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Reports have surfaced alleging that Chinese tech giant Alibaba has provided technological support and customer data to the People’s Liberation Army (PLA) for operations targeting the United States. These claims, primarily sourced from a White House national security memo, have sparked a vigorous denial from the company and escalated geopolitical tensions over technology and data security.
The core of the controversy stems from a national security memo, reportedly containing declassified “top secret” intelligence, that was shared with the Financial Times. The memo alleges that Alibaba is supplying the PLA with capabilities that Washington views as a direct threat to US national security.
Alibaba Allegedly Aided the Chinese Military
Key claims cited from the intelligence memo include:
Data Access: Alibaba allegedly granted the Chinese government and the PLA access to extensive customer data, including IP addresses, WiFi information, and payment records.
AI Services: The company is accused of supplying the PLA with various AI-related services for their operations.
Cyber Vulnerabilities: The memo also cited intelligence suggesting that Alibaba employees transferred knowledge of “zero-day exploits”—previously unknown software vulnerabilities—to the PLA.
US officials speaking on the matter suggested that these capabilities could give the Chinese military an edge in cyber operations and align with broader concerns in Washington about the reach of Chinese cloud and AI companies.
Alibaba Denies the Allegations
Alibaba Group has vehemently denied the claims, labeling the report and the underlying memo as “completely false” and “complete nonsense.”
A spokesperson for the company stated that “The assertions and innuendos in the article are completely false,” further questioning the motivation behind the anonymous leak, suggesting it was a “malicious PR operation” intended to undermine trade relations.
A spokesperson for the Chinese embassy in Washington also pushed back, calling the allegations a “complete distortion of facts.” They maintained that the Chinese government would “never require companies or individuals to collect or provide data located in foreign countries in violation of local laws.”
These allegations come amid long-standing and growing concerns in the US regarding China’s “military-civil fusion” strategy, which some US lawmakers argue requires Chinese companies to share technology with the military.
The dispute highlights the increasing scrutiny of Chinese cloud and AI firms, with US officials warning about Beijing’s potential ability to access or exploit sensitive American data through these vendors.
US Lawmakers Call for Action Against Alibaba
In the wake of these reports, some US lawmakers have renewed calls for tougher action against Alibaba, including urging the Securities and Exchange Commission to consider delisting the company.
While the Financial Times noted it could not independently verify every detail of the declassified claims, the reports underscore the deep-seated technological competition and geopolitical mistrust between Beijing and Washington.
Chinese Companies Are Legally Required to Share Data With the Government
Notably, Chinese companies are legally required to share data with the Chinese government under certain circumstances, primarily related to national security and intelligence. For instance, the National Intelligence Law of 2017 requires any organization or citizen to “support, assist, and cooperate with the state intelligence work.” This mandate is interpreted to compel companies to provide data when requested for intelligence purposes.
Similarly, the Data Security Law (DSL) of 2021 focuses on securing data across all sectors, classifying data into three tiers: general, important, and core data. It mandates that companies handling “important” and “core” data related to China’s national security must implement strict data protection measures and submit to data security reviews. Crucially, it also prohibits providing data stored in China to foreign judicial or law enforcement agencies without prior government approval.
The term “national security” is broadly defined in China, which gives authorities considerable latitude in demanding access to vast amounts of commercial and personal data.
Chinese Communist Party Promotes Military-Civil Fusion
The Chinese Communist Party (CCP) promotes a strategy of Military-Civil Fusion, which seeks to integrate the private sector’s technological innovation, including data and AI capabilities, with the People’s Liberation Army (PLA). This reinforces the government’s interest in accessing corporate data for strategic purposes.
The Chinese government consistently denies that it forces companies to illegally collect or transfer data in violation of laws. Chinese officials typically state that all data collection and transfer are conducted “in accordance with the law” and emphasize that its laws also include provisions to protect data and user privacy, like the PIPL. They view foreign concerns as unfounded accusations aimed at hindering the growth of Chinese businesses.
US-China Tech War
Notably, there is an apparent tech war going on between the US and China. The United States has imposed strict export controls on advanced AI chips, primarily targeting products from industry leader Nvidia, to prevent them from being used for military and national security purposes in China. This has created a vacuum in the Chinese market and spurred domestic companies to accelerate their own chip development.
Alibaba is among the Chinese companies that have developed AI chips and even secured a major deal with state-owned telecom company China Unicom to supply artificial intelligence (AI) chips for a new data center. The move underscores Beijing’s accelerating drive for technological self-sufficiency and marks a major victory for domestic chipmakers amid escalating geopolitical tensions and US export restrictions.
Chinese Companies Are Pivoting to Domestic Chips
Of the nearly 23,000 domestically made AI chips currently powering the initial phase of the data center, Alibaba’s chip unit, T-Head, supplied approximately 72%. The remaining chips were sourced from other Chinese companies, including MetaX, Biren Tech, and Zhonghao Xinying, with plans to procure additional chips from Tecorigin (Wuxi), Moore Threads, and Enflame.
A key feature of Alibaba’s new chip is that it is being manufactured by a Chinese company. This marks a significant departure from the past, where Alibaba’s earlier AI processors were fabricated by Taiwan Semiconductor Manufacturing Company (TSMC), a firm that the US has since restricted from producing cutting-edge AI chips for China. This shift to domestic manufacturing is in direct alignment with China’s broader national strategy to build a homegrown semiconductor ecosystem and lessen its dependence on foreign technology.
While Nvidia has attempted to navigate the complex regulatory environment with less powerful, China-specific chips, the recent developments suggest that Chinese tech companies are increasingly turning to domestic suppliers. This trend, coupled with ongoing government support and a renewed focus on self-sufficiency, indicates that the battle for AI chip supremacy in China is far from over, with domestic players like Alibaba rapidly gaining ground.