Beijing on Wednesday pushed back against U.S. allegations that a Chinese artificial intelligence startup improperly used proprietary American technology, arguing that the country’s AI advancements are the product of homegrown innovation and not theft.
Foreign Ministry spokesperson Lin Jian told reporters that China “opposes politicizing and instrumentalizing trade and tech issues,” after White House officials accused Moonshot AI of distilling technology from Anthropic’s latest model and securing restricted Nvidia chips to train its own system, Kimi K3.
“The development of AI in China comes from greater self-reliance and strength in science and technology, and is fueled by China’s vision of extensive consultation and joint contribution for shared benefit,” Lin said. He warned that politicizing the sector “will only stifle global AI advances.”
The dispute erupted after Michael Kratsios, director of the White House Office of Science and Technology Policy, posted on X that Moonshot AI operated a sophisticated platform to conduct large-scale distillation against U.S. frontier models. Distillation involves using outputs from a stronger model to train a weaker one, a common technique in AI development. Kratsios alleged the company “developed a sophisticated internal platform to conduct large scale distillation against U.S. models, allowing them to quickly switch between multiple methods of access to avoid detection.”
Kratsios also accused Moonshot of obtaining servers equipped with Nvidia’s GB300 system and accessing the same hardware in Thailand, likely to train its models. The allegations come amid a broader U.S. crackdown on Chinese access to advanced semiconductors and AI technology, and follow earlier warnings from Treasury Secretary Scott Bessent that the Trump administration could sanction China over intellectual property theft.
“What we do not support is IP theft,” Bessent told Fox Business. “And if we see, especially that overseas models are stealing from our great companies, we have the ability to sanction them because of this theft.”
In a separate statement to NBC News, Liu Chang, a spokesperson for the Chinese embassy in Washington, dismissed the accusations as an unfounded “smear.” Liu stressed that “China has consistently attached great importance to the protection of intellectual property and is committed to safeguarding, in a fair and impartial manner, the lawful rights and interests of both domestic and foreign IP holders.”
The Kimi K3 model, released by Moonshot AI late last week, quickly rattled the AI industry with its coding performance, which some analysts say rivals or surpasses that of U.S. models like Anthropic’s Claude Fable 5 and OpenAI’s GPT-5.6 Sol. Hamish Low, a research associate at the Institute for AI Policy and Strategy, told The Hill that it is “pretty overwhelming likely they are distilling from leading U.S. models.” He noted that Kimi excels in coding but lags in cybersecurity, a pattern consistent with heavy distillation of coding data from frontier models.
The Trump administration has previously flagged similar concerns. In April, Kratsios said U.S. officials were aware of Chinese entities using thousands of proxy accounts and jailbreaking methods to access proprietary information. The latest allegations add to a growing list of tensions between the two nations over technology leadership, which have also spilled into other domains such as Latin America's recalibration of ties with Beijing amid a new U.S. Monroe Doctrine push.
Kratsios sought to distinguish legitimate AI distillation—which he said “plays a vital role in this open innovation ecosystem”—from what he called “large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research.” The White House has not released specific evidence linking Moonshot to the alleged theft, but the episode underscores how the AI race is becoming a central front in the broader U.S.-China rivalry, even as President Trump has downplayed other Chinese interference claims.
