Cloud compute: IAPS proposes a four-level policy framework to restrict China's remote renting of U.S. AI compute

IAPS released a report recommending that the U.S. Bureau of Industry and Security (BIS) begin now to develop rules for controlling cloud compute, and proposing a four-level, progressively escalating policy framework. The report states that Chinese model developers and cloud providers remotely rent advanced U.S. compute through cloud service providers outside China; for example, Tencent is reported to have signed a five-year lease for about 100,000 AI chips at an Oracle data center in Southeast Asia, and neither company has confirmed the report. IAPS previously estimated that in 2026 alone, U.S. compute obtained by China through renting would add at least 60% on top of China's own purchased compute. The report recommends adopting at least Level 2, prohibiting entities from countries of concern from renting compute that reaches the threshold for frontier model training or large-scale inference, and conducting enhanced KYC on customers that trigger thresholds such as cluster capacity, cumulative FLOP, data ingress and egress, and spending. Level 3 extends the prohibition to all Chinese customers; the report notes that this would affect civilian research such as healthcare and environmental science and carries an economic containment connotation. Level 4 requires enhanced KYC for all customers; the report holds that the compliance burden and number of false positives make it difficult to implement at this stage.