Recent developments have revealed that state-linked Chinese entities are using cloud services provided by Amazon Web Services (AWS) and its competitors to access advanced U.S. technology and artificial intelligence (AI) capabilities, despite stringent export controls imposed by the U.S. government. This practice, which has been highlighted through a Reuters investigation, underscores the growing concerns about how China continues to gain access to cutting-edge technology, potentially circumventing U.S. regulations designed to limit its military advancements.
The U.S. government has been actively restricting the export of high-end AI chips to China for the past two years, citing the need to curb the technological capabilities of the Chinese military. However, these restrictions primarily focus on the direct export or transfer of physical commodities, software, or technology. This has left a loophole where Chinese entities can still access restricted technologies through cloud computing services provided by foreign companies.
A Reuters review of over 50 public tender documents posted in Chinese databases over the past year revealed that at least 11 Chinese entities sought access to restricted U.S. technologies or cloud services. Four of these entities explicitly named AWS as their cloud service provider, although they accessed these services through Chinese intermediary companies rather than directly from AWS. This strategy has allowed Chinese organizations to utilize advanced computing power and AI models that would otherwise be inaccessible due to U.S. export restrictions.
One notable example is Shenzhen University, which spent 200,000 yuan (approximately $28,000) to gain access to cloud servers powered by Nvidia A100 and H100 chips, through an intermediary company, Yunda Technology Ltd Co. These chips, which are essential for powering large-language models (LLMs) like OpenAI's ChatGPT, are banned for export to China. Despite the restrictions, the university was able to access these advanced capabilities via AWS cloud services.
AWS, which controls nearly a third of the global cloud infrastructure market, has stated that it complies with all applicable U.S. laws, including trade regulations. An AWS spokesperson emphasized that the company adheres to U.S. laws both inside and outside of China, but this adherence does not cover the remote access of technology through cloud services, which remains a gray area in current U.S. regulations.
The U.S. government has recognized this loophole and is now working to tighten regulations further. Legislation has been introduced in Congress to empower the Commerce Department to regulate remote access to U.S. technology via cloud services, although it remains unclear when or if this legislation will be passed. Additionally, the Commerce Department proposed a rule in January that would require U.S. cloud computing services to verify large AI model users and report any use of these services for training AI models capable of "malicious cyber-enabled activity." This rule, if finalized, would allow the Commerce Secretary to impose prohibitions on certain customers.
Despite these efforts, Chinese entities continue to leverage cloud services not only from AWS but also from other U.S. tech giants like Microsoft. In one instance, Sichuan University purchased 40 million Microsoft Azure OpenAI tokens to support the development of a generative AI platform. This purchase highlights the broader trend of Chinese organizations seeking to bypass export controls through cloud-based solutions.
The implications of these developments are significant. While the U.S. government has made strides in restricting the physical export of sensitive technologies, the ability of Chinese entities to access these technologies remotely through cloud services presents a challenge to the effectiveness of these restrictions. As the demand for advanced computing power and AI models in China continues to grow, U.S. companies are finding themselves in a complex position, balancing compliance with U.S. laws while catering to the lucrative Chinese market.
