White House accuses China of carrying out industrial-scale theft of U.S. artificial intelligence technology in a new memo that could increase tensions ahead of a planned summit between American and Chinese leaders next month.
The accusation was made in a memo shared on Thursday by Michael Kratsios, director of the White House Office of Science and Technology Policy, and first reported by the Financial Times.
White House Accuses China of AI Distillation Campaigns
According to the memo, the U.S. government has information indicating that foreign entities, mainly based in China, are engaged in deliberate campaigns to distill frontier American AI systems.
Kratsios wrote that these operations allegedly use tens of thousands of proxy accounts to avoid detection and rely on jailbreaking techniques to expose proprietary information.
He said the coordinated efforts systematically extract capabilities from U.S. AI models and exploit American expertise and innovation.
What Distillation Means in the AI Race
Distillation is the process of training smaller AI models using outputs from larger models. Companies often use the method to reduce the cost of developing powerful AI tools.
The memo suggests the administration views such activity, when tied to proprietary systems, as a serious national and commercial concern.
Tensions Rise Before Trump-Xi Meeting
The timing of the statement is notable. The memo was released only weeks before U.S. President Donald Trump is expected to visit Chinese President Xi Jinping in Beijing.
That meeting comes after a detente reached last October had lowered tensions in the ongoing technology rivalry between the two countries.
The latest language from Washington could complicate that diplomatic backdrop.
Nvidia Shipments Also in Focus
The report also raises questions about whether the U.S. will continue allowing advanced Nvidia AI chips to reach China.
The Trump administration approved those sales in January with conditions attached. However, Commerce Secretary Howard Lutnick said on Wednesday that no shipments had yet taken place.
U.S. Signals Possible Accountability Measures
The memo, addressed to government agencies, says the administration will share information with American AI companies regarding the alleged distillation campaigns.
It also states that officials will explore a range of measures to hold foreign actors accountable.
With AI now central to economic power and national strategy, the latest dispute shows how technology competition remains one of the most sensitive areas in U.S.-China relations.
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