China’s Commerce Ministry has accused the United States of pursuing “AI hegemonism” and threatened countermeasures after a senior US official said Chinese AI companies could face investigations, sanctions, and trade restrictions over the alleged theft of US technology.

The ministry said Washington had been threatening Chinese AI companies with punitive measures based on allegations that they used “distillation” to copy advanced US AI models.

Responding to the proposed actions, a spokesperson for China’s Commerce Ministry said, “For any action that causes substantive harm to Chinese interests, China will take all necessary measures to firmly safeguard its legitimate rights and interests.”

The ministry’s remarks came after White House Office of Science and Technology Policy Director Michael Kratsios said last week that the US government had information indicating that Moonshot AI had distilled Anthropic’s Claude Fable 5 model to develop its Kimi K3 AI model.

Kratsios alleged that Moonshot had built a sophisticated internal platform to carry out large-scale distillation of US AI models and switched between multiple methods of access to avoid detection. He also claimed the company had acquired servers equipped with Nvidia GB300 chips and accessed such systems in Thailand.

Adding to the pressure on Chinese AI companies, US Treasury Secretary Scott Bessent later said they could face financial sanctions or be placed on the Commerce Department’s Entity List, which restricts access to US technology.

Moonshot’s response to the Allegations

Moonshot rejected the allegations that Kimi K3’s performance was achieved through distillation. Speaking to China’s National Business Daily last week, the company said its performance gains stemmed from original changes to the model’s underlying architecture.

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Placement on the Entity List could significantly restrict Moonshot’s access to US semiconductors, software, and cloud services. The US has used the trade blacklist as a key tool against Chinese telecommunications equipment maker Huawei since 2019.

In February, Anthropic said it had identified more than 3.4 million interactions with its Claude models linked to Moonshot. The AI startup alleged that hundreds of fraudulent accounts were used to access capabilities such as reasoning, coding, data analysis, tool use, computer vision, and computer operation.