Ongoing tech surveillance loophole between the US and China fails to be resolved

U.S. lawmakers have consistently tried to close a technical loophole: China persuading export bans on American AI chips by renting them through U.S. cloud services.

The U.S. government has assisted American firms in selling technology to Chinese police, government agencies, and surveillance companies.

This issue has been ongoing for quite some time, with Congress disregarding loopholes that allow China to circumvent its own rules, such as cloud services. In 2014, China bought $20.7 million worth of chipmaking equipment from U.S. companies to support its industry.

In August 2025, President Donald Trump reached a deal with chipmakers Nvidia and AMD, in which they agreed to export controls on the sale of advanced chips to China in exchange for a 15% revenue cut.

However, national security experts fear that Chinese military and intelligence services could obtain power over these chips. Trump has also struck huge deals with Silicon Valley firms that link the U.S. economy to Chinese tech exports.

Both Democrats and Republicans agree that this issue is controversial and argue for a harder stance. The U.S. government allows American companies to set the agenda and ignore how they can help Beijing monitor its residents.

For the past two decades, U.S. technology companies have spent a significant amount of money on lobbyists who formulate bills that impact China-related trade on their reports.

Export restrictions might make China develop its own domestic supply in the growing race of artificial intelligence. Chinese companies that cannot access AI chips can use AWS or Microsoft Azure to train their AI models or offer surveillance abilities.

There has been a constant failure to close these loopholes. After the Tiananmen Square protests in 1989, the first rounds of U.S. prohibitions on Chinese police came, which barred U.S. companies from exporting goods to Chinese entities.

Attempts to close an additional loophole of restrictions passed after the massacre, which did not include new security technologies, have also failed.

Chris Smith, U.S. representative for New Jersey’s 4th congressional district, introduced the Global Online Freedom Act, which aimed to curtail the involvement of American tech companies in Chinese surveillance. That bill, too, had no effect.

In 2015, attempts were made to get the U.S. and China to collaborate on joint research. The U.S. also sought active counterterrorism cooperation with China, enabling tech companies to be more affiliated with Chinese authorities.

In 2016, former assistant secretary in charge of expert controls at Commerce, Kevin Wolf, began formulating a rule to regulate surveillance gear sales.

Two years later, Congress passed the Export Control Reform Act, which gave Commerce the power to set export control rules about advanced technologies.

In 2023, Gulbahar Haitiwaji, a Uyghur living in France, testified to Congress, wanting the government to “stop American companies from continuing to be complicit in surveilling our people”.

However, she was arrested and detained in internment camps for more than two years, with policing systems based on U.S. technology leading Chinese officers to identify her as a “terrorist” and putting her under extreme surveillance.

Haitiwaji said, “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.”

Prithvi Sudhakar is a fourth-year majoring in cybersecurity. To contact him, email pzs5683@psu.edu.