Chinese Entities Bypass US Export Controls with AWS

Chinese Entities Utilize Cloud Services to Access Restricted US Technologies

Chinese state-linked organizations are leveraging cloud services from Amazon Web Services (AWS) and other providers to obtain advanced US chips and AI technologies, which are currently restricted in China. This strategic approach enables them to bypass US export controls that are designed to restrain the export of high-end AI chips to China. According to a Reuters investigation, at least 11 Chinese entities have endeavored to access these restricted technologies, with four specifically utilizing AWS through local intermediaries. For example, Shenzhen University paid 200,000 yuan ($28,000) to utilize cloud servers powered by prohibited Nvidia A100 and H100 chips. Despite dominating the global cloud market alongside Microsoft and Google, AWS asserts adherence to all applicable US laws. The exploitation of this loophole in export controls has sparked concerns in the US, prompting proposals for new regulations to address remote access via cloud services. Similar cases include Zhejiang Lab and Fujian Chuanzheng Communications College, which also pursued cloud-based access to powerful AI technologies. This exploitation of cloud services has raised concerns in the U.S., leading to discussions on closing this regulatory loophole. This exploitation of cloud services has prompted U.S. officials to propose tighter regulations. Legislation is being introduced to grant the Commerce Department the authority to regulate remote access to U.S. technologies via cloud services. However, challenges remain in fully closing this loophole, as Chinese entities could turn to non-U.S. cloud providers if restrictions are imposed. The situation highlights the complexities of enforcing export controls in the digital age, where cloud computing enables indirect access to restricted technologies.

Key Takeaways

• Chinese entities utilize AWS and competitor services to circumvent US tech export bans.
• Utilization of cloud services provides access to restricted US chips and AI capabilities.
• Shenzhen University paid $28,000 for cloud servers equipped with banned Nvidia chips.
• The US is contemplating new measures to regulate tech access through cloud services.
• AWS, commanding a third of the global cloud market, ensures compliance with US laws.

Analysis

The circumvention of US tech export bans by Chinese entities through AWS has significant implications for US-China tech rivalry. In the short term, US tech giants may encounter regulatory scrutiny, potentially impacting trust and revenue. In the long term, heightened US regulations could reshape global cloud service norms, favoring domestic providers. This loophole underscores the evolving nature of tech export controls in the digital era.

Did You Know?

• Amazon Web Services (AWS):
  • Overview: AWS is a comprehensive and evolving cloud computing platform provided by Amazon, offering a range of infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) offerings. It caters to computing power, database storage, content delivery, and other functionalities, supporting the growth and scalability of businesses worldwide, including those in China.
• Nvidia A100 and H100 Chips:
  • Overview: The Nvidia A100 and H100 are advanced graphics processing units (GPUs) developed by Nvidia, primarily catering to high-performance computing (HPC) and artificial intelligence (AI) applications. Renowned for their powerful parallel processing capabilities, these chips are particularly suitable for tasks such as deep learning, scientific simulations, and data analytics.
• US Export Controls on High-End AI Chips:
  • Overview: The United States imposes export controls on high-end AI chips, including those from Nvidia, to restrict the sale and distribution of advanced technologies to certain countries such as China. These measures aim to uphold national security and technological superiority, preventing the targeted countries from developing their own advanced AI capabilities that could have strategic applications, such as in military contexts.