\n Chinese artificial intelligence firms are committing \u201cindustrial-scale\u201d theft of their American counterparts\u2019 trade secrets to save money and bring the coveted technology to market faster, US federal agencies alleged Tuesday.\n <\/p>\n
\n Major Chinese tech companies are using \u201cdistillation,\u201d which involves training lesser AI models on more advanced ones, to \u201cextract restricted proprietary functionalities and capabilities of U.S. frontier AI models,\u201d the FBI, National Security Agency, and Cybersecurity and Infrastructure Security Agency claimed<\/a> in an advisory.\n <\/p>\n \n Distillation can be a legitimate research technique, but American officials and AI executives have long complained that the volume and targeted manner of Chinese distillation campaigns against US firms amount to stealing. The new advisory puts more evidence behind those accusations and adds to the growing tensions between US and China over AI technology. President Donald Trump has said that AI will be among the discussion topics when he hosts Chinese leader Xi Jinping in Washington, DC, later this month\n <\/p>\n \n \u201cThe sheer scale of these campaigns and their sophistication indicate that distillation is not a supplement to these companies\u2019 AI model development, but the critical core of it,\u201d the new advisory says.\n <\/p>\n \n China-based AI firms \u201cuse a gray market of proxies known as \u2018transfer stations\u2019\u201d to get around US AI firms\u2019 geographic restrictions, safeguards, and terms of use, the US agencies said. They singled out several Chinese tech firms, including DeepSeek and Alibaba Group, as having conducted \u201chigh-volume knowledge distillation campaigns\u201d against US AI firms.\n <\/p>\n \n Treasury Secretary Scott Bessent threatened sanctions against Chinese companies that distill American AI.\n <\/p>\n \n \u201cWhen [People\u2019s Republic of China] firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table,\u201d he wrote on X.\n <\/p>\n \n CNN has requested comment from the Chinese Embassy in Washington on the US agencies\u2019 accusations, as well as from DeepSeek and Alibaba.\n <\/p>\n \n Anthropic alleged that three Chinese AI labs had been behind an \u201cindustrial-scale campaign\u201d to extract capabilities from Anthropic\u2019s AI model, Claude. The Chinese labs \u201cgenerated over 16 million exchanges with Claude through approximately 24,000 fraudulent accounts,\u201d Anthropic claimed<\/a>.\n <\/p>\n \n Chinese open-weight AI models are growing in popularity since they are highly customizable, can operate off the cloud and tend to be less expensive.\n <\/p>\n \n The global race for AI supremacy has put a bull\u2019s-eye on American firms in other ways. Hackers of various stripes are \u201cincreasingly targeting AI assets,\u201d Google\u2019s Threat Intelligence Group said in a report released Tuesday.\n <\/p>\n