‘Unfounded accusations’: China rejects US claims of 'malicious' AI distillation by its firms

The US has accused China of stealing its artificial intelligence (AI) secrets, including a technique called "distillation", which allows smaller AI systems to be trained using outputs from larger models. The US Treasury secretary warned that if China wins the AI race, it will have a significant impact on global competition for technological supremacy. Meanwhile, the transportation secretary expressed concern about Ford's ties to Chinese firms that he believes are detrimental to the US automotive industry. In response, China has rejected the allegations, calling them "unfounded accusations" and urging the US to strengthen cooperation instead of making unfounded smears.

The US authorities have identified six Chinese entities involved in this alleged theft, including DeepSeek, Moonshot AI, and Alibaba, which they claim are tapping into American AI products to accelerate their own development. The technique of distillation allows these smaller systems to be trained using outputs from larger models, drastically lowering the cost of building new tools.

The issue is expected to be a major topic at a planned meeting between US President Donald Trump and Chinese President Xi Jinping later this month, where AI governance is expected to be discussed. China's foreign ministry spokesperson Mao Ning has said that China's progress in AI is driven by "achieving high-level science and technological self-reliance", and urged the US to earnestly implement agreements reached by leaders of both countries.