- US State Department says China is stealing US intellectual property
- US AI models are being 'distilled' to produce cheaper models for China
- Deepseek, Moonshot AI and MiniMax accused of alleged theft
The US State Department has accused Chinese AI companies of stealing the intellectual property of US artificial intelligence models.
The White House recently accused China of ‘systematically’ distilling and extracting US AI models, but is now directly accusing Chinese companies.
A new cable issued a global warning and directly accused Chinese AI companies such as Deepseek, Moonshot AI and MiniMax of distilling US AI models to produce their own models.
Stealing intellectual property
The State Department says the cable was issued to “warn of the risks of utilizing AI models distilled from U.S. proprietary AI models, and lay the groundwork for potential follow-up and outreach by the U.S. government.”
AI models require large amounts of high quality data to train, but it is possible to ‘distill’ a smaller model from a large one. The smaller model is trained using the outputs of the larger model, significantly reducing the cost of its production.
The Chinese Embassy in Washington previously denied the accusations, stating that Beijing “attaches great importance to the protection of intellectual property rights.”
Chinese companies have released a number of powerful, low-cost AI models that have disrupted the AI market - most notably the release of Deepseek’s DeepSeek-V3 and DeepSeek-R1 models that rivalled their ChatGPT counterparts but with a significant reduction in cost and computing power.
Chinese AI companies Moonshot AI and MiniMax were also mentioned in the cable, which requests diplomatic staff around the world raise “concerns over adversaries’ extraction and distillation of U.S. A.I. models,” with their foreign counterparts.
US President Donald Trump is due to meet Chinese President Xi Jinping in May 2026, and the latest accusations will likely raise tensions between the two leaders.
