The ministry stated that Washington was threatening Chinese enterprises with punitive actions based on allegations of “distillation” used to replicate advanced U.S. AI models, despite what it described as a lack of factual or legal justification.
Model distillation is a common AI training method where developers utilize outputs from a more advanced model to train or enhance another system. U.S. officials claim to differentiate between legitimate distillation practices and large-scale extraction that amounts to intellectual property theft.
‘ALL NECESSARY MEASURES’
A spokesperson from the ministry declared, “For any actions that inflict significant harm on Chinese interests, China will implement all necessary measures to firmly protect its legitimate rights and interests.”
This statement highlights an intensification in tensions surrounding Beijing’s Moonshot AI, whose recently launched Kimi K3 model has garnered attention for its coding abilities, prompting a heated discussion in Washington over whether Chinese developers are imitating U.S. models or rapidly advancing through original research. This controversy mirrors reactions to Chinese startup DeepSeek’s emergence last year.
Last week, White House Office of Science and Technology Policy Director Michael Kratsios stated that the U.S. government possessed information suggesting Moonshot distilled Anthropic’s Claude Fable 5 model to create Kimi K3.
Kratsios accused Moonshot of developing an advanced internal system for large-scale distillation of U.S. models, employing various access methods to evade detection. He also claimed that the company had procured servers with Nvidia’s GB300 chips and accessed these systems in Thailand, likely for model training.
U.S. Treasury Secretary Scott Bessent later cautioned that Chinese firms could face financial sanctions or be placed on the Commerce Department’s Entity List, limiting their access to U.S. technology.
“We advocate for open-source AI and the innovations it spurs. However, open source does not equate to unrestricted access to American IP,” Bessent posted on social media platform X.
“When PRC (Chinese) firms engage in covert, large-scale distillation efforts that cross into IP theft, sanctions and Entity List listings will be considered,” he remarked.
Moonshot has denied allegations that Kimi K3’s success resulted from distillation, asserting to China’s National Business Daily last week that its advancements stemmed from original modifications to its underlying architecture.
Being placed on the Entity List could significantly hinder Moonshot’s access to U.S. semiconductors, software, and cloud services. The U.S. employed the trade blacklist as a crucial strategy against Chinese telecommunications company Huawei starting in 2019.
In February, Anthropic revealed that it had identified over 3.4 million interactions with its Claude models associated with Moonshot, noting that hundreds of fraudulent accounts targeted various capabilities, including reasoning, coding, data analysis, tool use, computer vision, and computer operation.
