U.S. lawmakers have tried four times since September last year to close what they called a glaring loophole: China is getting around export bans on the sale of powerful American AI chips by renting them through U.S. cloud services instead.
But the proposals prompted a flurry of activity from more than 100 lobbyists from tech companies and their trade associations trying to weigh in, according to disclosure reports.
The result: All four times, the proposal failed, including just last month.
This reluctance to act reflects the tremendous wealth and power of the tech industry, which is more visible than ever under the Trump administration. And in recent months, the president himself has struck grand deals with Silicon Valley firms that even more closely tie the U.S. economy to tech exports to China, giving taxpayers a direct stake in the profits for the first time.
Longtime Chinese activist Zhou Fengsuo said the U.S. government is letting American companies set the agenda and ignoring how they help Beijing surveil and censor its own people. In 1989, Zhou was a student leader during the Tiananmen protests, where hundreds and possibly thousands were shot and killed by the Chinese government. Zhou was arrested and imprisoned.
“It’s driven by profit, and that’s why these strategic discussions have been silenced or delayed,” Zhou said. “I’m extremely disappointed. … this is a strategic failure by the United States.”
The sale of technology to China is contentious among both Republicans and Democrats, with some arguing for a harder stance.
They are fighting a powerful opponent. An AP analysis of lobbying filings showed U.S. tech and telecom companies, as well as their trade associations, spent hundreds of millions of dollars over the past two decades on lobbyists who listed key bills impacting China-related trade on their quarterly disclosure reports, among other issues.
Tech companies argue that further export restrictions will push China to develop its own domestic supply and strengthen its position in the global race for leadership in artificial intelligence.
“Continuing to ban U.S. computing from commercial markets only benefits foreign competition and undercuts President Trump’s efforts to create jobs, reduce the trade deficit, and grow the economy,” Nvidia said in a statement.
Nvidia has also said that it does not make surveillance systems or software, does not work with police in China and has not designed its H20 AI chip for police surveillance.
“The U.S. government’s investment is a passive ownership, with no board representation, governance or information rights,” Intel said in a statement.
AMD did not respond. The White House and the Commerce and State departments also did not respond to multiple requests for comment.
The AP investigation was based on dozens of open record requests, hundreds of pages of congressional testimony, lobbying disclosures and dozens of interviews with current and former Chinese and American executives, politicians, and former federal officials.
Microsoft denied providing services to Hikvision or partnering with them to provide services to others. OpenAI, which provides its advanced AI models through Microsoft’s Azure cloud platform, said it was subject to Microsoft’s policies and doesn’t support China access to its services. AWS did not respond on the record to questions about the cloud services loophole.
Another enduring loophole is in the restrictions passed after the Tiananmen massacre that didn’t include newer policing technologies, such as security cameras, surveillance drives, or facial recognition systems. In 2006, 2007, 2009, 2011 and 2013, lawmakers introduced bills to try and close the loophole. All failed.
Some politicians on both sides of the aisle blame the failures in part on the money and political influence of tech companies.
“I think we’ve been naive or complicit in the extreme,” said New Jersey GOP Rep. Chris Smith. The U.S., he said, has been “selling and conveying to a malevolent power the ability to destroy us and destroy like-minded Western democracies.”
“What do all those companies all have in common? A big wallet,” said Ron Wyden, a Democratic senator from Oregon. “That is as much as anything is what’s behind the fact we haven’t made as much progress.”
The first round of U.S. prohibitions on Chinese police came after the Tiananmen massacre and applied to “crime control and detection” equipment. They largely stopped U.S. companies from exporting goods to Chinese entities such as restraints, helmets, shields and batons.
But the controls were narrowly confined to largely low-tech goods, leaving out advanced technologies that could be used by police and leading at times to puzzling priorities. U.S. regulators warned sex shops against shipping novelty gold handcuffs to China. At the same time, they broadly permitted Silicon Valley companies to sell routers, servers, software, and more recently, AI-powered surveillance systems to Chinese police.
For example, despite explicit restrictions on fingerprint recognition systems, U.S. companies still were able to sell gear to process, store and compare fingerprints.
Associations representing the tech and telecommunications industries and dozens of companies stepped up their lobbying against Smith’s proposal, disclosures show. The companies argued the computers, servers and routers they sold in China were no different from what they sold to other countries. Industry groups and individual companies also submitted hundreds of comments to regulators, hoping to influence China-related export regulations.
Smith’s bill went nowhere.
“Money talks … When they flood certain members on strategic committees with the money, PAC money and the like, how much easier it is to listen to their narrative that somehow they’re part of the reform?” said Smith.
Jeanette Chu, who then worked at the U.S. Embassy in Beijing and helped give the 2007 webinar, recalled sometimes having concerns.
“I used to ask myself all the time, ‘what is the scary potential of each item?’” said Chu, now a national security and trade expert advising industry.
Despite promises to nail shut Washington’s revolving door, President Barack Obama — like presidents before and after him — gave former industry lobbyists and allies top jobs, including Eric Hirschhorn in the Commerce Department, who represented a trade group that lobbied for tech companies exporting abroad. Hirschhorn wrote that Beijing’s surveillance abilities were nothing compared to the half-million surveillance cameras blanketing London. He was put in charge of the office that administers U.S. export controls.
In an interview, Hirschhorn said export controls alone were an inefficient way to defend human rights.
“You can use a computer to type an order or type a love note,” he told AP. “Are you not going to sell computers to China because one out of every 10,000 of them will be used to store data about a dissident?”
A 2015 State Department draft plan for “smart city” cooperation obtained by AP proposed that China and the U.S. collaborate on joint research, such as on crime and “urban security,” and include private sector players such IBM. Additional documents AP obtained via a Freedom of Information Act request show the U.S. government also sought active counter-terrorism cooperation with China, which gave tech companies a chance for closer contact with Chinese authorities even as Beijing broadly labelled protest or dissent among Uyghurs as terrorism.
Kevin Wolf, then an assistant secretary in charge of export controls at Commerce, said as news about human rights abuses inside China kept surfacing, he worried about U.S. innovations falling into the wrong hands. Wolf said he began drafting a rule to regulate certain surveillance gear sales in early 2016.
“The problem I was struggling with was, mass surveillance can involve everyday ordinary common items: it’s cameras, it’s software, it’s facial recognition stuff and 99 percent of all of those applications are perfectly benign,” said Wolf, now a compliance attorney for industry. “So if you were to say, ban cameras that can read someone’s face, you blow up international trade.”
Wolf’s colleagues told him the draft rule was too complicated, Wolf said, and it foundered.
In 2018, Congress passed the Export Control Reform Act, giving Commerce authority to make export control rules about advanced technologies. In 2019 and 2020, the Trump administration sanctioned some Chinese officials and surveillance firms over atrocities in Xinjiang. But sales of surveillance equipment continued, albeit at a slower pace — though references to working with the Chinese police would disappear from annual Commerce Department reports for U.S. industry.
But once again, Washington lobbyists, lawyers and politicians pushed back. “The result would slow business considerably and likely result in the loss of customers that do not present any national security or human rights concerns,” said a Chamber of Commerce filing from late last year.
The proposed rule, in the end, stalled out.
Haitiwaji was arrested and detained in internment camps in Xinjiang for more than two years, after policing systems based on U.S. technology led Chinese officers to identify her as a “terrorist.” She was under constant, excruciating surveillance, with cameras watching her even in the toilet. After she was released in 2019, she still found herself living in what she calls “an open-air prison,” with every move monitored, until she finally left Xinjiang later that year.
She said U.S. tech companies show little accountability.
“It’s truly disappointing that the United States, one of the most powerful countries in the world, would sell such technology to China despite knowing the potential for serious consequences,” Haitiwaji said.
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Burke reported from San Francisco and Washington, Kang reported from Beijing and Tau reported from Washington. Former AP journalist Trenton Daniel contributed to this report from New York.
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Contact AP’s global investigative team at Investigative@ap.org or https://www.ap.org/tips/
