China says AI development comes from 'greater self-reliance and strength' amid stolen tech claims

China defended the country's development of artificial intelligence, stating it comes from "greater self-reliance and strength" after a top White House official accused a Chinese startup of improperly using Anthropic's latest model and accessing restricted Nvidia chips.

Lin Jian, China's Foreign Ministry spokesperson, told reporters on Wednesday the country "opposes politicizing and instrumentalizing trade and tech issues," as the startup Moonshot AI faces allegations of distilling technology and stealing intellectual property (IP) from U.S. frontier labs to develop its latest model, Kimi K3.

"The development of AI in China comes from greater self-reliance and strength in science and technology and is fueled by China's vision of extensive consultation and joint contribution for shared benefit," Lin said, adding later the politicization "will only stifle global AI advances and serve one."

In a separate statement to NBC News, Liu Chang, a spokesperson for the Chinese embassy in Washington called the allegations unfounded "smear."

"The so-called allegation about China 'stealing' intellectual property developed by U.S.-based AI and life science startups is entirely unfounded," he reportedly said. "China has consistently attached great importance to the protection of intellectual property."

Kimi K3, released late last week by the China-based firm Moonshot AI, quickly sent shockwaves through industry and policy circles, threatening the leads in coding ability of U.S. labs and models like Anthropic's Claude Fable 5 and OpenAI's GPT-5.6 Sol.

Michael Kratsios, the director of the White House Office of Science and Technology Policy, claimed on Wednesday the administration has information that Moonshot AI distilled Anthropic's Fable to produce Kimi K3.

Distillation occurs when the outputs of a stronger model are used to train less capable models.

"To do this they developed a sophisticated internal platform to conduct large scale distillation against U.S. models, allowing them to quickly switch between multiple methods of access to avoid detection," Kratsios wrote on social platform X.

The White House official also accused Moonshot of obtaining servers equipped with Nvidia's GB300 system and accessing the same systems in Thailand and suggested they were likely used to train the firm's AI models.

"Legitimate AI distillation used to create smaller, more efficient models plays a vital role in this open innovation ecosystem," he continued. "However, large-scale, covert industrial distillation aimed at stealing proprietary U.S. technology and undermining American research is unacceptable."

A day earlier, Treasury Secretary Scott Bessent warned the Trump administration could sanction China over intellectual property theft.

"We've seen a lot of talk about ... open-source models coming and threatening the large language models in the U.S.," Bessent told Fox Business's Maria Bartiromo. "What I will tell you is this administration supports open-source models, but what we do not support is IP theft." And if we see, especially that overseas models are stealing from our great companies, we have the ability to sanction them because of this theft.

Hamish Low, a research associate in compute policy at the Institute for AI Policy and Strategy, reviewed Kimi 3 and told The Hill that it's "pretty overwhelming likely they are distilling from leading U.S. models." He pointed to how Kimi K3 is excelling in coding but not necessarily in cybersecurity. This is "pretty much what we would expect if they were doing lots of distillation of coding data." by Miranda Nazzaro and Julia Shapero -- 07/23/26 12:43 PM ET