Amazon Web Services has sold some of its physical infrastructure assets in China to its domestic partner Beijing Sinnet, but says it will continue offering cloud services in the country.
According to press reports, Amazon is only selling "certain physical assets" and the deal will allow Sinnet to better comply with Chinese laws.
"We're excited about the significant business we have in China and its growth potential".
Charlie Dai, a Beijing-based analyst at Forrester Research, feels that the move was necessary for AWS to improve its other business areas in the market.
AWS first launched a China service in 2014, but must operate via local partners to comply with Chinese law, with companies required to store data locally in legislation enacted in June.
Amazon said on its website that its public cloud services in the country are exclusively managed by Sinnet. If the company intends to continue functioning in China, it has to cooperate with local partners, that often have some degree of government oversight, an AWS spokesman explained.
Amazon's cloud business in China already faced tougher rules due to China's tight internet controls.
Sinnet has told customers it has been told by the government to close VPNw which circumvent the Great Firewall.
Microsoft, Apple, Oracle and IBM also face challenges in localising their data storage units in China because of new laws coming into effect.
Big name tech companies in the US often bend over backward to either attempt to penetrate the highly protected Chinese market, or maintain a somewhat established presence.
More recently, telecoms equipment giant Huawei announced plans to take on AWS and Alibaba with its own cloud platform.
According to Synergy, 80% of China cloud services are provided by China companies and about 50% of China based data centres are owned by China-based organisations.