A White House memo accuses Chinese entities of ‘industrial-scale’ AI extraction, vowing to address the threat.
The theft of American artificial intelligence (AI) systems by China-based entities could trigger sweeping restrictions from Washington, with experts saying the move would widen the U.S.–China technology gap by years.
The White House said in an internal memo dated April 23 that foreign entities, principally based in China, are engaged in “deliberate, industrial-scale campaigns to distill U.S. frontier AI systems.”
“These coordinated campaigns systematically extract capabilities from American AI models, exploiting American expertise and innovation,” it said.
Michael Kratsios, director of the White House Office of Science and Technology Policy, wrote that industrial distillation activities—tactics used to produce smaller models from more advanced systems—aim to systematically undermine American research and development.
These activities are unacceptable, and the U.S. government will address this threat, he said.
Kratsios said that the Trump administration would share information on unauthorized, industrial-scale distillation with U.S. AI companies and enable the private sector to better coordinate against such attacks.
He also said Washington will work with private industry to build strong defenses against such activities and explore measures to hold foreign actors accountable.
In response, on April 24, the Chinese Foreign Ministry called the allegations “groundless” and “deliberate attacks on China’s development and progress in the AI industry.”
However, this is not the first time China-based actors have faced such accusations.
On Feb. 23, Claude chatbot maker Anthropic accused three Chinese AI firms—DeepSeek, Moonshot AI, and MiniMax—of carrying out “distillation” attacks to copy its models.
On Jan. 29, ChatGPT creator OpenAI said that DeepSeek might have “inappropriately distilled” its models.
National Security Issue
Sun Kuo-hsiang, a professor of international affairs and business at Taiwan’s Nanhua University, said the warning is significant, reflecting Washington’s decision to treat China-based entities’ theft of AI technology as a national security issue.
“The memo makes clear that the U.S. concern goes beyond individual copyright violations,” Sun told The Epoch Times.
“What it fears is that Chinese technology companies could undermine U.S. AI firms and the global market by building AI capabilities illegally at low cost and massive scale.”
Sun said the memo lays policy groundwork for potential follow-on measures.
“These [measures] include Application Programming Interface (API) controls, cloud computing oversight, corporate sanctions, allied coordination, and security reviews of Chinese AI tools,” Sun said.
“They show that China-linked theft of U.S. AI technology has reached a critical level.”
Daphne Shiow-wen Wang, an assistant research fellow at National Defense and Security Research (INDSR) in Taiwan, said the document corroborates prior accusations against Chinese AI firms while exposing that their advantages, whether in efficiency or cost, are built “entirely on the back of distilled U.S. large-scale models.”
“The White House is sending a direct message to Chinese companies that boast about AI superiority while still relying heavily on U.S. models,” she said.
“It also warns Chinese firms not to push their luck by stealing foreign technology and claiming it as their own,” Wang said.
By Jarvis Lim
