China weighs AI export curbs as tech fight with U.S. heats up
Beijing is discussing controls on AI and chip technology after reports that Washington may restrict Chinese AI models, according to the Financial Times.
By Sal Moretti · Money Reporter
3 min read
China is considering export controls on artificial intelligence and semiconductor technology as the tech standoff with the U.S. sharpens, the Financial Times reported Tuesday.
China’s Ministry of Commerce has been speaking with Chinese companies about possible restrictions, the FT reported, citing two people involved in the talks. The discussions include limits on sending important data overseas and curbs on foreign users downloading AI models, according to the report.
The move would come after Axios reported Monday that the U.S. government was considering restrictions on importing and using lower-cost Chinese AI models. Neither measure has been reported as final.
The tension has been supercharged by Kimi 3, a new AI model from Chinese start-up Moonshot that was launched at the World Artificial Intelligence Conference in Shanghai over the weekend. MarketWatch reported that the model has 2.8 trillion parameters and cited industry experts as saying it beats every major rival except Anthropic’s Fable and OpenAI’s ChatGPT 5.6.
That launch has put fresh focus on how quickly Chinese AI companies are closing the gap with the top U.S. players.
Chip designs are part of the worry
The FT reported that Beijing’s concerns go beyond AI models. Chinese officials are also worried that Western semiconductor companies, including Qualcomm and Taiwan Semiconductor Manufacturing Company, could draw on advanced chip designs from Chinese groups such as Huawei, Alibaba and ByteDance.
One proposal under discussion would block overseas buyers from acquiring strategic technologies in areas including agentic AI, according to the FT.
The report also said some prominent figures in China’s tech sector have warned officials that tighter controls could slow the country’s own AI development and hurt its growth prospects. MarketWatch said the talk of restrictions could also be a negotiating signal aimed at discouraging Washington from imposing its own limits.
Chinese tech stocks still rallied
Investors did not run from Chinese tech on Tuesday. The China AMC Star 50 technology index rose 11%, according to MarketWatch.
Bloomberg reported that an exchange-traded fund tracking the Star 50 index drew $2 billion in inflows Monday. MarketWatch also reported that a major brokerage lifted its margin financing quota, giving retail investors more access to borrowed cash for trading.
The rally followed a rough stretch for broader Chinese stock funds. MarketWatch reported that the KraneShares CSI China Internet ETF has fallen 22% this year, while the iShares MSCI China ETF is down 13% and Invesco’s China Technology ETF has lost 7%.
Louis Gave, founding partner and co-chief executive of Hong Kong-based Gavekal Research, told clients in a daily note that China’s young AI industry has benefited from scarcer cheap capital than U.S. rivals. He said that constraint pushed Chinese companies toward workarounds, including open-source software, using cheaper local chips and investing more in China’s electricity grid.
Gave wrote that DeepSeek made that case in 2025, while Moonshot is the Chinese company now drawing attention in Silicon Valley, according to MarketWatch.
This story draws on original reporting from MarketWatch.