China has accused the United States of pursuing “AI hegemonism” and warned of countermeasures after senior U.S. officials indicated that Chinese AI companies could face investigations, sanctions, and trade restrictions over allegations of using American technology to develop advanced AI models.
In a statement issued on Monday, China’s Commerce Ministry said Washington was threatening Chinese companies without sufficient factual or legal grounds. The ministry rejected allegations that Chinese firms improperly used model distillation, an AI training technique that allows developers to improve smaller models using the outputs of more advanced systems.
The dispute centres on Beijing-based Moonshot AI, whose recently launched Kimi K3 model has attracted attention for its coding capabilities. U.S. officials have questioned whether the company’s rapid progress resulted from copying advanced American AI models rather than independent research.
Last week, White House Office of Science and Technology Policy Director Michael Kratsios alleged that Moonshot AI used Anthropic’s Claude Fable 5 model to develop Kimi K3 through large-scale model distillation. He also claimed the company operated a sophisticated platform to access U.S. AI models while avoiding detection and had acquired servers equipped with Nvidia GB300 chips, including systems located in Thailand, to train its AI models.
Adding to the pressure, U.S. Treasury Secretary Scott Bessent said Chinese companies involved in intellectual property theft could face financial sanctions or be placed on the Commerce Department’s Entity List, which restricts access to U.S. technology. He stressed that while the U.S. supports open-source AI, it would act against what it considers industrial-scale theft of American intellectual property.
Moonshot AI has denied the allegations, stating that Kimi K3’s performance is the result of original architectural innovations rather than model distillation. The company said its advances were achieved through independent research and development.
If placed on the Entity List, Moonshot AI could lose access to critical U.S. semiconductors, software, and cloud services. The measure has previously been used against Chinese technology companies, including Huawei. Earlier this year, Anthropic also said it had identified more than 3.4 million interactions with its Claude models linked to Moonshot through hundreds of fraudulent accounts targeting AI capabilities such as reasoning, coding, data analysis, and computer vision.
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