US-China tensions spill over into AI industry as OpenAI terminates API services to China

OpenAI, the developer of ChatGPT, recently sent an email to Chinese users stating that it will terminate API services to China starting from July 9th. In response to the United States' attempts to hinder China's progress in AI through investment bans, the Chinese government has openly encouraged domestic companies to innovate. Following the announcement, Baidu and Alibaba Cloud have been actively competing in the market.

OpenAI to Terminate API Services for China in July

According to a report by CNA, OpenAI, the developer of ChatGPT, recently sent an email to Chinese users stating that starting from July 9, it will block application programming interface (API) traffic from "unsupported countries and regions," meaning OpenAI will cease to provide API services to China.

Although OpenAI's API is currently available to 161 countries and regions, China is not included. However, many developers access their tools through VPNs and other means.

US Attempts to Hinder AI Progress in China

Last year in August, US President Biden signed an executive order directing relevant agencies to oversee certain investments in the US in semiconductors, microelectronics, quantum computing, and artificial intelligence to prevent US technology from aiding China in developing advanced technology and dominating the global market.

After the preliminary review period ended, the US Treasury Department released proposed regulations and a series of exceptions on June 21. These regulations make US individuals and companies responsible for determining which transactions will be restricted or prohibited. The proposed regulations would ban transactions involving AI used for certain end uses and systems trained with specific computational capabilities, and require reporting of transactions related to the development of AI systems or semiconductor-related transactions that are not prohibited.

The US will solicit public comments on the proposed regulations until August 4 and is expected to implement them by the end of the year.

The aforementioned action by OpenAI is also considered a result of various factors such as legal compliance, data security, and more.

Baidu/Alibaba Cloud Actively Compete in the Market

According to a report by World Journal, the Chinese Ministry of Commerce angrily accused the US of repeatedly emphasizing that it has no intention to "decouple" from China, yet it persistently issued proposed regulations to restrict US companies from investing in China, suppressing the normal development of China's industries.

After OpenAI announced the termination of API services in mainland China, Alibaba Cloud immediately announced that it will provide OpenAI's API users with alternative solutions that offer higher value for money. In addition, Baidu Smart Cloud Qianfan launched a large-scale model universal access program, providing zero-cost usage for newly registered enterprise users to attract users.

Chinese companies like Baidu and Alibaba are actively developing artificial intelligence models that can rival ChatGPT. The Chinese government has also repeatedly encouraged domestic companies to innovate in the field of artificial intelligence, considering this technology crucial for strengthening China's economic and military position.