China is the world’s biggest market for new cars, making it a hugely valuable place for global car makers to do business. But when it comes to autonomous vehicles, China is likely to impose severe restrictions on foreign companies, hurting firms like Alphabet’s Waymo in particular.

Chinese policy makers want to leapfrog the West and create their own cutting-edge driverless and electric cars. Government-backed investment funds are pouring money into self-driving car startups, while erecting barriers to protect the market. They hope to replicate the success of firms such as smartphone and telecommunications equipment maker Huawei that has caught up with and in some ways surpassed foreign competitors.