The H200 Paradox: Beijing Cleared the Sale, Then Told Firms Not to Buy

At the Great Hall of the People on Thursday, Xi Jinping told the American CEOs traveling with Donald Trump that China's door 'will only open wider.' Hours earlier, Reuters reported that Washington had finally cleared Nvidia's second-most powerful AI chip, the H200, for sale to roughly ten Chinese firms.

The number of chips delivered since the green light: zero.

The cleared list

The U.S. Commerce Department has approved Alibaba, Tencent, ByteDance and JD.com to buy up to 75,000 H200 chips each. Distributors Lenovo and Foxconn are licensed to resell. Trump structured the arrangement so that Washington takes 25 percent of the revenue from every sale.

On paper, this is the breakthrough Jensen Huang flew to Beijing for. Before the export curbs tightened, Nvidia had 95 percent of China's advanced chip market and the country accounted for 13 percent of its revenue. Huang puts China's AI market at $50 billion this year.

Beijing's veto

Commerce Secretary Howard Lutnick put it plainly: 'The Chinese central government has not let them, as of yet, buy the chips, because they're trying to keep their investment focused on their own domestic industry.' Beijing worries that imports would gut the homegrown push that has lifted Huawei, Cambricon and others.

So the licenses sit, the inventory sits, and Huang flies home without a sale on the books. Asked about the Reuters report on CNBC, Treasury Secretary Scott Bessent answered: 'This is news to me.'

What was actually signed

The deliverable from Beijing is a three-year guidance document. Xi's official readout calls it a 'constructive China-U.S. relationship of strategic stability,' led by cooperation and 'measured competition.' Tianchen Xu at the Economist Intelligence Unit reads it as 'managed stability.' Goldman Sachs expects no grand bargain, just a tactical catalyst for the yuan and for Chinese equities that have trailed Japan, Korea and Taiwan all year.

Markets did not wait for the small print. The Hang Seng Tech Index added 0.5 percent on Thursday, the Hang Seng 0.3 percent. The mainland CSI 300 is up nearly 7 percent year to date.

Trump leaves Beijing on Friday after a working lunch. Next on the calendar: APEC in Shenzhen in November, the G20 in Florida in December. The H200 question is unlikely to be settled by then.

Sources: CNBC, Reuters, SCMP, Yonhap News