The company confirmed that it has sold off its Amazon Web Services (AWS) infrastructure to Sinnet, its local technology partner. Thus, to comply with the Chinese law, it sold "certain physical infrastructure assets" to Sinnet, who has been operating the Amazon services since August 2016.
Amazon has made it clear that it is selling only "certain physical assets", and retains the ownership of intellectual property for AWS (Amazon Web Services) worldwide.
Amazon's sale of the hardware used in its Chinese Public Cloud business comes at a time when the country's authorities are imposing new surveillance measures as well as increasing their examination of cross-border data transfers.
AWS has a separate hardware venture in partnership with the Ningxia provincial government in China's northwest.
A Cyber Security Law (CSL) came into effect back in June, requiring certain companies to hold data within China and to undergo on-site security laws.
Beijing Sinnet Technology, Amazon's partner in China, told customers months ago to stop using illegal virtual private networks (VPNs), which can offer secure, private networks for users, but also circumvent internet censorship in the country. Microsoft operates its Azure cloud services unit in partnership with China-based 21Vianet Group.
In recent year, cloud services are becoming a crowded and major competitive domain in China.
China is in the process of strengthening its censorship apparatus - commonly known as the Great Firewall of China - and companies like Amazon appear to be furthering Beijing's ambitions in order to maintain a place in the local market.