China used OpenAI and Anthropic outputs to train military AI systems: Report

Chinese military researchers have reportedly used outputs from leading artificial intelligence models developed by OpenAI and Anthropic to train domestic AI systems, according to a Reuters review of more than 80 Chinese academic papers and patents. The documents suggest researchers relied on a technique known as model distillation to build smaller AI models for defence and security applications.

The findings come as AI competition between the United States and China intensifies, with both countries increasingly treating advanced AI as a strategic technology.

What is model distillation?

Model distillation is a widely used AI technique in which a smaller model learns from the outputs of a much larger one. Rather than recreating frontier AI from scratch, developers use responses generated by advanced models to build systems that require far less computing power.

According to the Reuters review, researchers linked to the People's Liberation Army (PLA) and other military institutions used this approach to develop AI systems that could run within secure domestic networks. Experts note that distillation itself is a common industry practice. The dispute centres on whether American AI models were used without authorisation to transfer proprietary capabilities.

How were the models reportedly used?

The papers reviewed by Reuters describe AI applications ranging from software analysis and content monitoring to drone navigation and target recognition. One study by researchers from PLA Unit 96941 reportedly used OpenAI's GPT-3.5 to summarise sensitive military software code before training a domestic model capable of operating entirely inside Chinese military systems. Other papers described using Anthropic's Claude 3 Haiku to generate synthetic training data for content moderation, while separate research explored deploying distilled AI models on drones, ships and unmanned submarines.

The report comes ahead of expected US-China discussions on AI governance and follows growing concerns in Washington over the transfer of advanced AI capabilities. Anthropic said it does not provide commercial access to Claude in China or to Beijing-controlled entities and monitors for policy violations. Reuters reported that OpenAI, the Pentagon, China's foreign ministry and the PLA did not respond to requests for comment.

Researchers also caution that distilled models have clear limitations. They can inherit selected capabilities from larger models but cannot fully match the broad intelligence or reasoning abilities of frontier AI systems built with massive computing resources. The findings highlight how AI has become a key area of strategic competition, with nations racing not only to build powerful models but also to adapt them for defence, cybersecurity and national security applications.