U.S. lawmakers have tried 4 instances since September final yr to shut what they known as a obtrusive loophole: China is getting round export bans on the sale of highly effective American AI chips by renting them by means of U.S. cloud companies as an alternative.
However the proposals prompted a flurry of exercise from greater than 100 lobbyists from tech firms and their commerce associations making an attempt to weigh in, in line with disclosure stories.
The end result: All 4 instances, the proposal failed, together with simply final month.
Following a long-heralded assembly between leaders Donald Trump and Xi Jinping, the sale of U.S. know-how to China stays among the many thorniest points the U.S. faces, with billions of {dollars} and the way forward for tech dominance at stake. However the powerful discuss China obscures a deeper story: Even whereas warning about nationwide safety and human rights abuse, the U.S. authorities throughout 5 Republican and Democratic administrations has repeatedly allowed and even actively helped American corporations to promote know-how to Chinese language police, authorities companies, and surveillance firms, an Related Press investigation has discovered.
And time after time, regardless of bipartisan makes an attempt, Congress has turned a blind eye to loopholes that enable China to work round its personal guidelines, equivalent to cloud companies, third-party resellers, and holes in sanctions handed after the Tiananmen bloodbath. For instance, regardless of U.S. export guidelines round superior chips, China purchased $20.7 billion value of chipmaking gear from U.S. firms in 2024 to bolster its homegrown trade, a report from a congressional committee this month warned.
This reluctance to behave displays the great wealth and energy of the tech trade, which is extra seen than ever below the Trump administration. And in latest months, the president himself has struck grand offers with Silicon Valley corporations that much more carefully tie the U.S. financial system to tech exports to China, giving taxpayers a direct stake within the income for the primary time.
In August, Trump introduced a deal with chipmakers Nvidia and AMD to elevate export controls on gross sales of superior chips to China in change for a 15% reduce of the income, regardless of considerations from nationwide safety specialists that such chips will find yourself within the fingers of Chinese language army and intelligence companies. Trump mentioned after Thursday’s assembly with Xi that China would comply with up with Nvidia on the gross sales of chips however didn’t announce any decision. Trump additionally has introduced that the U.S. authorities has taken a ten % stake in Intel value round $11 billion.
Longtime Chinese language activist Zhou Fengsuo mentioned the U.S. authorities is letting American firms set the agenda and ignoring how they assist Beijing surveil and censor its personal folks. In 1989, Zhou was a scholar chief in the course of the Tiananmen protests, the place lots of and presumably hundreds had been shot and killed by the Chinese language authorities. Zhou was arrested and imprisoned.
Now a U.S. citizen, Zhou testified earlier than Congress in 2024, calling on Washington to research the involvement of American tech firms in Chinese language surveillance. An AP investigation in September discovered that American firms to a big diploma designed and constructed China’s surveillance state, enjoying a far larger position in enabling human rights abuses than beforehand recognized.
“It’s pushed by revenue, and that’s why these strategic discussions have been silenced or delayed,” Zhou mentioned. “I’m extraordinarily upset. … this can be a strategic failure by the US.”
Tons of of hundreds of thousands in lobbying
The sale of know-how to China is contentious amongst each Republicans and Democrats, with some arguing for a tougher stance.
They’re combating a strong opponent. An AP evaluation of lobbying filings confirmed U.S. tech and telecom firms, in addition to their commerce associations, spent lots of of hundreds of thousands of {dollars} over the previous 20 years on lobbyists who listed key payments impacting China-related commerce on their quarterly disclosure stories, amongst different points.
Tech firms argue that additional export restrictions will push China to develop its personal home provide and strengthen its place within the world race for management in synthetic intelligence.
“Persevering with to ban U.S. computing from business markets solely advantages international competitors and undercuts President Trump’s efforts to create jobs, cut back the commerce deficit, and develop the financial system,” Nvidia mentioned in an announcement.
Nvidia has additionally mentioned that it doesn’t make surveillance techniques or software program, doesn’t work with police in China, and has not designed its H20 AI chip for police surveillance.
Intel, which partnered with a Chinese language fingerprinting firm as not too long ago as final yr, has mentioned the corporate follows export management insurance policies, and didn’t handle particulars of its cope with the U.S. authorities.
“The U.S. authorities’s funding is a passive possession, with no board illustration, governance or data rights,” Intel mentioned in an announcement.
AMD didn’t reply. The White Home and the Commerce and State departments additionally didn’t reply to a number of requests for remark.
The AP investigation was primarily based on dozens of open file requests, lots of of pages of congressional testimony, lobbying disclosures, and dozens of interviews with present and former Chinese language and American executives, politicians, and former federal officers.
Below the cloud companies loophole, Chinese language firms barred from accessing cutting-edge chips can use Microsoft Azure or Amazon Internet Companies abroad as an alternative to coach their AI fashions. Microsoft and AWS additionally each promote the capability to retailer video surveillance footage on their cloud companies for Chinese language clients.
For instance, SDIC Contech, a state-owned tech firm that works with AI, sought entry to AWS and Microsoft Azure massive knowledge analytics companies, procurement bids present. And Shanghai Qi Zhi Institute, a government-backed analysis institute engaged on delicate applied sciences equivalent to encryption, sought entry to $280,000 value of Azure OpenAI cloud companies from Microsoft.
Even sanctioned Chinese language firms can use AWS and Microsoft Azure to supply surveillance skills to clients abroad. For instance, regardless of U.S. sanctions over human rights abuses in Xinjiang in 2019, Dahua and Hikvision, China’s two largest surveillance firms, use AWS to supply networked surveillance overseas, in line with advertising materials on the corporate web sites. Hikvision markets a video surveillance platform known as “HikCentral” to non-public firms abroad, which could be additionally deployed on Azure, in line with a publish on Hikvision’s web site this yr.
Microsoft denied offering companies to Hikvision or partnering with them to offer companies to others. OpenAI, which supplies its superior AI fashions by means of Microsoft’s Azure cloud platform, mentioned it was topic to Microsoft’s insurance policies and doesn’t help China’s entry to its companies. AWS didn’t reply on the file to questions concerning the cloud companies loophole.
One other enduring loophole is within the restrictions handed after the Tiananmen bloodbath that didn’t embody newer policing applied sciences, equivalent to safety cameras, surveillance drives, or facial recognition techniques. In 2006, 2007, 2009, 2011 and 2013, lawmakers launched payments to try to shut the loophole. All failed.
The U.S. authorities below each Republican and Democratic presidents has made different makes an attempt to manage tech surveillance exports to China. In 2008, the Division of Commerce requested for remark on whether or not to incorporate “biometric units” and “built-in safety techniques” below managed exports, however ran out of time earlier than the following administration got here in. In 2014 and 2015, it tried to tighten controls on surveillance merchandise, however most fell by means of. In 2024, it sought to limit exports of face-recognition techniques and bar many extra army, police, and intelligence finish customers from receiving U.S. items, with no success.
Some politicians on either side of the aisle blame the failures partly on the cash and political affect of tech firms.
“I feel we’ve been naive or complicit within the excessive,” mentioned New Jersey GOP Rep. Chris Smith. The U.S., he mentioned, has been “promoting and conveying to a malevolent energy the power to destroy us and destroy like-minded Western democracies.”
“What do all these firms all have in frequent? A giant pockets,” mentioned Ron Wyden, a Democratic senator from Oregon. “That’s as a lot as something is what’s behind the very fact we haven’t made as a lot progress.”
A historical past of failures to shut loopholes
The primary spherical of U.S. prohibitions on Chinese language police got here after the Tiananmen bloodbath and utilized to “crime management and detection” gear. They largely stopped U.S. firms from exporting items to Chinese language entities equivalent to restraints, helmets, shields and batons.
However the controls had been narrowly confined to largely low-tech items, leaving out superior applied sciences that might be utilized by police and main at instances to puzzling priorities. U.S. regulators warned intercourse retailers in opposition to transport novelty gold handcuffs to China. On the similar time, they broadly permitted Silicon Valley firms to promote routers, servers, software program, and, extra not too long ago, AI-powered surveillance techniques to Chinese language police.
For instance, regardless of express restrictions on fingerprint recognition techniques, U.S. firms nonetheless had been in a position to promote gear to course of, retailer and evaluate fingerprints.
In 2006, with bipartisan help, Smith launched the World On-line Freedom Act to curtail the involvement of American tech firms in Chinese language surveillance. Smith drew parallels with IBM’s sale of computing gear to Nazi Germany, which has been effectively documented by historians. IBM advised AP in a follow-up assertion that the declare that IBM knowingly collaborated with Nazi Germany was “false and has been rejected by credible historians.”
Associations representing the tech and telecommunications industries and dozens of firms stepped up their lobbying in opposition to Smith’s proposal, disclosures present. The businesses argued the computer systems, servers and routers they bought in China had been no completely different from what they bought to different international locations. Business teams and particular person firms additionally submitted lots of of feedback to regulators, hoping to affect China-related export laws.
Smith’s invoice went nowhere.
“Cash talks … After they flood sure members on strategic committees with the cash, PAC cash and the like, how a lot simpler it’s to take heed to their narrative that someway they’re a part of the reform?” mentioned Smith.
Tech gross sales to China continued, typically with direct authorities help. Quite a few archived webpages present that the U.S. Business Service, the export-promoting arm of the Commerce Division, performed a vital position for greater than a decade in connecting U.S. distributors to Chinese language safety companies and key authorities officers, together with by means of its marquee Gold Key Matching service.
In 2004, the Business Service invited American firms promoting safety applied sciences and gear to point out off their merchandise at a Chinese language safety exposition. Two years later, it marketed alternatives for American corporations within the “security and safety” market, adopted by one other publication later describing market alternatives for international safety merchandise equivalent to inspection management and guard communication techniques. Archived webpages additionally present that below each the George W. Bush and Obama administrations, the Business Service steadily promoted U.S. participation in policing commerce exhibits, even those who showcased “organic identification applied sciences” or had been initiated by the Chinese language Communist Occasion.
Below Bush, the Commerce Division in 2007 hosted a webinar about find out how to promote to the Chinese language safety market and promote surveillance instruments to China’s public sector. For simply $35, the federal company may supply attendees “market entry-strategies and long-term market penetration plans,” an archived webpage exhibits.
Jeanette Chu, who then labored on the U.S. Embassy in Beijing and helped give the 2007 webinar, recalled typically having considerations.
“I used to ask myself on a regular basis, ‘what’s the scary potential of every merchandise?’” mentioned Chu, now a nationwide safety and commerce professional advising trade.
Regardless of guarantees to nail shut Washington’s revolving door, President Barack Obama — like presidents earlier than and after him — gave former trade lobbyists and allies prime jobs, together with Eric Hirschhorn within the Commerce Division, who represented a commerce group that lobbied for tech firms exporting overseas. Hirschhorn wrote that Beijing’s surveillance skills had been nothing in comparison with the half-million surveillance cameras blanketing London. He was put in command of the workplace that administers U.S. export controls.
In an interview, Hirschhorn mentioned export controls alone had been an inefficient solution to defend human rights.
“You need to use a pc to kind an order or kind a love observe,” he advised AP. “Are you not going to promote computer systems to China as a result of one out of each 10,000 of them can be used to retailer knowledge a few dissident?”
In 2010, the U.S. State Division’s human rights report warned of “police surveillance, harassment and detentions of activists.” But U.S. Ambassador Jon Huntsman led a mission to advertise American enterprise pursuits within the far-west area of Xinjiang, the place authorities had arrested hundreds of ethnic Uyghurs and reduce web entry after lethal unrest the yr earlier than. Huntsman didn’t reply to requests for remark.
That very same yr, the Business Service spotlighted alternatives for U.S. firms to promote gear on to China’s central authorities “to put in a city-wide infrastructure of safety, surveillance, and alarm techniques” on its web site.
A 2015 State Division draft plan for “sensible metropolis” cooperation obtained by AP proposed that China and the U.S. collaborate on joint analysis, equivalent to on crime and “city safety,” and embody personal sector gamers such IBM. Further paperwork AP obtained through a Freedom of Info Act request present the U.S. authorities additionally sought lively counter-terrorism cooperation with China, which gave tech firms an opportunity for nearer contact with Chinese language authorities at the same time as Beijing broadly labelled protest or dissent amongst Uyghurs as terrorism.
Kevin Wolf, then an assistant secretary in command of export controls at Commerce, mentioned as information about human rights abuses inside China saved surfacing, he frightened about U.S. improvements falling into the improper fingers. Wolf mentioned he started drafting a rule to manage sure surveillance gear gross sales in early 2016.
“The issue I used to be fighting was, mass surveillance can contain on a regular basis extraordinary frequent gadgets: it’s cameras, it’s software program, it’s facial recognition stuff and 99 % of all of these functions are completely benign,” mentioned Wolf, now a compliance lawyer for trade. “So for those who had been to say, ban cameras that may learn somebody’s face, you blow up worldwide commerce.”
Wolf’s colleagues advised him the draft rule was too sophisticated, Wolf mentioned, and it foundered.
In 2018, Congress handed the Export Management Reform Act, giving Commerce authority to make export management guidelines about superior applied sciences. In 2019 and 2020, the Trump administration sanctioned some Chinese language officers and surveillance corporations over atrocities in Xinjiang. However gross sales of surveillance gear continued, albeit at a slower tempo — although references to working with the Chinese language police would disappear from annual Commerce Division stories for U.S. trade.
In 2021, Joe Biden put out an govt order describing Chinese language surveillance tech firms as “uncommon and extraordinary threats” that enabled severe human rights abuses. In his remaining months in workplace, Biden’s administration drew up sprawling guidelines for exporting superior pc chips used to develop AI techniques. Commerce additionally floated an up to date model of Wolf’s draft rule to maintain facial recognition and different mass surveillance instruments from reaching army and intelligence companies and corporations, together with in China.
However as soon as once more, Washington lobbyists, attorneys and politicians pushed again. “The end result would sluggish enterprise significantly and sure end result within the lack of clients that don’t current any nationwide safety or human rights considerations,” mentioned a Chamber of Commerce submitting from late final yr.
The proposed rule, ultimately, stalled out.
Gulbahar Haitiwaji, an ethnic Uyghur dwelling in France, says little has modified since she testified to Congress in 2023 urging the U.S. authorities to “cease American firms from persevering with to be complicit in surveilling our folks”.
Haitiwaji was arrested and detained in internment camps in Xinjiang for greater than two years, after policing techniques primarily based on U.S. know-how led Chinese language officers to establish her as a “terrorist.” She was below fixed, excruciating surveillance, with cameras watching her even in the bathroom. After she was launched in 2019, she nonetheless discovered herself dwelling in what she calls “an open-air jail,” with each transfer monitored, till she lastly left Xinjiang later that yr.
She mentioned U.S. tech firms present little accountability.
“It’s actually disappointing that the US, probably the most highly effective international locations on this planet, would promote such know-how to China regardless of figuring out the potential for severe penalties,” Haitiwaji mentioned.
—By Garance Burke, Dake Kang, and Byron Tau, Related Press
Former AP journalist Trenton Daniel contributed to this report.
