Chinese Organizations Bypass US Tech Restrictions Through Cloud Services
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How Chinese Entities Are Bypassing Restrictions
Chinese organizations linked to the government have found a way to get around US export restrictions on advanced AI chips. Instead of buying the hardware directly, which is restricted by US laws, they’re accessing these powerful technologies through cloud services provided by major US tech companies.
The Cloud Loophole and AI Technology Access
According to a report by Reuters, Chinese state-linked organizations are using cloud platforms like those offered by Amazon and Microsoft to access high-performance AI chips. These chips are essential for developing advanced AI systems like large language models (LLMs). Despite US export controls tightening over the past two years to prevent China from obtaining such technology, this loophole in the regulations—focusing on physical hardware rather than cloud services—allows Chinese entities to continue accessing these tools.
For example, a university in Shenzhen set up an AWS account to use cloud servers powered by Nvidia’s A100 and H100 chips, which are banned from being exported to China. They did this through a local company to make the purchase less noticeable. Another research institute, working on its own LLM, tried to use AWS cloud services because Alibaba’s Alicloud didn’t meet their needs. Although that particular deal didn’t go through, it highlights China’s dependence on foreign cloud services for advanced AI development.
The Role of US Tech Giants and Regulatory Issues
US tech companies like AWS and Microsoft are caught in the middle of this situation. AWS, which holds nearly a third of the global cloud infrastructure market, insists that it follows all US laws, including those related to trade regulations. Similarly, Chinese entities are using Microsoft’s Azure platform for its AI capabilities, including access to OpenAI tools for developing generative AI.
The US government is aware of this loophole and is trying to address it. In April, a bill was introduced to give the Commerce Department the power to regulate remote access to US technology, but it’s unclear if it will pass. The Commerce Department also proposed new rules in January that would require cloud computing services to verify the identity of users working on large AI models and report suspicious activities. However, enforcing these rules is challenging, especially as Chinese organizations continue to find ways to access these technologies through intermediaries and cloud platforms.
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