In particular, the committee urged the State Department to determine whether distillation attacks violate statutes such as the Economic Espionage Act and the Computer Fraud and Abuse Act. It also recommended that “adversarial distillation” be precisely defined and formally classified as a controlled technology transfer, which would simplify efforts to block illicit Chinese access to models.
The committee’s report said that if those measures were implemented, the US could pursue prosecutions and levy substantial fines likely to deter Chinese companies from viewing “serious violations as a tolerable cost of doing business.”
China slams accusations as “pure slander”
Kratsios’s memo warning of a clampdown arrives ahead of Donald Trump’s much-anticipated meeting with China’s president Xi Jinping next month.
Trump has described the meeting as “special” and said “much will be accomplished.” Still, an analyst told the South China Morning Post that the war in Iran has left Trump “with almost all his bargaining chips gone” just as the US and China try to steady a trade relationship that has been strained since he took office.
China appears unlikely to accept Kratsios’s allegations. Liu Pengyu, a spokesperson for the Chinese embassy in Washington, DC, told FT that the White House’s claims were “pure slander.”
“China has always been committed to advancing science and technology through cooperation and healthy competition,” Pengyu said. “China places great importance on the protection of intellectual property rights.”
Whether Trump will side with AI companies seeking to cut China off from their models and punish distillation attacks remains to be seen. Trump has previously been accused of making major concessions to China on export controls that experts say threatened US national security and the economy, the same kind of risks US firms say distillation attacks pose.
Some of those concessions might need to be reversed to counter the alleged “industrial espionage.”
Chris McGuire, a technology security expert at the Council on Foreign Relations, told FT that “Chinese AI firms are relying on distillation attacks to compensate for shortfalls in AI computing power and to illicitly reproduce the core capabilities of US models.” To prevent that, the US may have to tighten export controls loosened by Trump — for example, the policy permitting Nvidia chip sales to China so long as the US gets a 25 percent cut. Experts called that odd deal “no sense,” warning it could have opened the door for China to demand access to America’s most advanced AI chips.
