China approved purchase of NVIDIA H200 GPUs for Chinese AI firms, signaling controlled export cap-and-trade model.

For months, the United States and China have been locked in an unusual stand-off over cutting-edge chips—the building blocks of the artificial intelligence industry.

Now, however, China's stance is beginning to change. The government plans to let selected companies, including Alibaba Group Holding, buy limited numbers of the device, according to a source with knowledge of the matter speaking to the South China Morning Post.

Beyond Alibaba, the Chinese government has also informed ByteDance, the maker of TikTok, and leading AI start-up DeepSeek of the coming approvals. However, companies will have to explain why they need to buy the Nvidia product rather than a locally made alternative, according to reporting from The Information on Wednesday.

The core consideration behind this approach is most likely to secure a window of opportunity for domestic AI chips to grow, according to Zhou Chao at Anbound.

China may allow H200 imports because domestic chips are unlikely to fill the country's computing-power gap in the near term, said Shi Shenchang, a lawyer focusing on export controls at Shanghai-based Co-Effort Law Firm.