China’s outbound AI strategy starts with models and governance and ends with chips

Key arguments

• Export sequencing matters: the first layers exported (models, governance) embed fastest and shape future dependencies, which is why Europe should engage now while hardware/software terms are still undetermined.
• Open-weight models cut entry barriers and spread adoption, but continued access to frontier versions depends on Chinese developers' future releases; the 16 October 2026 draft rules limiting export of 23 cutting-edge AI technologies raise questions over long-term openness.
• Governance is China's strongest soft-stack lever: WAICO's 29-to-38 member growth in about two months shows traction in the Global South, though its operating model is largely untested and the US pressures partners against duplicative initiatives.
• Rare-earth export controls undercut downstream attraction, strengthening diversification arguments among countries Beijing is courting.

Corresponding source evidence

1. Chinese chips still lag the US’s NVIDIA and, importantly, they are needed to supply China’s own market to reduce excessive dependence on the US 3.Once production capacity increases, Chinese chips can be expected to flood overseas markets at competitive prices.
2. ASIA THEMATIC INSIGHTS 2 How China’s outbound strategy on AI is sequenced is very relevant to Europe, because the first AI-stack layers that China exports will become embedded quickest and will shape future dependencies.
3. The hard stack: energy, compute and chips China’s clearest advantage is its rapid deployment of renewables -sourced electricity, which makes its compute comparatively cheap, attracting international users who pay lower prices to use Chinese AI models when run through Chinese cloud services.