The US government alleges that Chinese AI firms engaged in industrial-scale distillation activities to maliciously copy proprietary models.

The U.S. government has accused Chinese artificial intelligence companies of maliciously copying technology from American AI firms, potentially complicating diplomatic relations ahead of a planned meeting between the leaders of the world’s two largest economies later this month.

According to a joint statement from U.S. law enforcement and intelligence officials, the Chinese firms appropriated intellectual property from American AI laboratories through a technique known as distillation. This process involves training smaller AI models using the outputs of larger, more expensive models to reduce the cost of developing new AI tools.

U.S. officials identified six Chinese companies, including DeepSeek, Moonshot AI, and Alibaba, alleging they leveraged variants of American-made AI models to accelerate the training of their own products. The statement noted these actions were “likely with Chinese government awareness,” and specified that the targeted models originated from Anthropic, OpenAI, Alphabet’s Google, and SpaceX.

“China-based AI companies are engaging in aggressive, malicious and targeted distillation activities at an industrial scale,” the officials said.

The allegations emerge as the administration of President Donald Trump prepares for Chinese President Xi Jinping’s visit to the United States in late September. Separately, the United States and China are preparing to discuss AI safety risks during a bilateral dialogue scheduled for mid-September, Reuters previously reported.

The Chinese Embassy in Washington did not immediately respond to a request for comment regarding the distillation claims. The U.S. issued a similar accusation in April ahead of President Trump’s visit to Beijing.

This week’s statement further alleged that distillation not only lowers research and development expenses for Chinese AI firms but also bolsters China’s “military and cyberattack capabilities that could be used against the US and our allies.” On July 31, Reuters reported that Chinese military researchers had utilized outputs from leading U.S. AI models to train domestic AI systems and advance the country’s defense capabilities.