China accuses US of AI hegemonism and threatens countermeasures over model-theft probes

Reuters reported that China's commerce ministry on Monday accused the United States of AI hegemonism and threatened countermeasures after senior U.S. officials said Chinese AI companies could face investigations, sanctions, and trade restrictions over alleged theft of U.S. technology. The ministry said Washington was threatening Chinese firms over claims they used distillation to copy advanced U.S. AI models, which Beijing called lacking factual or legal grounds. Distillation is a training technique that uses outputs of a stronger model to improve another system; U.S. officials distinguish legitimate use from large-scale extraction they treat as intellectual property theft. A ministry spokesperson said China would take all necessary measures to safeguard its legitimate rights and interests against actions that cause substantive harm. Reuters said the dispute centers on Beijing-based Moonshot AI and its recently released Kimi K3 model. White House Office of Science and Technology Policy Director Michael Kratsios said last week the U.S. government had information indicating Moonshot distilled Anthropic's Claude Fable 5 model to build Kimi K3, and alleged the company ran large-scale distillation via multiple access methods and used Nvidia GB300-equipped servers, including systems accessed in Thailand. Treasury Secretary Scott Bessent warned that Chinese firms could face financial sanctions or Commerce Department Entity List placement, writing that open source is not open season on American IP. Moonshot rejected distillation claims to China's National Business Daily, saying gains came from original architecture changes. Anthropic said in February it had identified more than 3.4 million Claude interactions linked to Moonshot and hundreds of fraudulent accounts targeting capabilities such as reasoning and coding.