TLDR
- US security agencies accused Chinese AI firms of “aggressively” extracting capabilities from American AI models including Claude, GPT, Gemini and Grok
- Named companies include DeepSeek, Alibaba, Moonshot AI and Z.ai, with activities allegedly done with Chinese government awareness
- China’s Commerce Ministry called the accusations “groundless” and warned of “resolute countermeasures” if the US acts against Chinese AI firms
- China said distillation is a “common practice” used worldwide, and suggested American companies may also distill from Chinese models
- The dispute comes ahead of planned Trump-Xi talks later this month where AI governance is expected to be discussed
The FBI, National Security Agency and Cybersecurity and Infrastructure Security Agency issued a joint advisory on Tuesday accusing Chinese AI companies of extracting capabilities from top US AI systems at an “industrial scale.” The targeted models included Anthropic’s Claude, OpenAI’s GPT, Google’s Gemini and xAI’s Grok, with activity traced back to at least late 2024.
BREAKING: China will hold talks with the US but vows to retaliate if Washington targets its AI companies https://t.co/2TjRR7APDH
— Kalshi (@Kalshi) September 10, 2026
The advisory named DeepSeek, Alibaba, Moonshot AI, MiniMax, StepFun and Z.ai as the companies involved. US agencies said the activities were carried out “likely with Chinese government awareness” and involved routing requests through multiple pathways to bypass terms of service.
US agencies also said Chinese firms used bulk purchases of premium subscriptions shared across developer teams to cut costs during these distillation campaigns.
China Pushes Back Hard
China’s Commerce Ministry rejected the claims as “groundless” on Wednesday. It called distillation a standard technique used by AI companies around the world, including those in the US. The ministry said the accusations reflected US “anxiety and double standards.”
“If the US suppresses Chinese AI companies under the pretext of targeting distillation, China will take resolute countermeasures,” the ministry said in a statement.
China’s Foreign Affairs Ministry also called on the US to stop making “unfounded accusations.” Spokesperson Mao Ning said China’s AI progress is the result of its own technological development and called for global cooperation.
The ministry said China is willing to hold “constructive and professional discussions” with the US on AI, based on equality and mutual benefit. But it made clear that any US actions targeting Chinese firms would be met with a response.
AI Dispute Ahead of Trump-Xi Summit
The row is playing out weeks before President Donald Trump is expected to host Chinese leader Xi Jinping at the White House for their second summit this year. AI governance is expected to be a key topic.
US Treasury Secretary Scott Bessent also weighed in Tuesday, telling an event at Southern Methodist University that China “can never get ahead” of the US in AI.
“The Chinese distill our models and they can never get ahead of us,” Bessent said.
The dispute reflects the wider technology competition between the two countries. Chinese models like Moonshot’s Kimi K3 have gained ground in the US market, seen by some as cheaper and more efficient alternatives to American systems.
OpenAI and Anthropic have each previously made similar accusations against Chinese developers. Tuesday’s joint advisory provided more detail than earlier statements, specifying which US systems were targeted and for what purposes.
None of the named Chinese companies responded to requests for comment.
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