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Trump’s Approval of Nvidia AI Chip Sales to China Sparks Backlash in Washington

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U.S. lawmakers and former national security officials are pushing back against President Donald Trump’s decision to allow Nvidia to sell its H200 artificial intelligence chips to China, warning the move could weaken America’s AI advantage and bolster Beijing’s military capabilities.

The Trump administration on Tuesday formally approved China-bound sales of Nvidia’s H200, the company’s second most powerful AI processor, setting the stage for shipments to resume despite long-standing concerns in Washington over national security risks.

At a congressional hearing, Matt Pottinger, a former White House Asia adviser during Trump’s first term, said the administration was on the “wrong track” and argued that selling advanced AI chips to China would “supercharge Beijing’s military modernization.” He warned the chips could enhance capabilities ranging from nuclear weapons development to cyber warfare, autonomous drones and intelligence operations, urging Congress to impose stricter guardrails.

Several Republican lawmakers voiced unease. Congressman Michael McCaul said the United States should not be selling sensitive technology to a country that routinely steals American intellectual property. Democratic lawmakers were more direct, with Congressman Gabe Amo likening the policy shift to “handing our opponents our coordinates in the middle of a battle.”

The administration has defended the decision, with White House AI czar David Sacks arguing that controlled sales could discourage Chinese firms such as Huawei from accelerating efforts to develop rival chips. Pottinger dismissed that logic as unrealistic.

Under the new rules, chips exported to China must undergo third-party testing, and China cannot receive more than 50% of the volume sold to U.S. customers. Nvidia must also certify sufficient domestic supply, while Chinese buyers are required to demonstrate security safeguards and pledge not to use the chips for military purposes.

Some lawmakers acknowledged these safeguards. Congressman Brian Mast, who chairs the House Foreign Affairs Committee, said “know your customer” provisions were significant. Others remained skeptical, noting the rules rely heavily on self-reporting by Chinese buyers and would add strain to the Commerce Department, which oversees export controls.

Adding to the uncertainty, Reuters reported that Chinese customs officials recently indicated Nvidia’s H200 chips were not permitted to enter the country, raising questions about how quickly shipments could actually resume.

China-Led Digital Currency Platform Sees Rapid Growth in Cross-Border Use

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Transactions on a China-backed cross-border digital currency platform have surged past $55 billion, signaling growing momentum behind efforts to reduce reliance on dollar-based global payment systems, according to a new report.

Analysis by the Atlantic Council shows that the prototype platform, known as mBridge, has now processed more than 4,000 cross-border transactions. The project is being tested by central banks in China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia.

The cumulative transaction value reached $55.5 billion, representing an increase of roughly 2,500 times since the platform’s early testing phase in 2022. The digital yuan accounted for an estimated 95% of total transaction volume, underlining China’s dominant role in the system.

The digital yuan, also known as e-CNY, remains the world’s largest live central bank digital currency experiment. Recent figures from the People’s Bank of China showed the e-CNY has processed more than 3.4 billion transactions worth around 16.7 trillion yuan ($2.4 trillion), an increase of over 800% compared with 2023.

Chinese state media reported last month that holders of the e-CNY will begin earning interest on balances held in digital wallets or bank accounts later this year, a move widely interpreted as an effort to encourage broader adoption.

“Taken together, these developments point to a gradual expansion of the yuan’s internationalization through digital infrastructure,” said Alisha Chhangani, a policy analyst at the Atlantic Council.

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THE RACE IS ON
The rapid progress of mBridge is being closely monitored by policymakers worldwide. The project was originally overseen by the Bank for International Settlements, but the Switzerland-based institution unexpectedly withdrew from the initiative in late 2024.

While not a direct competitor, the BIS has since shifted its focus to a separate cross-border payments project involving seven major central banks, including the Federal Reserve Bank of New York, the European Central Bank (via the Banque de France), the Bank of Japan, Swiss National Bank and Bank of England. That group said this week it is accelerating testing in collaboration with more than 40 large commercial banks.

Despite that, mBridge remains well ahead in terms of real-world usage. In November, the UAE Ministry of Finance and the Dubai Department of Finance completed the first government transaction using a wholesale digital dirham on the platform.

Chhangani said mBridge is likely to increasingly target trade settlements, particularly in energy and commodities, sectors where China already plays a central commercial role. Rather than directly displacing the U.S. dollar, she said, the platform is creating parallel settlement infrastructure that reduces dependence on existing dollar-based systems.

“Project mBridge is unlikely to challenge dollar dominance outright, but it may incrementally erode it,” she said.

The People’s Bank of China did not immediately respond to requests for comment outside business hours.

Nvidia Says No Upfront Payment Required for H200 AI Chips

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Nvidia said on Tuesday it does not require upfront payment for its H200 artificial intelligence chips, pushing back against reports that it had imposed unusually strict payment terms on Chinese customers.

In a statement to Reuters, Nvidia said it “would never require customers to pay for products they do not receive,” responding to a January 8 report that suggested the company was demanding full advance payment from Chinese buyers seeking access to its AI processors.

According to a source familiar with the matter, Nvidia’s standard commercial terms for Chinese clients have previously included advance payment requirements, though customers were sometimes permitted to place a deposit instead of paying the full amount upfront. The source added that, for the H200 chip, Nvidia has been more cautious in enforcing its conditions due to uncertainty over whether Chinese regulators would approve shipments.

Concerns over regulatory approval have been heightened by ongoing geopolitical tensions and export controls affecting advanced semiconductors. Any requirement for full prepayment would effectively shift financial risk from Nvidia to customers, forcing them to commit capital without assurance that Beijing would authorize the imports or that the chips could be deployed as planned.

The H200 is one of Nvidia’s most advanced AI accelerators, designed for large-scale data center workloads, and demand for the chip has surged globally as companies race to expand AI computing capacity.