China AI export curbs support offshore service model amid U.S. rivalry

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China AI export curbs service model

Highlights

China's draft rules, released October 16, would add 23 AI technologies to its export control list and impose immediate registration for certain transfers.
The proposal allows foreign access to Chinese AI services via websites and cloud platforms but requires government approval for some technology transfers and deployments.
The draft sets thresholds for regulated AI models—at least 2 trillion parameters, 10^26 calculations for training, or top-10 global rankings—and applies registration requirements to overseas deals, including current transactions.

Draft rules reshape overseas AI access

As reported by Reuters, draft rules released on October 16 distinguish between foreign users accessing Chinese AI services and foreign companies obtaining the models, data or expertise needed to operate or reproduce those systems independently. The proposals would broadly allow overseas users to reach Chinese AI through websites and cloud platforms, while requiring government approval for some transfers of underlying technology or for some overseas deployments.

The draft would add 23 AI-related technologies to China's list of technologies banned or restricted from export. They include advanced models, agents that carry out tasks with limited human direction, and technology used to design chips and run large computing facilities. A temporary requirement to register certain transfers takes effect immediately, and the proposals remain open for public comment until November 15.

Alfredo Montufar-Helu, managing director at consultancy Ankura in Beijing, says the approach matches a structure already taking shape in the market, with IP and R&D kept onshore and operations and access sold abroad. China is expected to adopt the proposals by the end of the year and issue implementation guidelines later, according to a source familiar with the discussions.

Operational and deal risks for Chinese AI firms

The distinction in the draft matters for developers that rely on computing facilities abroad, where access to powerful chips can be easier because U.S. export restrictions constrain shipments to China. The rules could affect how leading Chinese AI firms run advanced models on overseas data centres, structure international partnerships and manage foreign investment or ownership involving AI assets.

Researchers at major Chinese AI labs are seeking clarification on whether they can train or run their most advanced models on foreign-owned overseas servers, according to a person briefed on the matter. In a worst-case scenario, developers might have to maintain separate domestic and overseas versions of the same downloadable model.

Companies are also seeking more detail on how authorities will decide which models fall under the rules. The draft sets out three tests, based on the computing work needed to train a model, with a threshold of 10 to the power of 26 calculations, model size of at least 2 trillion parameters, or a place among the world's top 10 in certain assessments of performance, use or efficiency.

The measures could also reach corporate transactions. Registration requirements cover transfers that place Chinese technology under foreign ownership or control, including qualifying deals already underway. Beijing's earlier order for Meta to unwind its more than $2 billion acquisition of Chinese-founded AI startup Manus already shows the risks for foreign buyers, while the draft offers simplified approvals for Chinese companies building and operating their own computing facilities abroad.

Our earlier coverage of U.S.-China AI safety coordination described how policymakers and major developers are discussing tighter safeguards for advanced AI systems and even a dedicated incident channel for high-risk events. We also noted arguments that broader, neutral international forums could help align rules and reduce cross-border misuse risks as AI capabilities accelerate.

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