China has reported a record trade surplus of nearly $1.2 trillion for 2025, which comes as it seeks to diversify away from the US to other markets, and also seeks to downplay exports in favor of domestic consumption. The first is working to some extent but the second is not.

Outbound shipments in December hit a 6.6% increase year-on-year, up from November which saw a 5.9% increase. Imports for December were up 5.7% after having dropped to 1.9% the month earlier, which while an improvement is still a significant gap.

This is not good for either the economies of China’s trading partners, or for China itself long-term. Having such strong exports reduces the need for the system to address domestic imbalances which are causing low consumer spending. Another is the growing reaction against Made in China exports seen in many countries which is prompting producers to move their factories out of China—hence less employment and less tax revenue. The knock-on effect is a weaker economy overall.

The Trump administration has formally approved China-bound sales of second most powerful AI chips, reports Reuters. The approval comes with conditions and is expected to kickstart shipments of the H200 despite deep concerns among China hawks in Washington.

According to the regulations, the chips will be reviewed by a third-party testing lab to confirm their technical AI capabilities before they can be shipped to China, which cannot receive more than 50% of the total amount of chips sold to American customers.

Nvidia will need to certify there are enough H200s in the US, while Chinese customers must demonstrate “sufficient security procedures” and cannot use the chips for military purposes. Those conditions had not been established previously.

The Chinese government this week told some tech companies it would only approve their purchases of Nvidia’s H200 AI chips under special circumstances, such as for university research, reports Reuters, citing unnamed sources quoted in The Information.

The move signals Beijing is remaining cautious about fully reopening the Chinese market to Nvidia, whose semiconductors are pivotal in operating the most advanced artificial intelligence applications and data centers.

China’s government issued a “deliberately vague” directive, the report said, telling some technology firms to buy chips only when “necessary” but was unclear as to what that means.

The US has formally approved sales of Nvidia’s second most powerful chip, the H200 to China, albeit with conditions that both ensure there are enough chips for the US market, and that they won’t fall into any kind of military use. Meanwhile, Reuters has cited unnamed sources stating that Beijing would approve sales only under certain unspecified circumstances.

The assumption has to be that Nvidia chips are useful for China, but Beijing seems to want to downplay. The leadership has repeatedly stated that China should be using its own domestically produced chips, but there is clearly a market for them.

As the world appears to be moving into spheres of influence, it is clear that semiconductors will play a core role.

China has made strengthening export control rules and safeguarding supply-chain resilience top priorities this year, reports the South China Morning Post. This comes as officials move to secure the nation’s economic interests amid rising geopolitical friction.

The Ministry of Commerce said it would enhance legal frameworks and risk prevention and tighten the “safety net for opening up” as one of eight core work areas, according to a statement released on Sunday after its annual work conference in Beijing.

China has increasingly used export controls to protect national security and critical technologies amid trade, supply-chain and diplomatic disputes.