The United States Congress is advancing legislation to close the so-called “cloud compute loophole,” but experts warn that the move could inadvertently accelerate China’s global technological influence. The proposed Remote Access Security Act (RASA), currently moving through both the House and the Senate, seeks to authorize the US government to regulate not only the export of artificial intelligence capabilities but also their use by foreign entities via cloud services.
The legislation is driven by concerns that Chinese companies are utilizing cloud computing infrastructure, particularly in Singapore and other Southeast Asian nations, to bypass US export bans on advanced AI chips. By renting compute power from American cloud providers rather than purchasing the restricted hardware directly, Chinese firms have maintained access to the processing capabilities necessary for training frontier AI models. RASA aims to mandate that US cloud companies determine whether their data centers are being accessed by entities from adversarial nations for AI training.
However, according to an analysis published in The Diplomat by Charles Mok, a research scholar at Stanford University’s Global Digital Policy Incubator, this heavy-handed approach could have devastating unintended consequences for American technological leadership. Mok argues that imposing global “know your customer” (KYC) requirements on cloud operators could drive legitimate users and friendly nations away from US providers and directly into the arms of Chinese competitors.
The Risk of Alienating Global Cloud Customers
For years, US cloud and facility operators, including Amazon Web Services, Microsoft Azure, and Google Cloud, have dominated the global market for commercial public cloud services. This dominance has been a cornerstone of American technological influence, embedding US infrastructure into the digital economies of nations worldwide. RASA threatens to disrupt this dynamic by forcing these providers to act as global enforcers of US export controls.
Mok warns that if the United States begins requiring cloud operators around the world to demand that their customers “prove their innocence,” the resulting uncertainty and hostility will prompt legitimate users to reduce their dependence on US firms. “Instead, these third parties would build their own AI ecosystem around Chinese technologies or turn toward Chinese cloud providers, such as Huawei Cloud, AliCloud, and others—all eagerly waiting for this windfall to happen,” Mok writes.
This scenario directly contradicts the stated goals of the US administration. Executive Order 14320, which promotes the export of the American AI technology stack, aims to solidify US leadership by ensuring global reliance on American digital infrastructure. By imposing onerous compliance burdens on foreign users of US cloud services, RASA could inadvertently undermine this objective, creating a vacuum that Chinese providers are well-positioned to fill.
Lessons from the Hardware Export Bans
The potential backfire of RASA mirrors the complex outcomes of previous US efforts to restrict hardware exports to China. In April 2025, the US tightened export controls on Nvidia’s H20 chips, which had been specifically designed to comply with earlier restrictions. While the administration later reversed course and approved the exports under a licensing regime, the damage to US market share had already been done.
Rather than embracing the return of American chips, Chinese authorities delayed, discouraged, or blocked domestic firms from purchasing Nvidia products. This strategy was designed to groom the domestic market for budding Chinese suppliers such as Huawei and Cambricon. The result was a catastrophic loss of market share for US firms; in a May 2026 interview, Nvidia founder Jensen Huang lamented that his company’s share of the Chinese market had plunged to “zero.”
This dynamic illustrates a fundamental reality of the US-China technology competition: Beijing’s ultimate goal is not to maintain access to American technology but to develop indigenous alternatives that can displace US leaders globally. As Mok notes, “Dependence on American technology is the last thing China wants anyway. At the end of the day, they do not want any US technology. They want to develop their own indigenous and global firms.”
The rapid maturation of China’s domestic hardware ecosystem is already evident. Cambricon recently became China’s first trillion-yuan AI chip stock, reflecting immense investor confidence in the company’s ability to capture domestic market share previously held by foreign competitors. Similarly, Huawei’s unveiling of the Atlas 950 SuperPod demonstrates the increasing sophistication of China’s AI infrastructure capabilities.
The Global Competition for AI Infrastructure
The debate over RASA highlights the delicate balance the US must strike between protecting national security and maintaining global technological leadership. While there are strong arguments for preventing adversaries from accessing advanced AI capabilities for military applications, applying broad restrictions to commercial cloud services risks alienating the global market.
If RASA passes and is strictly enforced, it could accelerate the bifurcation of the global internet into distinct US and Chinese spheres of influence. Countries in the Global South, many of which are already deeply integrated with China’s digital infrastructure through the Belt and Road Initiative, may increasingly opt for Chinese cloud providers that do not impose stringent US regulatory requirements.
This shift would not only cost US companies billions in revenue but also diminish Washington’s ability to set global standards for AI development and data privacy. As the competition for AI supremacy intensifies, the US must carefully consider whether policies designed to slow down its adversaries might inadvertently accelerate their rise by handing them uncontested access to emerging markets.
“Beware thinking too much about slowing down our adversaries from overtaking us, lest we take steps that will instead slow ourselves down,” Mok concludes. In the race for global AI dominance, maintaining an open market for US firms to compete freely may ultimately be the most effective strategy for preserving American leadership.