through intermediaries such as Vietnam and Mexico, the Trump administration appears to have realized that complete commercial divorce between the two biggest economies in the foreseeable future is improbable. Its new approach appears to move away from outright decoupling toward extracting economic concessions from China such as securing its commitment to address US concerns regarding critical minerals supply chains, purchase Boeing aircraft and restore market access for US farm produce.
This does not mean that the United States has abandoned economic pressure. Washington is pursuing selective commercial engagement with China while continuing to restrict its access to technologies deemed critical to US national security. The emerging strategy suggests that the Trump administration is focusing on increasing trade with Beijing in non-sensitive sectors to retain economic leverage over China. Beijing, meanwhile, is doubling down on its efforts to build domestic capabilities to reduce exposure to foreign suppliers and establish its own leverage against Washington.
The Trump administration's policy has clearly shifted from decoupling to selective economic engagement. While Washington is deploying tariffs and technology curbs to secure benefits for domestic manufacturers and farmers, China continues to draw on its dominance in global supply chains and limited reliance on American semiconductors to strengthen its position in future trade negotiations. In this fierce brinkmanship, both sides are playing to their respective advantages to prevail over the other: Washington by applying economic pressure and Beijing by finding ways to blunt it.
