Chinese authorities are considering expanding export controls to cover advanced artificial intelligence and semiconductor technologies, a move that would significantly strengthen Beijing’s oversight of strategic technologies as competition with the United States increasingly extends beyond hardware to AI models, algorithms and chip design.

According to a Financial Times report on Tuesday, regulators are consulting leading Chinese technology companies on a range of potential restrictions aimed at preventing advanced domestic AI capabilities and semiconductor intellectual property from flowing overseas.

The discussions show Beijing now sees frontier AI technologies as strategic national assets, mirroring Washington’s restrictive approach to advanced chips, AI models and semiconductor manufacturing equipment. The reported measures would mark another escalation in the global technology rivalry, with both the United States and China moving to limit the international transfer of technologies viewed as critical to national security and economic competitiveness.

The report follows Reuters’ exclusive reporting earlier this month that Chinese authorities had convened meetings with major technology companies to discuss restricting overseas access to China’s most advanced AI models, including next-generation systems that have yet to be released publicly.

Those discussions highlighted growing concerns within Beijing that capable Chinese AI models could strengthen foreign competitors or be incorporated into overseas AI ecosystems. Rather than focusing solely on hardware exports, regulators are now examining ways to control the movement of AI capabilities themselves, including model parameters, training data and underlying technologies.

The latest consultations suggest China is developing a comprehensive export-control framework covering both physical semiconductor technologies and intangible AI assets.

According to the Financial Times, China’s Ministry of Commerce has been consulting AI developers including Alibaba, ByteDance and Zhipu regarding restrictions on transferring sensitive AI training data outside China.

Officials are also reportedly evaluating whether companies should be prevented from allowing foreign users to download model weights, the numerical parameters that determine how AI systems perform after training.

Model weights are regarded as strategically valuable because they enable developers to reproduce and fine-tune sophisticated AI systems without repeating the expensive training process. Restricting access to those weights would represent a significant shift toward tighter government oversight of China’s open-weight AI ecosystem, which has expanded rapidly over the past year through companies including Moonshot AI, Z.ai, MiniMax and Alibaba.

The discussions come as Chinese firms have narrowed the performance gap with leading U.S. AI developers by releasing capable open-weight models at substantially lower operating costs.

Chip Design Exports May Also Face New Controls

Beyond artificial intelligence, regulators are reportedly considering measures that would restrict overseas production of advanced semiconductors designed by Chinese companies. The proposals could prevent foreign foundries, including Taiwan Semiconductor Manufacturing Co. (TSMC) and Qualcomm’s manufacturing partners, from fabricating cutting-edge chips based on designs developed by Chinese firms such as Huawei, Alibaba and ByteDance.

Such restrictions would represent a notable expansion of China’s export-control regime by focusing not only on manufacturing equipment and materials but also on semiconductor intellectual property. The move could complicate global semiconductor supply chains by limiting where Chinese-designed chips can be manufactured, particularly as U.S. export controls have already reduced Chinese access to the world’s most advanced fabrication technologies.

Potential Inclusion in Export-Control Catalogue

According to the report, the proposals could eventually be incorporated into the next revision of China’s catalogue of technologies that are prohibited or restricted from export.

That catalogue serves as the legal foundation for Beijing’s export-control regime and has increasingly been used to protect technologies viewed as strategically important. Officials are reportedly gathering feedback from industry participants before determining which technologies should ultimately be included.

The report also said regulators are considering restrictions on overseas acquisitions involving strategic technologies, including emerging areas such as agentic AI, where autonomous software systems perform complex tasks with limited human intervention.

The reported measures underscore how the technology competition between China and the United States has broadened significantly. Initially centered on semiconductor manufacturing equipment and advanced processors, the rivalry now encompasses AI models, algorithms, computing infrastructure, critical minerals and intellectual property.

Washington has imposed stringent restrictions on exports of advanced AI chips, semiconductor equipment and related technologies to China, while tightening rules designed to prevent Chinese entities from accessing advanced computing power through third countries. China has responded by accelerating domestic semiconductor development, expanding export controls on critical minerals including gallium, germanium and rare earth elements, and promoting indigenous AI ecosystems built around domestic hardware such as Huawei’s Ascend processors.

The latest proposals suggest Beijing is now moving toward a more comprehensive strategy that treats advanced AI systems and semiconductor designs as strategic technologies warranting export restrictions comparable to those already applied to critical minerals and other sensitive technologies.

The new controls, if implemented, are expected to further fragment global technology supply chains and reinforce the emergence of separate AI and semiconductor ecosystems led by the United States and China.

Japanese Prime Minister Sanae Takaichi on Tuesday unveiled her administration’s first comprehensive economic policy blueprint, pledging to mobilize more than 370 trillion yen ($2.28 trillion) in public and private investment through fiscal 2040 to revive long-term growth.

The plan, however, has been overshadowed by investor concerns that the government could pressure the Bank of Japan (BOJ) to keep interest rates low, fueling a selloff in government bonds.

The blueprint seeks to position investment in strategic industries as the centerpiece of Japan’s long-term growth plan, but repeated revisions to its language on monetary policy underscore growing market sensitivity over the relationship between the government and the central bank.

Japan’s government bond yields have climbed to multi-decade highs in recent weeks as investors worry that Takaichi’s emphasis on fiscal stimulus and accommodative monetary policy could delay efforts to contain inflation while worsening the country’s already heavy debt burden. The benchmark 10-year Japanese government bond yield, which reached a three-decade high of 2.9% on July 9, eased modestly to 2.73% on Tuesday but remains near levels not seen in decades.

The economic blueprint underwent several revisions before receiving cabinet approval after earlier drafts unsettled financial markets.

An initial version called for monetary policy that would “bolster private demand,” language that disappeared as bond yields continued rising. A subsequent draft linked monetary policy more directly to the government’s economic growth strategy, prompting another negative market reaction and further revisions.

The final document states that the BOJ should conduct monetary policy appropriately “to achieve stable price rises,” while adding a footnote referencing Japan’s law guaranteeing the central bank’s operational independence.

The blueprint nonetheless retains language calling for the BOJ to coordinate its policy with the government’s economic objectives, reflecting the longstanding framework established under Japanese law, which requires close cooperation while preserving the central bank’s authority over monetary decisions.

“To achieve a strong economy, it is very important for monetary policy to be conducted appropriately to see stable price rises,” the final blueprint said.

Echoes of Abenomics

Takaichi has consistently expressed support for the economic philosophy associated with former Prime Minister Shinzo Abe, whose “Abenomics” strategy relied on aggressive fiscal stimulus, ultra-loose monetary policy and structural reforms to combat decades of deflation.

Her latest blueprint amplifies that approach by emphasizing government-led investment to stimulate private sector spending.

“Under the Takaichi administration, the government will take the initiative and, together with the private sector, invest in strategic areas, thereby ending the trend of under-investment that has mired Japan,” the document said.

The government plans to work alongside private businesses to channel capital into strategic sectors over the next 15 years, with combined public and private investment projected to exceed 370 trillion yen by fiscal 2040.

Unlike previous administrations, however, the blueprint avoids making explicit commitments to restoring fiscal health, instead stating that the government will seek to balance economic growth with “fiscal sustainability.”

Markets Remain Unconvinced

Investors remain concerned that the administration’s policy mix could increase pressure on the BOJ to slow or pause further interest rate increases, allowing the government to finance additional spending at lower borrowing costs.

Those concerns have intensified since Takaichi took office in October, as she has repeatedly pledged to expand fiscal spending while expressing reservations about the BOJ’s recent tightening cycle.

The BOJ ended nearly a decade of ultra-loose monetary policy in 2024 and has since raised its benchmark interest rate several times, including a hike in June. Even after those increases, Japan’s policy rate stands at just 1%, remaining among the lowest in the developed world.

The central bank has signaled that additional rate increases remain possible if inflation and wage growth continue evolving in line with its forecasts.

Any perception that political leaders are attempting to influence those decisions risks undermining confidence in the BOJ’s independence, a cornerstone of modern monetary policy.

Japan already carries the highest public debt burden among advanced economies, with government debt exceeding twice the size of annual economic output. Higher bond yields increase borrowing costs for the government, making investors especially sensitive to policies that could require additional debt issuance.

The combination of increased fiscal spending, persistent inflation and expectations of further BOJ tightening has driven Japanese government bond yields steadily higher in recent months.

Analysts say investors are increasingly demanding higher compensation to hold long-term Japanese debt amid uncertainty over the government’s fiscal trajectory.

“We’ve guided economic and fiscal policy paying due heed to fiscal sustainability and the need to maintain market trust. We will continue to do so based on this blueprint,” Takaichi said during a government panel meeting on Tuesday.

Some economists argue that revisions to the blueprint’s wording do little to address broader concerns about the administration’s policy intentions.

Former BOJ board member Seiji Adachi said markets remain focused on the government’s broader objective of maintaining low borrowing costs.

“The administration wants the BOJ to keep rates low so that it can issue more debt,” Adachi said.

“That’s not a good message to send to markets.”