China-backed entities with ties to the Chinese Communist Party are utilizing cloud services provided by Amazon or its competitors to acquire high-end American chips and artificial intelligence technology in order to circumvent U.S. regulatory measures.
According to a report by Reuters, recent public tender documents reveal that Chinese enterprises associated with the CCP are using cloud services offered by Amazon or Microsoft to access high-end American chips and artificial intelligence (AI) technology that they cannot obtain through other channels.
Over the past two years, the U.S. government has imposed restrictions on exporting high-end chips and AI technology to mainland China to prevent the CCP from using American-developed technology for military purposes.
However, accessing such chips or advanced AI models through cloud services does not violate relevant U.S. regulations, as it is only the export or transfer of goods, software, or technology that is subject to control.
Reuters found that in over 50 bid documents publicly available on Chinese databases in the past year, at least 11 Chinese entities sought access to restricted American technology or cloud services.
Among them, four companies specifically listed Amazon Web Services (AWS) as their service provider but accessed the services through Chinese intermediary companies rather than directly from AWS.
An AWS cloud business spokesperson stated, “When AWS provides services to users inside and outside China, we comply with all applicable U.S. laws, including trade laws.”
According to research firm Canalys, AWS controls nearly one-third of the global cloud infrastructure market. In China, AWS ranks as the sixth largest cloud service provider according to data from International Data Corporation (IDC).
In a bid document from March, Shenzhen University spent 200,000 RMB (approximately $27,996) to open an AWS account to access cloud servers powered by Nvidia’s A100 and H100 chips for an undisclosed project.
The document showed that Shenzhen University obtained this service through an intermediary company called Yuanda Technologies. These two Nvidia chips are used for large language models (LLM), such as OpenAI’s ChatGPT.
Shenzhen University and Yuanda Technologies did not respond to Reuters’ requests for comment. Nvidia declined to comment on transactions with Chinese entities.
Zhejiang Lab, a research institution that developed the large language model GeoGPT independently, expressed in a bid document from April its intention to spend 184,000 RMB to purchase AWS cloud computing services as domestic Alibaba lacked sufficient computing power for their AI model.
A spokesperson for Zhejiang Lab stated that the institution did not follow through with the purchase but did not answer questions regarding the reasons behind the decision or how they planned to meet the computing requirements for their LLM.
Alibaba’s cloud division, Alibaba Cloud, did not respond to requests for comment.
The U.S. government is currently attempting to tighten regulations to restrict access to high-end chips and AI technology through cloud services.
Chairman of the U.S. House Foreign Affairs Committee, Michael McCaul, told Reuters in a statement, “This loophole is an issue I have been concerned about for years; we should have addressed it sooner.” He referred to foreign entities accessing advanced U.S. computing remotely through the cloud.
The U.S. Congress proposed legislation in April of this year to grant the Department of Commerce the authority to regulate remote access to advanced U.S. technology.
A spokesperson for the Department of Commerce stated that the department is closely collaborating with Congress and seeking additional resources to strengthen existing control measures, limiting Chinese companies from accessing advanced AI chips through remote access to cloud computing.
In January, the department proposed a rule requiring U.S. cloud computing service providers to verify large AI model users when training models capable of conducting “malicious cyber activities” and report to regulatory agencies.
An AWS spokesperson mentioned, “We are aware that the Department of Commerce is considering new regulations, and we comply with all applicable laws of the countries in which we operate.”
Chinese entities are also seeking to use Microsoft’s cloud services.
In April, Sichuan University stated in a bid document that the university is establishing a generative AI platform and purchasing 40 million Microsoft Azure OpenAI tokens for delivery. The university’s May procurement document revealed that Sichuan Xuedong Technology Co., Ltd. provided the required tokens.
Microsoft did not respond to requests for comment. Neither Sichuan University nor Sichuan Xuedong Technology Co., Ltd. responded to requests for comment on the procurement.
In a statement, OpenAI mentioned that it does not support services in China itself, while Azure OpenAI operates under Microsoft’s policies. The company did not comment on this bid.
In a bid document from March, University of Science and Technology of China (USTC) Suzhou Research Institute expressed its desire to rent 500 cloud servers, each powered by 8 Nvidia A100 chips, for unknown purposes.
A procurement document from April indicated that the bid project was operated by Hefei Advanced Computing Center Management Co., Ltd., but the document did not mention the name of the cloud service provider.
In May, USTC was added to the U.S. Entity List for acquiring U.S. quantum computing technology, which could be used for the CCP’s military industry and nuclear plans.
USTC and Hefei Advanced Computing Center did not respond to Reuters’ request for comment.
Amazon not only provides advanced AI chips to Chinese entities but also offers high-end AI models that cannot be obtained through other means, such as Anthropic’s Claude.
In May, Amazon Web Services Greater China’s General Manager Ricky Sung mentioned AWS’s cloud platform at an AI-themed conference in Shanghai.
He said, “Bedrock offers a series of leading large language models, including well-known proprietary models like Anthropic’s Claude3.”
Amazon emphasized in multiple Chinese-language articles targeting AWS developers and customers the opportunity to try “world-class AI models,” mentioning that Chinese game company Source Technology is one of the users of Claude.
According to information from two former high-ranking Amazon executives, the company has a dedicated sales team to provide services to Chinese customers domestically and overseas.
After Reuters contacted Amazon for comment, Amazon updated dozens of posts on its Chinese channels, indicating that some cloud services are not available in certain regions in China.
Amazon also deleted several promotional articles, including those about Source Technology. However, Amazon did not explain the reasons for deleting these posts and did not respond to Reuters’ queries.
An AWS spokesperson stated, “Amazon Bedrock customers must comply with Anthropic’s end-user license agreement, which prohibits accessing Claude data in China via Amazon’s Bedrock API and Anthropic’s API.”
Anthropic stated that they do not support or permit clients or end-users inside China to access Claude.
However, an Anthropic spokesperson mentioned, “If a company based in China has a subsidiary or product division located in a supported region outside China, they can use Claude.”