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The White House Office of Science and Technology Policy (OSTP) has accused China of 'industrial-scale' AI technology theft through 'distillation campaigns,' just weeks before a scheduled summit between President Trump and Chinese President Xi Jinping. This accusation comes amid broader concerns about Chinese intellectual property theft and follows similar allegations from AI firm Anthropic.
The White House Office of Science and Technology Policy (OSTP) has formally accused China of 'industrial-scale' AI technology theft in a scathing Thursday memorandum. OSTP Director Michael Kratsios confirmed the U.S. has evidence that foreign entities, primarily in China, are conducting extensive 'distillation campaigns' to steal American AI. He emphasized the U.S. government's commitment to taking action to protect its innovation and intellectual property in the artificial intelligence sector, highlighting the severity of the alleged cyber espionage efforts.
The OSTP memo details that these 'distillation campaigns' involve the use of tens of thousands of proxies in a coordinated effort to siphon American AI innovation. Kratsios warned that AI models built on such 'fragile foundations' would lack the integrity and reliability of legitimately developed technologies. A critical concern is that these campaigns allow actors to intentionally strip security protocols and mechanisms that ensure AI models remain ideologically neutral and truth-seeking. This compromise enables authoritarian governments to deploy these frontier AI capabilities for malicious purposes, including offensive cyber operations, disinformation campaigns, and mass surveillance, posing significant national security risks.
The White House's accusation emerges just three weeks before a pivotal summit between President Donald Trump and Chinese President Xi Jinping in Beijing. This meeting, originally slated for late March but rescheduled to May 14, is expected to cover various complex issues. President Trump has suggested that China's dependence on oil from the Strait of Hormuz could prompt its involvement in a coalition to secure the vital waterway, in discussions related to the ongoing conflict in Iran. Technology controls, including those on semiconductors and AI, were already on the agenda, with China likely seeking to ease Washington's restrictions. The AI theft allegation adds a highly contentious element to these high-stakes diplomatic negotiations.
The OSTP's announcement came immediately after a House Judiciary Committee hearing titled 'Stealth Stealing: China’s Ongoing Theft of U.S. Innovation.' During this session, Senator Chuck Grassley presented substantial evidence on the severe economic impact of Chinese technology theft on the U.S. economy. He cited figures indicating that these illicit activities cost the United States between $400 billion and $600 billion annually. This significant financial drain underscores the urgency of the White House's concerns and the broader governmental efforts to safeguard American technological and economic competitiveness against foreign appropriation.
In 2025, China's DeepSeek AI model was promoted as a major advancement, but Anthropic, the developer of the popular Claude AI model, accused China of stealing its technology to create DeepSeek. Anthropic explicitly stated that China utilized a 'mass-proxy distillation process' to siphon key data, a method mirroring that described by the OSTP. At the time, Anthropic warned about the implications of 'distilled American models' being used by authoritarian governments for offensive cyber operations, disinformation campaigns, and mass surveillance. Despite previous tensions where the Pentagon labeled Anthropic as a 'supply chain risk,' Anthropic CEO Dario Amodei recently met with senior White House officials. This meeting focused on critical shared priorities such as cybersecurity, America’s leadership in the AI race, and overall AI safety, signifying an ongoing dialogue and commitment to responsible AI development.