The United States’ decision to authorize the export of Nvidia’s H200 chips to China could accelerate the advancement of Chinese artificial intelligence and alleviate technological limitations, according to consultancy Capital Economics.
In a report sent to clients, analyst Julian Evans-Pritchard indicated that Beijing had “disparaged” the H20 chips – a limited version intended for the Chinese market –, but will now be “willing to authorize its companies to purchase the more powerful H200”, which US President Donald Trump has decided to liberalize.
“This will allow China to accelerate the construction of its AI infrastructure and increase the likelihood that Chinese models will match, or even surpass, the most advanced US models,” said the expert.
Evans-Pritchard recalled that Chinese technology has already demonstrated the ability to operate with hardware limitations, training AI models with performance close to those of North Americans. “With more powerful ‘chips’, we could see a new ‘DeepSeek moment’,” he said, referring to the Chinese company that rose to prominence in early 2025 with an advanced AI model.
If Beijing chooses to also refuse the H200s, this will show, according to the analyst, “a much greater willingness to give up short-term gains in the name of self-sufficiency”, an objective declared by the Chinese authorities for the next five-year plan (2026-2030), in the face of the commercial and technological conflict with Washington.
Evans-Pritchard envisages a “pragmatic” approach and considers it likely that China will allow some companies to purchase H200s as it develops domestic alternatives. Trump specified that Nvidia will only be able to sell the chips to “approved customers” in China, under the condition that sales guarantee the national security of the USA, which requires payment of a 25% tariff. Nvidia already had a license to export H20s – with lower capacity – to China, in exchange for 15% of revenue.
In the analyst’s view, Washington’s decision indicates that the Trump Administration is prioritizing a possible agreement with Beijing – which could be signed during a presidential visit scheduled for April 2026 – to the detriment of concerns about national security and efforts to decouple the two economies.
Capital Economics maintains its “skepticism” regarding the possibility of a lasting rapprochement between the two countries, considering that China will see this concession as a “temporary relief”, which will allow it to buy time to reduce dependence on Western semiconductors.
“Tensions between China and the US are likely to flare up again, which will again lead to more restrictions on exports. However, China will take advantage of its newfound access to more powerful chips, and the construction of privately financed data centers is likely to accelerate,” Evans-Pritchard predicted.
In July, a US House of Representatives committee warned that H20s could significantly surpass China’s local manufacturing capacity and boost the development of AI for strategic purposes.
Trump has now defended that the measure will benefit American employment and US leadership in the AI sector. “We will protect national security, create American jobs, and maintain American leadership in AI,” Trump wrote on the Truth Social network, which he owns. “NVIDIA’s American customers are already moving forward with their incredible, highly advanced Blackwell and soon Rubin chips, neither of which are part of this agreement,” he added