U.S. Plans to Restrict China’s Access to Cloud-Computing Services

U.S. Plans to Restrict China’s Access to Cloud-Computing Services

News by Nikola DjuricNikola Djuric
Published: July 05, 2023

The United States is reportedly considering new regulations that could limit the use of domestic cloud-computing services by Chinese companies. 

As revealed by The Wall Street Journal on Tuesday, the proposed regulations would likely require cloud-service providers such as Amazon and Microsoft to acquire government approval before offering AI cloud-computing services to China-based customers. 

The new policy aims to extend the reach of export control to a broader spectrum of companies beyond semiconductor and equipment manufacturers, people familiar with the matter said, with Amazon Web Services and Microsoft Azure set to be most impacted due to their significant presence in the Chinese market. 

The proposed limitations are viewed by the newspaper as an attempt to close a significant security loophole, with analysts warning that Chinese AI companies could potentially circumvent existing export control rules by utilizing cloud services. 

The U.S. Commerce Department is expected to officially announce the policy action in the upcoming weeks as part of an expansion of its semiconductor export control policy instituted last October that initially sanctioned as many as 50 Chinese tech giants.

The U.S.-China Trade War Doesn’t Stop 

The latest restrictions would represent yet another move in an ongoing series of reciprocal actions between Washington and Beijing concerning semiconductors and other high-end technologies.  

Yesterday’s report came just a day after China announced export restrictions on metals vital to advanced chip production. 

The escalating tug-of-war over access to cutting-edge technology supply chains intensified ahead of an impending visit by Treasury Secretary Janet Yellen to China scheduled for July 6-9, her first trip to Beijing aimed at defusing tensions between the two countries. 

Since taking office in January 2021, the Biden administration has introduced several new export limits and U.S. investment bans for Chinese companies to protect the country’s economic and security interests. 

Furthermore, European Commissioner Thierry Breton announced at the start of 2023 that the European Union will join the U.S. in blocking the sale of technology to China that would allow it to produce semiconductor chips.  

Several days later, the Biden administration stopped approving licenses for U.S. companies to export most items for manufacturing and production used by Huawei Technologies. 

Responding to the tightening in relations, China expanded its Unreliable Entities List to include American corporations Raytheon and Lockheed Martin last February.

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