Web giant Baidu’s stock is down 12 percent after a report linked its AI platform with the Chinese military, amid separate claims the Middle Kingdon’s armed forces are sidestepping US sanctions to buy Nvidia GPUs.

China is in the tech news for the wrong reasons again, this time based on local media claims that scientists working for its military were using Baidu’s ERNIE chatbot for research purposes.

Hong Kong-based South China Morning Post reported that Chinese scientists had been teaching an experimental military AI how to face “unpredictable human enemies” using chatbots, claiming it was using Baidu’s ERNIE and another chatbot, iFlyTek’s Spark, for this research.

As a result, Baidu’s shares have faced heavy sales pressure, dropping by 12 percent in trading after the weekend based on fears from investors that the US government might impose sanctions against the Chinese internet company in response.

For its part, Baidu told SCMP that it had no knowledge of the research project in question and denied having any links with the academic institution said to be carrying out the research.

This project was detailed in a peer-reviewed paper published in December 2023 in the Chinese academic journal, Command Control & Simulation, SCMP stated. The military AI is described as being able to pull in sensor data and battlefield information reported by frontline units and convert it into descriptive language or images for the chatbots, with the ultimate goal of assisting human decision-making in combat situations.

It is precisely the kind of military AI project that the US government claimed it was trying to suppress when Washington started to tighten up the rules on advanced technology that American companies would be allowed to export to the Middle Kingdom.

In response to queries from The Register, Baidu claimed the scientists involved had simply used its publicly available APIs in their research, the same way any other user would, attempting to distance itself from claims it was linked with the Chinese military.

“ERNIE Bot is available to and used by the general public. The academic paper, published by scholars at a Chinese university, described how the authors built prompts and received responses from LLMs, using the functions available to any user interacting with generative AI tools,” Baidu said in a statement.

“Baidu has not engaged in any business collaboration or provided any tailored service to authors of the academic paper or any institutions with which they are affiliated. The South China Morning Post, the first media outlet that reported on this academic paper, has clarified and corrected their original media report,” the company said.

The company told us it was committed to operating AI related products and businesses in compliance with applicable laws and regulations and best corporate practices.

In related claims, Reuters reckons that Chinese military agencies and state-run artificial intelligence research institutes were able to purchase Nvidia products, including A100 and H100 GPUs over the past year, despite a US export ban of this hardware.

A review of tender documents published in China show that largely unknown China-based suppliers were fulfilling the orders, but it is not clear how these were able to secure supplies of Nvidia products. Neither Nvidia nor any partners approved by the GPU giant were among the suppliers identified in the documents, the newswire stated.

The A100 and H100 are among Nvidia’s most advanced products for accelerating AI processing, and were already banned from being sold to China by President Joe Biden’s administration before it decided to extend the export restrictions last October to cover less powerful hardware such as the A800 and H800.

Organizations said to be in receipt of Nvidia GPUs are several elite universities, plus the Harbin Institute of Technology and the University of Electronic Science and Technology of China – two entities subject to US export restrictions over claims they are linked with the military.

Nvidia told The Register it complies with all applicable export control laws, and requires partners to do the same, with a spokesperson stating: “If we learn that a customer has made an unlawful resale to third parties, we’ll take immediate and appropriate action.”

Late last year, we reported that the Biden administration was willing to compromise with Nvidia over AI accelerator sales to China, but it is possible these latest revelations may instead lead to a stricter crackdown on which organizations the company is allowed to sell kit to. ®

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