Washington accuses Chinese AI firms of ‘systematic’ theft

Washington accused top Chinese artificial intelligence labs including DeepSeek and Moonshot AI of systematically stealing the capabilities of American models on Tuesday as the two countries race for tech supremacy.

Chinese startup DeepSeek’s AI assistant. File photo: Kelly Ho/HKFP.

The advisory from the US cyber defense agency comes ahead of an expected meeting this month between President Donald Trump and his Chinese counterpart Xi Jinping at the White House, where AI could be an important discussion topic.

It follows several previous accusations of Chinese AI theft through a process known as distillation, levelled by the US government and American AI companies.

“China-based artificial intelligence (AI) companies are conducting systematic extraction of proprietary functionalities and capabilities of US AI companies’ models,” Tuesday’s advisory read.

They are doing so “through industrial-scale knowledge distillation campaigns that form the core — not merely a supplement — of their AI development strategy”, it said.

OpenAI, the creator of ChatGPT. Photo: Levart_Photographer/Unsplash.

Distillation is where an AI model is trained to mimic the output of a larger, more capable one.

The method is widely used across the industry, but Washington says Chinese firms have deployed it at scale to illicitly copy American systems.

Chinese companies that adopt this strategy “see significantly shorter AI development timelines and reduced financial expenditures in training a frontier model”, the advisory said.

It detailed how DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun, and Z.AI allegedly used millions of exchanges and requests to steal the capabilities of US models from the likes of OpenAI, Anthropic, Google and xAI.

These actions, taken “likely with Chinese government awareness”, have taken place since at least late 2024, it said.

AFP contacted the Chinese companies apart from StepFun which was not immediately reachable. Moonshot AI declined to comment.

‘Smearing China’

Trump is under pressure to respond to the increasing success of Chinese AI models that many companies prefer to the more powerful, but pricier, US versions from Anthropic or OpenAI.

In July, dozens of startups wrote a letter to the Trump administration urging it to think twice against any outright ban or strict curbs on foreign-made AI models, saying this should only be considered for government use of the technology.

That month, Beijing also turned the tables by accusing US AI of using Chinese examples to train their models.

The Ministry of Foreign Affairs in Beijing, China. Photo: Wikicommons.

Asked about the accusations at a regular briefing Wednesday, Chinese foreign ministry spokeswoman Mao Ning said she had not seen the specific US report but the country should “refrain from making unfounded accusations against and smearing China”.

“The development of artificial intelligence in China is the result of achieving high-level self-reliance and strength in science and technology,” she said.

“Both China and the United States are major countries in the field of AI. We should strengthen cooperation.”