White House warns of 'industrial-scale' efforts in China to rip off U.S. AI tech

The Trump administration on Thursday accused Chinese entities of waging "industrial-scale campaigns" to rip off U.S. artificial intelligence systems, and said it will explore ways to hold the foreign actors accountable.

"There is nothing innovative about systematically extracting and copying the innovations of American industry," Michael Kratsios, the top science and technology advisor to President Donald Trump, said in a memo on alleged Chinese "distillation" operations to train smaller AI models off of larger ones.

The U.S. government has previously accused China of targeting American AI technology and intellectual property.

Kratsios warned that as it gets easier to detect and prevent large-scale "distillation" operations, the entities that "build their AI capabilities on such fragile foundations" should lose confidence in "the integrity and reliability of the models they produce."

U.S. information indicates that the campaigns to "distill" U.S. frontier AI systems are coming from mostly China-based entities, he said.

The efforts involve using tens of thousands of proxy accounts and jailbreaking techniques to secretly "expose proprietary information," Kratsios said.

Attempts to copy U.S. models through "surreptitious, unauthorized distillation campaigns" won't result in AI systems with the same performance as the originals, the advisor noted.

But they "enable foreign actors to release products that appear to perform comparably on select benchmarks at a fraction of the cost," he said.

They also enable the distillers to "deliberately strip security protocols from the resulting models and undo mechanisms that ensure those AI models are ideologically neutral and truth-seeking," according to Kratsios.

The Chinese Embassy in Washington did not immediately respond when asked for comment on the memo.

Distillation is not inherently in conflict with a competitive AI ecosystem, and it can play a "vital" role when "legitimately used to produce smaller, lighter-weight models from more advanced systems," Kratsios said.

"Industrial distillation activities that aim to systematically undermine American research and development and access proprietary information, however, are unacceptable," he said.

The Trump administration will respond by sharing information with U.S. AI companies about the adversarial campaigns, "including the tactics employed and actors involved."

It will also "explore a range of measures to hold foreign actors accountable," Kratsios said.