US Calls For AI Poisoning To Sabotage China's Model Distillation

“Reducing reasoning depth, presenting correct information with different reasoning, or stylistic inconsistencies may evade detection while reducing training usefulness,” it says.“Avoid informing China-based AI company users suspected of distillation campaigns of a switch to a downgraded model. Informing malicious distillers would enable them to improve their defense evasions and indicate when to roll back training.”

The advisory adds that firms should alter responses only for users confirmed to be querying frontier models for malicious distillation. In effect, the advisory's message to US firms is simple: poison suspected Chinese“students” with bad data, or hallucinations in AI jargon, but never tell them they did so.

“There is no day after tomorrow if China wins at this,” Bessent said at a Breitbart News economic forum in Washington on Tuesday.“If they were to pull ahead of us on AI, then nothing else matters.”

He added that the US could not afford to pause AI development while China and other rivals pressed ahead.

In fact, Washington started this poisoning tactic several months ago.

In July, Bessent said the US had found watermarks from American models in Chinese systems and threatened sanctions. White House science adviser Michael Kratsios said China's Moonshot AI had distilled Anthropic's Fable model to help build its own K3 model using methods designed to evade detection.

Neither Beijing nor much of the global media appears aware of the advisory's quiet call for AI poisoning tactics.

Chinese officials have instead responded forcefully to the prospect of US sanctions and to the broader distillation accusations. They said distillation is a neutral, widely used practice, and accused Washington of using national security as a pretext to protect its dominance in computing power and data.

Foreign Ministry spokesperson Mao Ning said China's AI progress stemmed from self-reliant innovation and open cooperation.

“We hope the US side will earnestly act on the important common understandings reached between the two presidents and stop leveling false allegations to smear China,” she said.

An unnamed Chinese Ministry of Commerce spokesperson called the US approach a double standard, noting that American firms had themselves drawn heavily on Chinese open-source models even as Washington accused Chinese firms of copying US systems.

“This is a textbook case of using a crackdown on distillation as a pretext for industrial monopoly,” the spokesperson said.

He said the US and Chinese state heads had agreed to launch an AI dialogue and that China was willing to engage on equal and mutually beneficial terms, but warned Beijing would take resolute countermeasures if Washington used distillation as a pretext to contain Chinese AI companies.

The dispute is unfolding weeks before the two countries hold AI safety talks in Beijing, where Bessent will likely lead the American delegation and discussions are expected to focus on preventing AI-related security incidents.

The talks come ahead of a broader summit between US President Donald Trump and Chinese President Xi Jinping planned for September 24 in Washington.

Despite the risk of their models being poisoned during distillation, Chinese AI developers are unlikely to break their habit of tapping US and Western AI models.

Some Chinese commentators see distillation as the shortcut that lets the country's AI companies catch up and break through the technological blockade formed by Washington's export controls on advanced chips, in place since late 2022.

“Model distillation itself is a technical method widely used across the global AI industry, and not all capability transfer or model learning can simply be equated with a national security threat,” Liu Dian, a research fellow at Fudan University's China Institute, told the Global Times.

He said that if Chinese firms could build similar-capability models more cheaply through open-source development and engineering optimization, Washington's chip controls alone would not preserve its lead. He said even if the US sanctioned Chinese firms and banned their AI models, China should keep focusing on developing AI applications and a broader ecosystem.