The Trump administration is drafting a rule that would block Chinese firms from renting advanced AI compute through data centers in third countries, closing a route around US export controls that does not require moving a single physical chip across a border. [1] The rule would target remote access through Thailand and Singapore specifically, and the Commerce Department could share a draft with trade groups for feedback as early as September, according to a report from The Information cited by Tom's Hardware. [1]

The mechanism the rule targets is not new to this paper's coverage. Two days ago, this paper reported on Taiwan's indictment of nine people, including an Nvidia manager, for smuggling 74 servers loaded with restricted B300 chips into China through Indonesia, Japan and Hong Kong — a physical-shipment scheme built to outrun the same export controls this week's rule is designed to extend into the cloud. That case worked because someone moved hardware across a border in violation of paperwork rules. The loophole this week's rule targets requires no shipment at all: a Chinese company simply logs into a server sitting in Bangkok or Singapore that happens to be equipped with US-origin Nvidia chips, uses the compute remotely, and never touches export-controlled hardware in any legally cognizable sense.

The specific case that appears to be driving the rule became public in July, when White House Office of Science and Technology Policy Director Michael Kratsios posted on X that Moonshot AI, the Chinese company behind the Kimi K3 model, had "distilled" Anthropic's proprietary model to train its own system, using "a sophisticated internal platform to conduct large scale distillation against U.S. models, allowing them to quickly switch between multiple methods of access to avoid detection." [2] Kratsios added that "Moonshot AI has also acquired GB300-equipped servers and has accessed GB300s in Thailand, likely to train its AI models," and drew a distinction between legitimate AI distillation, which he called part of "a thriving competitive ecosystem," and what he termed "large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology," which he called "unacceptable." [2] That post is now more than a month old, and the rule it appears to have prompted has not yet been finalized.

Trade coverage has largely treated the remote-access rule and the administration's chip-export posture as separate stories, but they describe the same government pursuing contradictory tracks simultaneously. In December 2025, Trump approved the sale of Nvidia's H200 processors to China after months of restricting them, and Reuters reported in July that Nvidia had begun shipping the chips. [3] The administration that opened a direct channel for China to legally buy H200s eight months ago is now, in the same month, trying to close an indirect channel that let Chinese firms rent access to even more powerful chips without buying anything. The tightening and the loosening are not contradictory in the narrow legal sense, since a licensed direct sale and an unlicensed remote workaround are different categories of thing, but they add up to a policy that expands China's legal access to US compute while trying to plug a route around export limits at the exact same time.

Even if the rule is finalized, its legal footing is contested before it exists. An attorney at Baker McKenzie told The Information it is "widely acknowledged" that the Commerce Department lacks authority to regulate remote access directly, since the department has traditionally governed the physical transport of goods rather than data-center login sessions. [1] The administration could instead lean on know-your-customer requirements similar to the Foundry Due Diligence Rule the Biden administration introduced in its final days in office — a rule the Trump administration has said it will not enforce. [1] That leaves the draft rule on uncertain ground: a response to a specific, publicly named incident, built on export-control authority a trade lawyer says was never designed for the problem it is now being asked to solve, mirroring the gap that let Taiwan prosecutors charge the B300 smugglers only with forgery, since Taiwan itself has no law directly criminalizing chip exports to China.

-- DAVID CHEN, Beijing