The U.S. government has formally accused several Chinese artificial intelligence companies of maliciously copying technology from American AI labs, escalating tensions just weeks before a planned meeting between the leaders of the world’s two biggest economies.
According to a statement from U.S. law enforcement and intelligence officials, six Chinese companies, including DeepSeek, Moonshot AI, and Alibaba, engaged in “aggressive, malicious, and targeted distillation activities at an industrial scale.”
Distillation is a technical process where smaller AI models are trained using the outputs of larger, more expensive models to significantly reduce development costs. U.S. officials allege that these Chinese firms tapped variants of American-made models from companies like Anthropic, OpenAI, Alphabet’s Google, and SpaceX to accelerate their own products, “likely with Chinese government awareness.”
Beyond commercial competition, Washington warns that this practice directly enhances China’s military and cyberattack capabilities. The accusation follows recent reports that Chinese military researchers have actively used outputs from leading U.S. AI models to advance domestic defense systems.
The timing of the allegation is highly sensitive. It comes as the U.S. administration prepares for Chinese President Xi Jinping’s visit to the U.S. in late September, and just ahead of a mid-September bilateral dialogue focused on AI safety risks.
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Beijing has firmly rejected the claims. China’s commerce ministry called the allegations baseless, accusing the U.S. of double standards and attempting to suppress legitimate competition. The ministry noted that distillation is a “neutral technical method in nature” and claimed that some U.S. companies have also extensively distilled Chinese models.
“If the U.S. uses cracking down on distillation as a pretext to take actions to contain or suppress Chinese AI companies, China will certainly take resolute measures in response,” the ministry warned. A foreign ministry spokesperson echoed this, urging the U.S. to refrain from “false accusations and smearing China” and to instead strengthen cooperation as major AI powers.
This is not the first time such claims have surfaced, with the U.S. making similar accusations earlier this year. But as the global AI race intensifies, intellectual property has become a new frontline. For Washington and Beijing, the challenge is no longer just about who builds the smartest machine, but who controls the foundational knowledge that feeds it and what happens when the boundaries of innovation are crossed.
Promise Idoko is Junior Reporter working with moderncrux He covers global politics and international affairs. Based in Nigeria,
