Aqib Zakaria and Quinn Ennis published their investigation on ChinaTalk on 11 November. They wrote that companies such as Mercor, Surge AI, AfterQuery and Turing are selling roughly half a billion dollars’ worth of data to Chinese labs, and that part of it takes the form of reinforcement learning environments.

The Decoder’s headline on its summary presents the whole sum as environments, although ChinaTalk’s text says environments are only part of the trade.

The same environments as US labs

A reinforcement learning environment is a simulated workplace in which a model attempts a task repeatedly. Grading criteria decide whether the result is rewarded. In ChinaTalk’s example, a vendor builds a PowerPoint clone and hires experts to write criteria for a good slide deck. In a coding environment, the model receives code with an unfixed bug, and the environment checks whether the model finds the fix.

Chinese labs have been reported to buy exactly the same products as Anthropic and OpenAI, the authors wrote, so that they get data proven to work and do not waste compute. According to one study, rollouts take up more than 70 per cent of reinforcement learning time. The savings vary widely from one environment to another, the authors said. Rollouts are memory-bound inference, and Chinese chips are especially short of fast HBM memory.

US labs may pay four or five times the price for exclusivity. Even so, the experience a vendor gains benefits its next customers, the authors wrote.

Nine vendors, partly from anonymous sources

The authors found at least nine vendors: those above plus Abundant, Pareto, DeccanAI, Eaglepoint and Invisible. Named buyers include Alibaba, Tencent, ByteDance, Z.ai and Moonshot AI. The authors do not publish their sources. The evidence rests partly on anonymous sources and on contractors’ LinkedIn posts and CVs. Forbes reported that AfterQuery earns half of its $100 million in annual recurring revenue from China. ChinaTalk, however, could not verify the company’s sales.

The environments are largely outside export controls unless the buyer is on the US Commerce Department’s Entity List, the authors wrote. Buyers can easily sidestep the restriction through a subsidiary outside China that is not on the list. Deals also take place outside China; ByteDance, for example, buys data in Singapore and San Jose. Such deals fall outside China’s procurement registers and most US rules.

The risk lies in cyber and bio

The authors said coding environments can also improve cyber-offensive capabilities, and biology environments can advance gene synthesis and the design of biological weapons. They propose that the Commerce Department’s BIS restrict exports of dual-use environments. Their top priority is for the government to get a better picture of the trade.

The authors do not regard the situation as a catastrophe. Industry sources say Chinese buyers are almost exclusively chasing better benchmark scores, although this is disputed in the industry. Many commercially important benchmarks measure coding and office tasks, so the authors consider the trade likely harmless for now. Buyers also lag by at least a few months, because they get an environment only after a US lab has bought or built it. Few dangerous environments exist, and leading US labs increasingly build environments for sensitive fields themselves.