China Rejects US Claims of "Malicious" AI Model Distillation

China has rejected US claims that Chinese artificial intelligence developers are engaged in “aggressive, malicious” industrial-scale efforts to extract capabilities from advanced American AI systems.

China has rejected US allegations that its AI companies are using industrial-scale knowledge distillation to extract capabilities from American AI models.

The FBI, National Security Agency and Cybersecurity and Infrastructure Security Agency issued a joint cybersecurity advisory accusing Chinese AI developers of using a technique known as knowledge distillation to extract capabilities from leading US models, including Anthropic's Claude, OpenAI's GPT, Google's Gemini and xAI's Grok.

The advisory named DeepSeek, Alibaba, Moonshot AI, MiniMax, StepFun and Z.AI and said the activity had occurred since at least late 2024, “likely with Chinese government awareness.”

The agencies said the companies had extracted billions of tokens through millions of exchanges and used various pathways to obtain access to US AI systems.

In Beijing, China's Commerce Ministry dismissed the US claims as groundless and accused Washington of pursuing a “monopoly of the AI industry.”

“If the US suppresses Chinese AI companies under the pretext of targeting distillation, China will take resolute countermeasures,” the ministry said, according to the Associated Press.

China's Commerce Ministry also said distillation is a common practice used by AI companies worldwide, including those in the United States, and accused Washington of applying double standards.

The Chinese Foreign Ministry separately urged the United States to refrain from making what it called unfounded accusations against China.

Spokesperson Mao Ning said China and the United States are both major AI powers and should strengthen cooperation.

The dispute comes amid growing competition between Washington and Beijing over artificial intelligence, including concerns about technology restrictions, access to advanced computing and the development of increasingly capable AI models.