Beijing can weather current trade friction but tightening restrictions on open-weight models complicate outlook, analysts say
As US-China tech tensions rise ahead of an expected leadership summit next month, analysts argue Washington’s latest restrictions are unlikely to cause a major disruption in China’s AI exports. But they caution that some of the measures – such as limiting access to “open-weight” models – represent a “genuine wild card” that could reshape the global landscape.
Hong Kong-based analysts at Citi Research, led by Yu Xiangrong, argued in a Friday note that US tariffs and export controls were “unlikely to materially disrupt China’s AI exports” because direct trade in the sector was “already suppressed at the aggregate level, limiting the potential first-order impact of further restrictions.”
The analysts estimated that a full AI decoupling, considered an extreme-case scenario, could place up to 9.2 per cent of China’s exports at risk. Even this would likely be “manageable”, they added, pointing to Beijing weathering US President Donald Trump’s “Liberation Day” tariffs last year despite America accounting for 14.7 per cent of total exports at the end of 2024.
imposed reciprocal measuressince last month, with Washington targeting Chinese artificial intelligence models, advanced robotics and optical transceivers while expanding its forced labour blacklist. Beijing has retaliated
by targeting US firms. The latest US curbs centred on drones. On Thursday, Trump signed a proclamation imposing tariffs of up to 100 per cent on certain imported drones and components, citing national security and cybersecurity risks.
The US-China direct bilateral AI trade has largely decoupled – with Chinese AI-related exports to the US falling 4.1 per cent year on year between January and June, shaving 0.5 percentage points off overall export growth – and Citi analysts noted that China remained an indirect beneficiary of the broader global AI boom.