US accuses Chinese AI firms of 'malicious' copying of AI technology

The U.S. government on Tuesday accused Chinese artificial intelligence companies of maliciously copying technology from American AI firms, potentially complicating relations ahead of a planned meeting between leaders of the world's two biggest economies later this month.

The Chinese companies copied U.S. AI labs’ intellectual property through a technique known as distillation, according to a statement from U.S. law enforcement and intelligence officials. Distillation is the process of training smaller AI models using output from larger, more expensive ones as part of an effort to lower the costs of training a new AI tool.

U.S. officials accused six Chinese companies, including DeepSeek, Moonshot AI and Alibaba 9988.HK, of tapping variants of American-made AI models to train their AI products more quickly. The companies did so "likely with Chinese government awareness," according to the statement from U.S. officials, who added that the Chinese companies targeted AI models from Anthropic, OpenAI, Alphabet's Google GOOGL.O and SpaceX SPCX.O.

"China-based AI companies are engaging in aggressive, malicious and targeted distillation activities at an industrial scale," the officials said.

U.S. officials made the allegations as the administration of President Donald Trump prepares for Chinese President Xi Jinping's visit to the U.S. in late September. The U.S. and China are also gearing up to discuss AI safety risks during a dialogue planned for mid-September, Reuters previously reported.

The Chinese embassy in Washington did not immediately respond to a request for comment about the distillation allegations.

The U.S. made a similar accusation in April ahead of Trump's visit to Beijing.

The Tuesday statement alleged that the distillation not only reduces research and development costs for Chinese AI firms, but also enhances China's “military and cyberattack capabilities that could be used against the U.S. and our allies.”