China Warns of Retaliation as the Administration Accuses Chinese AI Firms of Intellectual Property Theft via Distillation
China has warned that it will take all necessary measures to protect its interests if the United States imposes sanctions on Chinese artificial intelligence companies. The Ministry of Commerce criticized the administration's accusations that Chinese firms improperly used American models to train their own systems through a process known as distillation. Distillation involves using the outputs of an advanced model to train a smaller, more efficient model. While U.S. companies like Anthropic and OpenAI argue that Chinese competitors are exploiting their expensive intellectual property, China claims the practice is a standard industry technique. The Chinese ministry also alleged that many American AI companies have distilled Chinese models without providing specific evidence. Treasury Secretary Scott Bessent stated that the U.S. will carefully examine Chinese models for signs of intellectual property theft. In response to the accusations, China described the administration's approach as a "smear campaign" and urged the U.S. to improve dialogue and communication on AI governance.