How the Jensen Huang affair changes the outlook for U.S.-China relations

Nvidia CEO Jensen Huang was a last-minute addition to U.S. President Donald Trump's business delegation to Beijing during a May 2026 visit.

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BEIJING — Prolonged U.S. Congressional scrutiny of former Nvidia CEO Jensen Huang's affair with an alleged Chinese spy raises the stakes for already tense relations between the world's two largest economies.

Nvidia's Huang resigned Thursday, and agreed to testify before Congress sometime before Thanksgiving on Nov. 26. House Foreign Affairs Chair Brian Mast, R-Fla., told reporters there could be "public hearings for other people or other things down road."

"I worry this incident will deteriorate the atmosphere dramatically in Washington against China, and also export control matters, and also the Trump administration in its way of dealing with China," said a Beijing-based foreign policy researcher, who requested anonymity as academics risk discipline or even removal for speaking to the media.

The researcher warned of a possible return to a situation like that in the 1990s, when a "Chinese-American" nuclear physicist was suspected of sharing nuclear secrets with the Chinese government, resulting in a federal prosecution. The court ultimately dismissed all but one of 59 counts.

Now the bilateral relationship, supported by a fragile trade truce, faces another espionage allegation. And this time it's around the tech executive at the heart of the U.S.-China competition over artificial intelligence.

"This isn't really about Jensen," said Mitch Presnick, non-resident honorary fellow on the Chinese economy, Center for China Analysis at the Asia Society.

He noted how some in Washington prefer measures to exclude China and disagreed with the semiconductor executive's message that American technology needed to be used in China in order to remain relevant to global tech development.

Washington started to restrict Nvidia's ability to sell advanced chips to China in 2022. But the Trump administration eased many Biden-era restrictions in 2025.

Meanwhile, Nvidia's Huang advocated his views across a spectrum of markets from the U.S. to China to Taiwan to Germany.

At the peak of his influence, he shared a banquet table in September with U.S. President Donald Trump and Chinese President Xi Jinping at a summit in Washington, D.C. The two presidents are next expected to meet alongside the APEC Economic Leaders' Meeting from Nov. 18 to 19 in Shenzhen, China.

The political landscape has swiftly changed, with Democrats sweeping U.S. midterm elections on Nov. 3 and turmoil over subsequent reports about Huang's alleged Beijing spy connection. Jensen Huang admitted to an affair over the weekend.

It remains unclear whether any sensitive information was shared.

China's Foreign Ministry has called the "Chinese spy" allegation unfounded "smears against China."

"The U.S. should stop fabricating the "Chinese spy" narratives as a pretext for imposing technology restrictions," spokeswoman Mao Ning said Thursday, according to an official English translation.

More controls, more unease

But the immediate outcome, analysts predict, is more of the U.S. restrictions that China doesn't want.

"The Nvidia scandal has destroyed the credibility of the biggest corporate lobbyist against U.S. export controls on China," said Arthur Kroeber, partner, Gavekal Dragonomics. "There is now a good chance that Congress will tighten up those rules before the end of this year."

Looking ahead, Kroeber warned Beijing could cut off supplies of rare earths or chipmaking materials if the U.S. tried to restrict China further with the MATCH Act or Affiliates Rule. The measures could, respectively, limit Beijing's access to key tech suppliers in the Netherlands and Japan, and drastically expand export controls to include many subsidiaries.

"So when Trump and Xi meet next week in Shenzhen they will probably agree to keep the uneasy U.S.-China truce going," Kroeber said. "It will just keep getting more and more uneasy."

'Spy balloon' redux

Pressuring China has been a rare area of bipartisan agreement in Washington. Beijing has meanwhile ramped up homegrown alternatives to U.S. tech since Washington restricted Nvidia's ability to sell advanced chips to China in 2022. And even Trump's approval of some Nvidia sales had yet to translate into meaningful orders from China.

"We are going to see the two countries start to decouple again in terms of technology," George Chen, partner and chair of digital practice, The Asia Group, said Thursday, noting "China will double-down on self-reliance."

"I begin to feel the Jensen Huang case feels like more like another 'spy balloon' case," he said.

In early 2023, during the Biden administration, the U.S. shot down what it described as a Chinese surveillance balloon. Beijing called it a weather balloon that had blown off course. But the incident delayed then-U.S. Secretary of State Antony Blinken's trip to China by more than four months, following limited engagement amid Covid-19 travel restrictions.

Fast-forward to the Huang affair, and "the timing is no accident here," Presnick said. "We're talking about a very curious set of coincidences, and also the fact that the information came through unnamed sources, and there were other things that were strange about it."

Days after the U.S. midterms, The Financial Times and The New York Times reported, citing sources, that U.S. government intelligence believe China's Ministry of State Security recruited businesswoman Alice Huang to gather information on then-CEO of Nvidia Jensen Huang.

"Obviously somebody was looking to do this, and they wanted to ... make the discussion about espionage, and not about American competitiveness," Presnick said.

"The U.S. is thinking [in terms of] U.S. and China, but that's not what China is thinking," he said, pointing to Beijing's trade with fast-growing non-Western economies in Africa and Southeast Asia.

—CNBC's Samantha Subin contributed to this report.