What is distilling? US accuses China of industrial-scale AI system theft
&imwidth=600&imheight=450&format=webp&quality=medium "What is distilling? US accuses China of industrial-scale AI system theft")
US President Donald Trump speaks with Michael Kratsios, director of the White House Office of Science and Technology Policy, during a roundtable on Ratepayer Protection Pledge in the Indian Treaty Room at the Eisenhower Executive Office Building on the White House campus in Washington, DC on March 4, 2026. Photograph: (AFP)
Washington alleges that Chinese entities are using AI “distillation” techniques to extract capabilities from advanced models developed by American firms like OpenAI and Anthropic. Beijing has denied the claims, calling them baseless, as both sides prepare for a high-stakes summit.
US have accused China of intellectual property theft just weeks ahead of US President Donald Trump's visit to Beijing for a historic US-China summit. In a memo released by the White House Office of Science and Technology Policy, it accused China of distilling “US frontier AI systems” on an industrial scale. “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,” read the memo from Michael Kratsios, director of White House Office of Science and Technology Policy, as reported by the Financial Times on Thursday.
What is the distilling of AI?
Knowledge distillation is the process by which a smaller AI model trains itself from a “teacher” AI model, from its logits or probability distribution.
"Leveraging tens of thousands of proxy accounts to evade detection and using jailbreaking techniques to expose proprietary information, these coordinated campaigns systematically extract capabilities from American AI models, exploiting American expertise and innovation," read the memo from Michael Kratsios. The process involves a large scale of individual bot account that appear as normal user tries to reveal information about the “teacher” model which were not supposed to be made public.
Earlier this year, AI firms like Anthropic and OpenAI said they have been dealing with such distillation activity. Anthropic has said that it faced a distillation attempt from Deepsek, Moonshot and MiniMax.
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How did China respond?
The Chinese Embassy in Washington denied such claims, calling them “baseless allegations” It claimed that Beijing "attaches great importance to the protection of intellectual property rights." A spokesperson from China's US embassy said: "China's development is the result of its own dedication and effort as well as international cooperation that delivers mutual benefits." He added that China is not only the world's factory but is also becoming the world's innovation lab.
