China Accuses U.S. of ‘AI Hegemonism’ and Threatens Countermeasures
Beijing’s commerce ministry warned of “all necessary measures” after Washington raised the prospect of sanctions over alleged copying of Anthropic’s Claude.
July 28, 2026 – 8:09 am
China’s commerce ministry accused the United States of "AI hegemonism" on Monday and warned that it would retaliate, an escalation in a quarrel that started with an accusation of copying and has since pulled in chips, sanctions, and a pair of senior White House officials.
The ministry stated that Washington was threatening Chinese companies with punishment based solely on allegations, framing the whole affair as an attempt to stifle China’s technology sector rather than address genuine intellectual property concerns.
The Trigger: Distillation
The dispute originated from the practice of distillation, where a weaker AI model is trained using the outputs of a stronger one. White House Office of Science and Technology Policy director Michael Kratsios claimed that Beijing’s Moonshot AI had distilled Anthropic’s Claude to build its Kimi K3 system, and did so at industrial scale through a purpose-built platform designed to evade detection.
The White House had already put China on notice over distillation practices, though enforcing any penalties remains challenging. Treasury Secretary Scott Bessent went further, warning that firms caught running covert distillation attacks could face financial sanctions or placement on the Commerce Department’s Entity List, cutting them off from American chips and software. This sanction threat appears to have prompted Beijing’s response.
Ministry’s Response
The ministry’s statement was measured but firm:
"For any action that causes substantive harm to Chinese interests, China will take all necessary measures to firmly safeguard its legitimate rights and interests," said an unnamed spokesperson, without elaborating on potential countermeasures.
The ministry also rejected the underlying charge, arguing that distillation is a widely used technique and that the U.S. had provided neither factual nor legal grounds for the threatened punishment.
The Complaint and Its Origins
The initial complaint came from Anthropic itself. Earlier this year, the company informed U.S. lawmakers that three Chinese firms—DeepSeek, Moonshot, and MiniMax—had generated over 16 million interactions with Claude using approximately 24,000 fraudulent accounts, extracting reasoning, coding, and computer vision capabilities to incorporate into their own systems.
Anthropic later named Alibaba’s Qwen lab as the source of an even larger distillation campaign, and it has used these findings to advocate for tighter chip export controls, arguing that restricting access to advanced semiconductors limits both direct training and subsequent distillation practices.
Moonshot has denied the charges, stating that its gains in Kimi K3 resulted from its own architectural work rather than copying a rival. This aligns with the broader Chinese stance that Washington is masquerading commercial protectionism as a security concern. Whether U.S. regulators accept this narrative remains to be seen.