Chinese regulators ruled on Monday that Nvidia breached competition rules, raising the stakes as the United States and China entered a second day of trade negotiations in Madrid. The move came amid a raft of gloomy economic statistics from Beijing, suggesting that the slowdown in the world’s second biggest economy is worsening.
China’s State Administration for Market Regulation (SAMR) said on Monday that Nvidia failed to fulfil undertakings made when it acquired Mellanox Technologies, a networking equipment manufacturer, five years ago. These included a commitment to continue supplying its chips to Chinese companies. Washington has blocked the sale of the most advanced semiconductors to China since 2022.
Beijing initiated the investigation last December, after the Biden administration tightened export controls on semiconductors. Monday’s ruling comes as Chinese negotiators in Madrid are pressing their American counterparts for an easing of restrictions on the sale of chips and other high-tech products.
The latest round of talks come in advance of an expected meeting between Donald Trump and Xi Jinping next month. Mr Xi has invited Mr Trump to visit Beijing but the two men could meet instead on the margins of an Asia Pacific Economic Cooperation (Apec) summit in South Korea at the end of October.
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US treasury secretary Scott Bessent said in Madrid on Monday that the two sides were close to a deal on TikTok, which Washington has threatened to shut down on Wednesday if its Chinese owner, ByteDance, does not sell it. US legislators allege that Chinese ownership of the algorithm that runs the short video app is a threat to national security.
“Our Chinese counterparts have come with a very aggressive ask,” Mr Bessent told reporters. “We will see if we can get there at present. We are not willing to sacrifice national security for a social media app.”
Tariffs, Chinese export controls of rare earth minerals and US demands that Beijing should do more to stop the flow of chemicals that make the drug fentanyl are among the other issues under discussion in Madrid.
China’s commerce ministry on Monday condemned Washington’s call for the European Union and other western allies to impose tariffs on China on account of its purchases of Russian oil.
“This is a typical act of unilateral bullying and economic coercion, a serious violation of the consensus reached by the Chinese and US heads of state in their phone call, and could severely impact global trade as well as the stability of industrial and supply chains,” a spokesperson said.
China’s economic troubles deepened in August with retail sales growth slowing down and the worst performance in industrial output for 12 months. Investment slowed sharply, export growth weakened, the slump in the housing market worsened and the jobless number increased.
Production at Chinese factories and mines grew by 5.2 per cent last month, the National Bureau of Statistics said on Monday. This was the smallest increase since August 2024 and was below most market analysts’ expectations.
Retail sales also disappointed expectations, growing by 3.4 per cent year on year, down from 3.7 per cent in July. Fixed asset investment grew by just 0.5 per cent in the first eight months of 2025, compared with a 1.6 per cent increase in the first seven months of the year.
The four-year contraction in the property market shows no sign of ending and new home prices fell by 0.3 per cent in August compared to July, a 2.5 per cent drop since August last year. Resale home values fell by 0.58 per cent compared to the previous month, with the price of existing properties in Beijing falling by 1.2 per cent.
