White House claim that China is 'engaged in deliberate, industrial-scale campaigns to distil US frontier AI systems' called 'pure slander' by Chinese embassy

It looks like the US government might be getting a little more serious about tackling the growth and development of foreign AI companies, judging by a White House memo seen by the Financial Times. The memo reportedly says:

"The US government has information indicating that foreign entities, principally based in China, are engaged in deliberate, industrial-scale campaigns to distil US frontier AI systems."

The White House will apparently share information about all this with other American AI companies and help them coordinate against these operations.

Distillation, in the context of AI, is the process of training a model based on the outputs of a more advanced one, so it can learn how to replicate it. The Financial Times reported earlier in the year that Anthropic had accused DeepSeek, Moonshot, and MiniMax of "industrial-scale distillation attacks on our models."

Given Anthropic has been in more talks with the White House this month to discuss working together, it's not a big stretch to assume that the company is at least in part responsible for bringing the White House's attention to this distillation issue—or at least to its severity.

It's not only distillation that is an issue, though, apparently, as Michael Kratsios, a government science and tech adviser, reportedly said that these Chinese operations were "leveraging tens of thousands of proxy accounts to evade detection and using jailbreaking techniques to expose proprietary information."

The US is said to be exploring measures to hold foreign actors to account.

In response, the Chinese embassy in Washington has said these accusations are "pure slander" and that "China attaches great importance to the protection of intellectual property rights."

Michael Kratsios has been Trump's top science and tech advisor for some time and also serves on the President's Council of Advisors on Science and Technology (PCAST). This group was recently re-established with a bunch of business-oriented members including Meta's Mark Zuckerberg and AMD's Lisa Su. Assuming it's legit, the memo will certainly have some weight behind it—at least to the President's eyes and ears given its origin.

Such concerns will likely only become more pronounced as things go forward, given DeepSeek 4 just launched and is supposedly offering "cost-effective 1M context length"—ie, cheap AI with better conversational memory.

It's something I'm sure no American AI company is sleeping on, so these companies and the US will be looking to shore up any holes that might allow corporate copying.

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