China on Monday accused U.S. AI firms of using AI models developed by Chinese companies to improve their own platforms, marking the latest escalation in the technology dispute between the world's two largest economies.
According to the Chinese Ministry of Commerce, "many American artificial intelligence enterprises have distilled Chinese models during their research, development and training processes." The statement came days after the United States accused Chinese companies of copying proprietary American AI technology.
The dispute centers on AI model distillation, a widely used technique in which a smaller model is trained to mimic the performance of a larger, more capable model. The process lowers the computational costs without losing much of the original model's performance, and is a common practice throughout the AI industry.
However, US officials allege that some Chinese firms have used distillation to reproduce advanced US AI systems without authorization. Beijing denied the allegations, claiming they “lacked factual basis and legal grounds, adopt double standards in practice, and constitute typical acts of artificial intelligence hegemonism".
The latest exchange follows reports that a senior White House official accused the Chinese start-up Moonshot AI of illegally copying Anthropic's advanced AI model to create its recently released Kimi K3. Kimi K3's release garnered a lot of attention in the tech world as it competed strongly with top global AI models.
IDC estimates that AI spending, which encompasses AI-powered applications, infrastructure, and related services, will hit over $631 billion globally by 2028, signifying how vital AI is to various industries. Disputes regarding intellectual property, model development, and AI governance are becoming common in the midst of the growing investment.
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China's position is that model distillation is a common practice within the industry and that American AI firms have also benefited from Chinese-generated models.
The ministry added, "China will take all necessary measures to firmly safeguard its legitimate and lawful rights and interests."
The charges follow a warning by US Treasury Secretary Scott Bessent that Washington would be able to impose restrictions on Chinese entities, and reports also suggest the US is considering restrictions on some foreign-developed open-source AI models. The developments highlight the growing importance of AI as a major flash point in the broader technological and geopolitical rivalry between the US and China.