US accuses Chinese AI firms of ‘malicious’ copying of AI technology

The Chinese companies copied U.S. AI labs’ intellectual property through a technique known as distillation, according to a statement from U.S. law enforcement and intelligence officials. Distillation is the process of training smaller AI models using output from larger, more expensive ones as part of an effort to lower the costs of training a new AI tool.

U.S. officials accused six Chinese companies, including DeepSeek, Moonshot AI and Alibaba 9988.HK, of tapping variants of American-made AI models to train their AI products more quickly. The companies did so "likely with Chinese government awareness," according to the statement from U.S. officials, who added that the Chinese companies targeted AI models from Anthropic, OpenAI, Alphabet's Google GOOGL.O and SpaceX SPCX.O.

"China-based AI companies are engaging in aggressive, malicious and targeted distillation activities at an industrial scale," the officials said.

U.S. officials made the allegations as the administration of President Donald Trump prepares for Chinese President Xi Jinping's visit to the U.S. in late September. The U.S. and China are also gearing up to discuss AI safety risks during a dialogue planned for mid-September, Reuters previously reported.

In response, Chinese foreign ministry spokesperson Mao Ning said on Wednesday that China's AI advances were the result of "achieving high-level science and technological self-reliance."

"We hope the U.S. will earnestly implement the important consensus reached by the leaders of both countries and refrain from making false accusations and smearing China," Mao said.

"As major powers in artificial intelligence, China and the U.S. should strengthen cooperation."

The U.S. made a similar accusation in April ahead of Trump's visit to Beijing.

The Tuesday statement alleged that the distillation not only reduces research and development costs for Chinese AI firms, but also enhances China's “military and cyberattack capabilities that could be used against the U.S. and our allies.”

Reuters reported on July 31 that Chinese military researchers have used outputs from leading U.S. AI models to train domestic Chinese AI systems and advance China's defense capabilities.

(Reporting by Courtney Rozen in Washington and AJ Vicens in Detroit; Additional reporting by Beijing Newsroom; Editing by Rod Nickel, Bill Berkrot and Thomas Derpinghaus)