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China’s scrutiny comes as the U.S. plans legislation requiring advanced chips sold overseas to report their locations. This measure aims to prevent these chips from reaching embargoed regions. The renewed focus on Nvidia’s H20 coincides with the U.S. lifting an earlier export suspension on this GPU, which had been modified to comply with 2023 performance limits.

The H20 is a scaled-down version of Nvidia’s H100 GPU. Unlike fully restricted models, it does not include any hardware tracking modules. Experts note that Nvidia designed the H20 specifically for the Chinese market, responding to tightening U.S. export controls. Despite these controls, Nvidia remains a dominant player in China’s AI hardware market.

China’s Strategic Response and Market Outlook

Industry analysts differ on how aggressively China will pursue the security concerns. Tilly Zhang of Gavekal Dragonomics suggests Beijing views Nvidia’s technology as a bargaining tool, especially as domestic chip alternatives improve. Meanwhile, Charlie Chai from 86Research believes China will mostly apply symbolic pressure, as many local developers depend heavily on Nvidia’s CUDA software platform.

Despite regulatory challenges, including an ongoing antitrust review, demand for Nvidia GPUs remains strong in China. Reuters reports a recent TSMC order of about 300,000 H20 units. Other U.S. suppliers like Micron have also faced similar security investigations, highlighting Beijing’s broader strategy. These probes aim to leverage security concerns while promoting the growth of local semiconductor firms.

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So far, the CAC has not announced any specific countermeasures. Analysts expect China to continue importing Nvidia GPUs but under stricter oversight. Meanwhile, the government will likely accelerate investment in home-grown AI chips from companies such as Huawei, Biren, and Cambricon. This dual approach balances the immediate need for advanced hardware with the long-term goal of reducing dependence on foreign technology.

In summary, Nvidia’s denial of hidden features in the H20 GPU highlights ongoing tensions between U.S. export controls and China’s security concerns. The situation underscores the complexities of global technology competition and China’s strategic push to build its domestic AI hardware industry.

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The updated GDP figure reflects methodological improvements in assessing the housing sector’s contribution to the economy. While the revised metrics alter the overall economic size for 2023 and will influence 2024’s baseline. They are not expected to significantly affect China’s growth rate, according to officials.

The NBS initially released the revised figure without explanation but later clarified that the adjustment stemmed from a more comprehensive evaluation of housing market activities. This move aligns with China’s ongoing efforts to improve the accuracy of its economic data and better capture contributions from various sectors.

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China Revises 2023 GDP by 2.7%

China’s National Bureau of Statistics (NBS) announced on Friday a 2.7% upward revision to its 2023 GDP. Raising it by 3.4 trillion yuan (US$466 billion) to 129.4 trillion yuan (US$17.73 trillion). This adjustment reflects the adoption of a new method for calculating the housing sector’s contribution to the economy.

The NBS stated that it now uses rental values instead of the previous “housing cost method” to determine the output of housing services. This methodological change alone increased the housing sector’s contribution to GDP by 1.34 trillion yuan in 2023. The shift was made possible as China’s rental market matured. Providing more comprehensive data to enhance the accuracy of economic measurements.

Previously, the housing cost method calculated property value based on depreciation, maintenance costs, management fees, and taxes. Often undervalued housing services due to limited rental data. The updated approach aligns more closely with international standards and reflects the growing importance of rental activity in China’s economy.

The bureau emphasized that while the revision affects the overall size of the economy for 2023 and sets a higher baseline for 2024. It does not significantly alter the GDP growth rate. The change is part of ongoing efforts to refine statistical accuracy and ensure reliable economic data for policymaking.

Reflects Stronger Tertiary Sector Growth Amid Economic Challenges

China’s National Bureau of Statistics (NBS) announced that tertiary industries accounted for 56.3% of the country’s economic output in 2023. Following the recent GDP revision. This marks a 1.7 percentage point increase compared to preliminary data, contributing significantly to the GDP’s upward adjustment to 129.4 trillion yuan (US$17.73 trillion).

The tertiary sector, which encompasses industries like retail, transport, finance, catering, accommodation, and property, played a pivotal role in boosting economic performance. This shift underscores the growing importance of services in China’s economic structure.

Despite these adjustments, China’s economy faced headwinds in 2023, including a prolonged property market crisis, mounting local government debt, and weak consumer demand. Acknowledging these challenges, Chinese leaders outlined measures to stabilize the economy at this month’s agenda-setting meeting.

The government plans to increase the budget deficit, issue additional debt, and adopt looser monetary policies in 2024. Among these measures is the issuance of a record 3 trillion yuan in special treasury bonds, aimed at bolstering infrastructure investment and stimulating growth.

Economic policymakers are also preparing for potential trade tensions with the United States, as President-elect Donald Trump assumes office in January. These fiscal and monetary strategies reflect China’s commitment to sustaining growth amid complex global and domestic conditions.

The GDP revision, alongside targeted economic reforms, highlights China’s focus on adapting to changing economic dynamics while maintaining stability in the face of global uncertainties.

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