Scott Bessent warned that the administration may sanction Chinese AI companies if they are found to be stealing American intellectual property.
Treasury Secretary Scott Bessent stated that the administration will investigate whether Chinese artificial intelligence models are stealing intellectual property from American firms. Speaking on Fox Business, Scott Bessent noted that while the government supports open-source models, it does not support "IP theft." He specifically highlighted "distillation"—a process where a smaller model is built using the outputs of a stronger model—as a primary area of concern. The administration is currently monitoring Chinese models, such as Moonshot AI’s Kimi K3, which are gaining popularity and threatening the business models of U.S. leaders like OpenAI and Anthropic. Scott Bessent noted that the government has already identified watermarks from American large language models on many Chinese versions, calling the overlap "unacceptable." If overseas models are proven to be stealing from American companies, the administration has the authority to impose sanctions. These measures follow previous efforts to maintain a technological lead by restricting China’s access to advanced chips and tightening export controls.