Beijing Sinnet Technology (光环新网) announced that will offer not more than 2 billion yuan to buy specific operating assets of Amazon Web Services (AWS) in China, TechNode’s Chinese sister site has reported. The assets will include but are not limited to, servers and other IT devices and based on them, Sinnet will provide and operate cloud services based on Amazon cloud technology in China. According to the announcement, the decision was adopted on November 10 and an agreement on the sale of assets in installments was signed with Amazon.

The move was prompted by China’s new cyber security rules which state that all foreign cloud computing providers entering the Chinese market must offer IaaS (Infrastructure as a Service, a form of cloud computing that provides virtualized computing resources over the internet) in partnership with Chinese enterprises. For example, CenturyLink (世纪互联) is cooperating with Microsoft on its cloud services and Oracle has signed an agreement with Tencent. Apple also announced transferring data on local customers on cloud services to a government-owned company in June.

Amazon has authorized Sinnet to operate Amazon’s cloud technologies and related services (AWS) in the Beijing area as early as in the end of July 2016. Regarding the acquisition, Sinnet has stated that the move was carried out in order to comply with the local laws and regulations and further improve the security and service quality of AWS services.

As for AWS, they too have stated that they sold a part of their physical infrastructure assets its Chinese partner Sinnet in order to comply with the law and that the deal did not involve intellectual property transfer.

The new measures for foreign cloud services were announced within the new cybersecurity law by the Chinese Ministry of Industry and Information Technology at the beginning of this year and were put into effect in June. The new law spurred complaints from foreign companies and China watchers. Many have claimed that the law will make it harder for non-Chinese businesses to trade and that the law will be used to push out foreign influences from China.

The law stipulates that data on Chinese citizens can only be kept in China. It also prevents the transfer of any economic, scientific or technological data overseas on either national security or public interest grounds, as defined by the Chinese government.