China warned it would take "all necessary measures" should Washington impose penalties on Chinese artificial intelligence firms over claims that they illicitly employed US models to train their own systems. On Monday, the ministry rejected Washington's accusations that Chinese firms had misappropriated American AI models via a technique known as model distillation, while urging the U.S. to halt what it called a "smear campaign" and threats of sanctions.
"These actions lack factual basis and legal support, and constitute double standards in practice, representing typical acts of AI hegemony," the ministry said in a statement. "China will take all necessary measures to firmly safeguard its legitimate rights and interests against any actions that substantially harm China's interests."
This dispute is the latest flashpoint in a broader technological and economic rivalry between the world's two largest economies. The United States has put in place restrictions on the export of cutting-edge semiconductors and the equipment used to fabricate them, aiming to slow China's advancement in artificial intelligence. Chinese developers, facing hardware barriers, have increasingly turned to model distillation - a cost-effective shortcut for training large language models by using outputs from existing models. US firms argue that unauthorized use of their proprietary outputs crosses into theft, while China insists its AI progress relies on open-source methods and independent innovation.
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Model distillation itself is a well-known technique in the machine learning field, where a smaller "student" model learns from the outputs of a larger "teacher" model. Chinese developers have used this approach to bridge the gap created by US restrictions on advanced chips, allowing them to produce competitive AI systems without the same level of computing power. This tension reflects a deeper struggle over whose standards and practices will shape the global AI landscape, with both sides accusing the other of unfair tactics.
The backdrop to this standoff includes years of escalating measures. The US has blacklisted multiple Chinese tech giants - such as Huawei and several semiconductor firms - limiting their access to American software, hardware, and cloud services.
Last week, Treasury Secretary Scott Bessent announced that the U.S. would scrutinize Chinese AI models for potential intellectual property theft, repeating claims by OpenAI and Anthropic that their Chinese rivals have taken advantage of advanced American systems.
According to the ministry, several Chinese AI models launched around the same time as their American equivalents and have demonstrated strong performance in areas like front-end coding. The ministry's statement called distillation a routine technique in the industry, and it also asserted that several American AI companies have applied distillation to Chinese models - a claim not backed by evidence.
The ongoing standoff is part of a broader trade and technology war between the two superpowers. China has long emphasized independent innovation as a response to US restrictions, and has developed domestic substitutes for American semiconductors and software. The allegations over model distillation represent the latest point of contention, with each side accusing the other of unfair practices.
The ministry urged the United States to bolster dialogue and communication regarding AI, enhance oversight of the technology, and collectively advance its progress.
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