Several Chinese tech 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.
Regardless 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 to China’s growing ability to develop its AI sector indigenously and the limits of US efforts to contain China’s technological development.
The US hosts an estimated 5,427 data centers, more than 10 times any other country; almost every leading chip is fabricated by the Taiwan Semiconductor Manufacturing Company (TSMC), 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 the sale of Nvidia’s 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 broad trade negotiations.
But by capping H200 deployment in the mainland and using them to train AI models, China continues to support domestic AI growth while benefiting from American technology and avoiding long-term dependence on Washington, effectively blunting the leverage Trump is seeking.
Beijing’s perception that the US is trying to constrain China’s technological advancement has only accelerated its 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, released in August and entitled “The Great Transshipment Scam”, accuses Chinese exporters of routing goods through more than 40 countries to evade US tariffs.
The report reflects the limits of Washington’s efforts to reduce its economic dependence on China, revealing that while the United States may erect barriers to curtail the influx of Chinese goods into the country, it cannot prevent 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, a Washington-based think tank, 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 despite tariff barriers.
At the same time, China remains connected to American demand. Even as US tariffs and trade barriers have curtailed bilateral trade, 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 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, it emphasizes that the underlying trade relationship remains intact.
With studies already showing that Chinese inputs enter the US through intermediaries such as Vietnam and Mexico, the Trump administration appears to have realized that complete commercial divorce between the world’s two biggest economies in the foreseeable future isn’t realistic.
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 tactics. 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 efforts to build domestic capabilities, 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 heated but contained 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. Whether this sets the stage for a major bilateral trade deal when Xi Jinping and Trump hold a summit in Washington later this month is yet to be seen.
Azhar Azam is a geopolitical analyst with a focus on global economy, climate change and international security. His work has been published in several global media outlets including Al Jazeera, Cambridge MENF/Manara Magazine, South China Morning Post, Asia Times and Express Tribune.
