The Biden administration is considering implementing a new rule that would block Chinese firms from using cloud-computing services such as those offered by US tech giants Amazon and Microsoft, according to a report Tuesday.

Under the potential rule, US companies could be required to obtain government approval before offering their cloud services that use advanced artificial intelligence computer chips to China-based customers, the Wall Street Journal reported, citing people familiar with the matter.

The proposal would effectively close a loophole that would have allowed Chinese AI firms to use the high-powered computer chips through cloud services, despite export restrictions meant to limit their access, according to the report.

The Commerce Department is set to include the restrictions in the weeks ahead as it expands limits on semiconductor exports to China that were first imposed last October, the report added.

Amazon is the world’s largest cloud provider.
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Details about the policy surfaced as US and Chinese officials engage in a back-and-forth campaign to limit each country’s access to scarce computer chips and other key elements of the tech supply chain.

The Commerce Department declined to comment on the Journal’s report.

Representatives for Amazon and Microsoft could not immediately be reached.

Chinese President Xi Jinping
Chinese President Xi Jinping is pictured.

Treasury Secretary Janet Yellen is embarking on a closely-watched trip to Beijing on Thursday to restart economic talks between the two powers.

“While in Beijing, Secretary Yellen will discuss with [People’s Republic of China] officials the importance for our countries – as the world’s two largest economies – to responsibly manage our relationship, communicate directly about areas of concern, and work together to address global challenges,” the Treasury Department said in a release.

Earlier this week, China said it would curb exports of crucial metals used to produce semiconductors.

Microsoft could not immediately be reached for comment on the policy.

Days earlier, the Journal reported that the Biden administration would block shipments of chips manufactured by Nvidia and other top firms to Chinese customers by as soon as July.

Amazon Web Services and Microsoft’s Azure are the two biggest cloud providers by market share.

Each company currently has customers in China, where they compete with domestic tech giant Alibaba.