US AI Chips via Cloud Services: How Chinese Organizations Are Bypassing Export Restrictions

In a rapidly evolving technological landscape, Chinese organizations have been leveraging cloud services from companies like Amazon Web Services (AWS) to access advanced US AI chips and capabilities, circumventing strict US export controls. A recent investigation by Reuters uncovers how these Chinese entities are obtaining restricted technologies through intermediaries, spotlighting a significant loophole in current regulations.

The Investigation: A Deep Dive into Cloud-Based Access

Reuters’ comprehensive investigation reveals that over 50 public tender documents from the past year demonstrate a pattern where at least 11 Chinese entities have sought access to advanced US technologies or cloud services. Notably, four of these entities specifically named AWS as their preferred cloud service provider, accessed via Chinese intermediaries instead of direct channels.

AWS, however, maintains that it complies with all applicable US trade laws concerning its services in and outside China. Despite this compliance, the report brings to light a critical gap in US regulations—while direct export of high-end AI chips to China is restricted, providing access to these chips or advanced AI models via cloud services does not breach current US laws. This legal ambiguity has become a point of concern among US officials and lawmakers, who worry about the implications for national security.

Case Studies: How Chinese Entities Are Leveraging Cloud Services

One of the highlighted cases involves Shenzhen University, which reportedly spent 200,000 yuan (approximately £21,925) on an AWS account to access cloud servers powered by Nvidia’s A100 and H100 chips. These chips are pivotal for advanced AI research and applications, and the university was able to obtain this service through an intermediary, Yunda Technology Ltd Co.

Another significant example is Zhejiang Lab, a research institute working on a large language model (LLM) named GeoGPT. The institute detailed in a tender document its intention to spend 184,000 yuan on AWS cloud computing services, citing insufficient computing power from domestic cloud providers like Alibaba. This reliance on US-based cloud services underscores the challenges Chinese institutions face in achieving their AI ambitions without access to leading-edge technology.

US Response: Tightening the Regulatory Grip

The US government, recognizing the potential risks posed by this loophole, is moving to tighten regulations. The US Commerce Department is seeking additional resources to bolster existing controls that prevent Chinese entities from accessing advanced AI chips through remote cloud services. Additionally, a proposed rule would mandate that US cloud computing firms verify users of large AI models and notify authorities when these services are used to train AI models capable of malicious activities.

These measures reflect a growing awareness in the US about the complexity of regulating cloud-based access to advanced technologies. Michael McCaul, chair of the US House of Representatives Foreign Affairs Committee, expressed concerns about this loophole, emphasizing the need for updated regulations that address the nuances of cloud-based technology transfer.

The Broader Implications: National Security and the Global AI Race

The findings from Reuters’ investigation highlight a broader issue—the difficulty of regulating access to advanced computing resources in an interconnected global ecosystem. As Chinese entities continue to seek out US cloud services to fuel their AI development, the situation raises questions about the effectiveness of current export controls and the potential need for more comprehensive regulations.

As the global AI race intensifies, these revelations are likely to spark renewed debates about the balance between technological cooperation and national security. Policymakers and industry leaders will need to navigate these challenges carefully, ensuring that technological advancement does not come at the expense of national security.

In conclusion, the Reuters report underscores the pressing need for the US to close regulatory gaps that allow Chinese entities to bypass export restrictions on advanced AI chips. As the global AI landscape evolves, ensuring that regulations keep pace with technological advancements will be crucial in safeguarding national security while fostering innovation.