McKinsey has stopped its China business from undertaking consultancy work related to generative artificial intelligence amid geopolitical tensions, excluding it from one of the most potentially lucrative markets for consultants in the country.

The US firm instructed its mainland Chinese operation to refrain from projects deploying generative AI in recent months, according to two people with knowledge of the matter. One of the people said the move was prompted by Washington’s growing scrutiny of US companies operating in sensitive sectors such as AI and quantum computing in China.

The ban extends to projects in the mainland offices of multinational clients, but does not stop McKinsey’s China business from working with companies that have more established forms of AI in their products.