China Urges US to Stop Threatening Sanctions Against Chinese AI Firms

BEIJING, Jul 27:  China on Monday urged the United States to stop what it called "smearing" of Chinese artificial intelligence companies and threatening them with sanctions, escalating tensions in the ongoing US-China technology rivalry.

A spokesperson for China's Ministry of Commerce said Washington's actions lacked factual and legal basis, describing the measures as a "typical form of AI hegemony," according to state-run Xinhua News Agency.

The remarks came in response to reports that senior US officials had called for investigations into Chinese AI companies over allegations that they used "distillation" techniques to replicate advanced American AI models and could face sanctions over alleged intellectual property violations.

US officials recently accused Chinese AI firm Moonshot of distilling its Kimi K3 model from Anthropic's advanced Fable 5 model. US Treasury Secretary Scott Bessent warned that sanctions could be imposed if the allegations were confirmed.

Beijing has rejected the accusations, while the dispute highlights growing competition between the world's two largest economies over advanced artificial intelligence technology, which both sides increasingly view as a strategic and national security priority.