Glaring Loopholes: U.S. Tech Sales Fueling Chinese Surveillance

Thu Oct 30 2025 15:22:55 GMT+0200 (Eastern European Standard Time)

Despite repeated attempts by U.S. lawmakers to close loopholes, American technology, including AI chips and cloud computing services, continues to reach Chinese authorities, facilitating extensive surveillance and control.

U.S. lawmakers have repeatedly failed to close loopholes allowing China to acquire advanced U.S. technology, particularly for surveillance. Despite bipartisan efforts and concerns over national security, lobbying by tech companies has undermined regulatory attempts. Investigations reveal that even sanctioned companies utilize U.S. cloud services to enhance their surveillance capabilities, raising ethical questions about American tech companies' complicity in human rights abuses in China.

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.

As leaders Donald Trump and Xi Jinping prepare for a long-heralded meeting Thursday, the sale of U.S. technology to China is among the thorniest issues the U.S. faces.

But the tough talk about China obscures a deeper story: Even while warning about national security and human rights abuse, the U.S. government across five Republican and Democratic administrations has repeatedly allowed and even actively helped American firms to sell technology to Chinese police, government agencies and surveillance companies, an investigation has found.

And time after time, despite bipartisan attempts, Congress has turned a blind eye to loopholes that allow China to work around its own rules, such as cloud services, third-party resellers, and holes in sanctions passed after the Tiananmen massacre.

For example, despite U.S. export rules around advanced chips, China reportedly bought $20.7 billion worth of chipmaking equipment from U.S. companies in 2024 to bolster its homegrown industry, a congressional report warned this 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 closely tie the U.S. economy to tech exports to China.

Various companies argue that imposing further restrictions on exports could strengthen China's domestic tech development and lead to job losses abroad. Nvidia, for example, claims that banning American tech from markets would only benefit foreign rivals.

Longtime Chinese activist Zhou Fengsuo expressed disappointment over the U.S.'s inaction. Zhou, a leader during the Tiananmen protests, stated the U.S. has been naive in allowing American companies to profit while aiding the Chinese government's surveillance of its citizens.

Despite proposed regulations, significant roadblocks remain. Past administrations have grappled with how to regulate everyday technology that could potentially contribute to surveillance and human rights violations. Efforts to tighten controls on surveillance tech have generally stalled under pressure from lobbying efforts by tech companies.