On Monday, July 27, 2026, Beijing accused American artificial intelligence companies of using Chinese examples to train their AI models. This statement came shortly after Washington threatened sanctions on Chinese firms for allegedly stealing American technology.

The Chinese commerce ministry stated, "It is understood that many American artificial intelligence enterprises have distilled Chinese models during their research, development and training processes." Distillation refers to training an AI model to mimic a larger, more capable model, a common industry practice. However, US officials contend that Chinese firms have used this method extensively to illicitly copy proprietary American AI systems.

The ministry criticized the US accusations as lacking "factual basis and legal grounds," accusing Washington of double standards and "typical acts of artificial intelligence hegemonism." It also affirmed that "China will take all necessary measures to firmly safeguard its legitimate and lawful rights and interests."

Last week, a senior White House official accused the Chinese startup Moonshot AI of covertly copying Anthropic's most advanced AI model to develop its Kimi K3 system. The release of Moonshot's latest model surprised the US tech industry and reignited discussions about the AI competition between the two countries.

Treasury Secretary Scott Bessent warned of potential sanctions against China and indicated that the US is considering banning or restricting foreign-made open-source AI models, which are often created through distillation.

This exchange highlights escalating tensions between the US and China in the AI sector, with both sides accusing each other of unfair practices.

Sources