US lawmakers have urged the Defence Department to add Chinese battery maker CATL to a restricted list due to its alleged ties to the Chinese Communist Party and military. Senator Marco Rubio and Congressman John Moolenaar expressed concerns that CATL’s involvement in US energy infrastructure threatens national security, making the country overly reliant on Chinese technology.
CATL has firmly rejected the allegations, claiming its battery products are passive and do not endanger national security. The company labelled the accusations unfounded and inaccurate, emphasising that the Chinese government did not control them.
The push to restrict CATL comes as Ford Motor and other companies face scrutiny over their partnerships with the Chinese battery giant. Ford is licensing CATL technology for low-cost battery production at a Michigan facility, raising significant concerns among US lawmakers.
The effort to limit China‘s influence in American technology and infrastructure follows a broader move by the US Defence Department to add several Chinese companies to its restricted list. These include companies in industries such as AI and energy, reflecting growing tensions over Chinese involvement in key sectors.
According to a senior government official, China has invested over 43.5 billion yuan ($6.1 billion) in building computing data centres nationwide. The investment, part of the ‘Eastern Data, Western Computing’ initiative, aligns with President Xi Jinping’s vision for a ‘digital China’ and responds to increasing US restrictions on advanced computing products.
The initiative, launched in early 2022, focuses on constructing eight major data centre hubs in western regions. These hubs leverage the West’s energy resources to provide computing power to economic centres along the coast. The strategy underscores China’s determination to enhance its computing capabilities despite external pressures.
Liu Liehong, head of the National Data Bureau, reported that the project has drawn more than 200 billion yuan in total investment and has installed over 1.95 million server racks, with around 63% currently in use. The project demonstrates China‘s commitment to fostering a robust digital infrastructure.
In addition to government spending, Beijing actively seeks private investment to further bolster the initiative. The significant investment highlights China’s ambition to lead the global digital economy while countering challenges posed by US technology restrictions.
According to Lumen Technologies, a Chinese hacking group has exploited a software flaw, compromising several internet companies in the US and abroad. Researchers at Lumen revealed that the hackers targeted a previously unknown vulnerability in Versa Director, a software platform used by Santa Clara-based Versa Networks. The attack began early in June and affected four US firms and one in India.
Versa Networks acknowledged the flaw and urged customers to update their software. Lumen’s researchers believe the hacking campaign was conducted by the Chinese government-backed group, ‘Volt Typhoon.’
Allegedly, the attackers aimed to surveil the customers of the compromised internet companies. Cybersecurity experts warn that such access could enable broad, undetected surveillance.
The US Cybersecurity and Infrastructure Security Agency added the Versa vulnerability to its list of known exploited weaknesses. Concerns over China’s cyber activities have grown, with US officials noting an increase in the intensity of these efforts. In April, the FBI warned that China was developing the capability to disrupt critical infrastructure.
Chinese AI developers are finding innovative ways to circumvent US export controls on advanced chips by leveraging foreign computing resources. The strategy allows them to access high-performance chips, such as Nvidia’s A100 and H100, which are restricted under US regulations. As the demand for AI capabilities grows, these developers employ various methods to remain competitive in the tech landscape.
One key approach is using cloud computing services from major American providers like Amazon Web Services (AWS) and Microsoft Azure. This method is legally permissible under current US regulations, which focus on directly exporting physical technologies rather than cloud-based computing power.
Additionally, Chinese AI developers are collaborating with brokers and using identity-mapping techniques from the cryptocurrency industry. These brokers help facilitate access to AI servers in countries like Australia, allowing companies to deploy advanced chips without importing them directly into China. For example, entrepreneur Derek Aw has arranged for over 300 servers equipped with Nvidia’s H100 chips to be housed in Australia and utilised by firms in Beijing.
Despite the challenges posed by export controls, many Chinese companies have stockpiled chips and invested in domestic semiconductor manufacturing. While local suppliers often need to catch up to US technologies, this dual approach helps maintain momentum in AI research and development. Legal experts note that as long as technology is not used for military purposes, cloud services to access advanced computing power remain unregulated, highlighting the complexities of enforcing technology trade restrictions.
The ongoing situation illustrates the US government’s challenges in enforcing its trade policies. As Chinese companies continue to adapt and innovate, the US may need to tighten regulations to address emerging loopholes.
China’s ambition to lead in humanoid robot development was evident at the recent World Robot Conference in Beijing, where companies showcased innovative and cost-effective solutions. Wisson Technology, known for its flexible robotic arms powered by pneumatic artificial muscles, showed its ability to produce these at a fraction of the cost of traditional robotic arms, signalling a shift in production methods.
Despite the advancements, challenges remain in the supply chain. Yi Gang, founder of Ti5 Robot, pointed out product reliability issues, particularly in motion-control components like harmonic gears. These concerns limit production volumes, underscoring the need for further improvements in the industry.
China’s efforts in robotics are bolstered by President Xi Jinping’s push for technological advancement, with smart driving advancements contributing to progress in the field. The country’s robotics market, the largest globally, is reshaping traditional industries, from manufacturing to education and healthcare. Speaking at the close of the conference, Premier Li Qiang emphasised the need to stabilise the supply chain and expand robot usage across various sectors. Describing robots as a feature of technological innovation, he underscored their importance in China’s high-end manufacturing goals.
Despite its declining quarterly revenue, Baidu, in its statement, assured people that its leading position in AI in China will position it to navigate the increasingly competitive market. The comment comes from an AI price war in China, where companies are increasingly lowering the prices of large language models powering generative AI technologies.
Ernie, Baidu’s large language model, has been integrated into various applications to enhance user experience and is touted to be a competitor to OpenAI’s GPT. According to Baidu CEO Robin Li, the company’s Ernie platform processes over 600 million AI requests daily, the highest volume among Chinese firms. Li added, ‘Competition will be fierce over the next 2 to 3 years.’
As China’s dominant search engine, most revenue comes from ads. However, the company has strategically pivoted to AI by investing significantly in the sector to position itself as an ‘AI company’. The company has expanded its AI offerings by introducing a paid version of its Ernie-powered chatbot for public use and offering API services to developers via cloud computing. “Our advertising business is currently facing pressure caused by a combination of external factors and our proactive efforts to accelerate the AI-driven renovation of search,” Li said during a conference call with analysts.
Why does this matter?
The dipped revenue indicates Baidu’s difficulty in transitioning from search ads to AI as China faces an economic slump. Baidu’s news of prioritising AI as its search revenue stalls can be located as a part of the broader tech trend where, with the AI gold rush, companies increasingly look to increase their AI portfolios to ensure they retain their competitiveness and don’t fall behind in the AI market that is expected to accrue massive business value.
Chinese entities linked to the state are turning to cloud services from Amazon and its rivals to access advanced US chips and AI capabilities that are otherwise restricted. Over the past year, at least 11 Chinese organisations have sought cloud services to bypass US export restrictions on high-end AI chips, according to tender documents.
Amazon Web Services (AWS) was specifically mentioned as a provider in several cases, though Chinese intermediaries were used to access the services. US regulations focus on the export or transfer of physical technology, leaving a loophole for cloud-based access. This has allowed US companies to profit from China’s growing demand for computing power.
Efforts to close this loophole are ongoing. US legislators have expressed concerns, and the Commerce Department is considering new rules to tighten control over remote access to advanced technology. AWS has stated that it complies with all applicable laws, including trade regulations in the countries where it operates.
Microsoft’s cloud services have also been sought by Chinese universities for AI projects. These activities highlight the increasing demand for US technology in China and the challenges in enforcing export controls. Both Amazon and Microsoft declined to comment on specific deals, but the implications for US-China tech relations are significant.
Several Chinese state-linked entities are turning to cloud services to access restricted US technology, according to recent public tender documents. By using cloud platforms like Amazon Web Services (AWS), these entities gain access to advanced chips and AI capabilities that would otherwise be unavailable due to US trade restrictions.
Entities like Zhejiang Lab and the National Center of Technology Innovation for EDA have expressed interest in using AWS for AI development. Others, such as Shenzhen University and Fujian Chuanzheng Communications College, have reportedly utilised Nvidia chips through cloud services, circumventing US export bans.
Microsoft’s Azure platform has also attracted attention from Chinese institutions like Chongqing Changan Automobile Co and Sichuan University, which are exploring generative AI technology. The ability to integrate these advanced tools into their systems is seen as critical for maintaining competitiveness.
Concerns remain over the use of US technology by Chinese organisations, especially those with potential military applications. Universities such as Southern University of Science and Technology and Tsinghua University have pursued cloud access to Nvidia chips, despite US efforts to restrict such technology transfers.
Visitors to the Great Wall of China can now enjoy the convenience of having food and drinks delivered by drones. Chinese delivery company Meituan has launched the first drone service in Beijing, designed to serve tourists exploring a remote section of the Great Wall. The drones, which can carry up to 2.3 kilograms, cover the distance from a nearby hotel rooftop to a watchtower in just five minutes, significantly faster than the 50 minutes it would take on foot.
The service operates between 10 a.m. and 4 p.m., with a nominal delivery fee of just 4 yuan. After completing deliveries, drones also assist in carrying waste to recycling stations. While the drones are autonomous, they still require human assistance to load packages at the hotel and receive them at the watchtower, where app users collect their orders.
Meituan’s expansion into drone delivery is part of a broader trend across China, where drones are increasingly used for logistics in both urban and rural areas. The company first tested drone deliveries in Shenzhen in 2021 and now operates over 30 routes across multiple cities, including Shanghai. These drones navigate urban spaces by following set paths and delivering packages to designated kiosks.
The rise in drone delivery services aligns with the Chinese government’s push to develop the ‘low-altitude economy,’ a new growth sector focusing on businesses that utilise civil aerial vehicles. This initiative is seen as a key driver for the country’s economic future, reflecting the growing importance of innovative technology in everyday life.
As a part of its ongoing investigation, the European Commission has imposed a final duty of 36.3% on imported electric vehicles manufactured in China. Some specified companies who have cooperated with the EU in the process of the investigation will, however, be subjected to a reduced tariff rate of 21.3%.
The EU launched the investigation in October 2023 against the backdrop of a witnessed spike in low-cost electric vehicle export from China to the EU and is expected to conclude by November this year. It seeks to examine whether Chinese clean tech products are dumping subsidised goods in the EU market and if Chinese-owned entities operating within the EU avail of any other unfair subsidy advantages.
The final duty needs further approval from EU’s 27 countries and will take effect unless a majority of 15 countries representing 65% of the EU population vote against it. These duties are expected to be confirmed by 30 October and typically last for five years. Meanwhile, talks between Europe and China could also lead to a compromise to mitigate or avoid the tariffs altogether.
