China counter-accuses US AI firms of distilling its models, creating ‘hegemonism’

Scott Bessent, United States Secretary of the Treasury.China has accused US AI firms of distilling Chinese models as Washington threatened sanctions against Beijing over similar allegations, according to multiple media reports.Distillation is a process in which a smaller AI model is trained on the responses of a larger, more capable one.

The method is widely used across the industry, but US officials claim China has deployed it at scale to copy proprietary American systems illicitly.The Chinese commerce ministry dismissed US accusations as lacking factual basis, saying they adopted double standards and constituted "artificial intelligence hegemonism”."China will take all necessary measures to firmly safeguard its interests," the ministry added.US Treasury Secretary Scott Bessent last week threatened sanctions against China, as Washington also weighs a ban on foreign-made open-source AI models.The Chinese commerce ministry noted that many American artificial intelligence enterprises have distilled Chinese models during their research, development and training processes.Industry players support open-source AI modelsNvidia, Microsoft and several other technology companies have urged US lawmakers to avoid imposing restrictions on open-source artificial intelligence (AI) models, arguing that such measures could hamper competition and push innovation overseas.Microsoft and defence technology company Palantir Technologies have argued that open-source models, which customers can deploy within their own data centres, could help reduce AI infrastructure costs, reported Reuters.At the same time, concerns over AI safety have intensified following the reported cyber incident involving an OpenAI autonomous agent.US lawmakers have proposed legislation requiring a “kill switch” for AI models, while the administration of President Donald Trump is considering sanctions against Chinese developers of open-source AI models over allegations that they used US proprietary AI technology without authorisation.