China says it's open to AI talks with the US, warns it will hit back if Washington targets Chinese firms

What Happened

China's Commerce Ministry said Wednesday it is open to "constructive and professional" conversations with the US on artificial intelligence, citing an understanding between the two countries' leaders to set up such a channel. It also drew a bright line: if the US moves to contain Chinese AI companies under the banner of tackling "distillation," China will "resolutely take countermeasures."

The back-and-forth comes only a few weeks ahead of a planned visit in which President Donald Trump is expected to host his Chinese counterpart, Xi Jinping, at the executive mansion in Washington, D.C., for their second summit this year, with AI now a central front in the broader US China tech rivalry as leading Chinese models close the gap with top US systems.

How Beijing Framed It

US agencies have alleged that leading Chinese AI firms extracted protected insights from American research labs "at an industrial scale." The Commerce Ministry pushed back, calling the charge groundless. It described distillation as a common method used globally by AI developers to learn from other models, and suggested US companies may also be distilling from Chinese systems. As the spokesperson put it, "This reflects both US anxiety and its double standards."

Reaffirming its readiness for talks "on the principles of equality and mutual benefit, cooperation and win‑win outcomes," the ministry also restated its warning: "if the US takes action to contain and suppress Chinese artificial intelligence companies in the name of combating distillation, China will resolutely take countermeasures."

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The Accusations Getting Specific

On Tuesday, the National Security Agency, FBI and Cybersecurity and Infrastructure Security Agency escalated their claims with a joint statement. They outlined which US systems were allegedly distilled by individual Chinese firms and why, singling out DeepSeek, Moonshot, Alibaba Group Holding Ltd., MiniMax, StepFun and Z.AI Co. None of the companies responded to requests for comment.

Separately, American AI players, among them OpenAI and Anthropic PBC, along with Trump administration officials, have made repeated allegations that Chinese companies took material from US models by using a method called distillation.

Why It Matters For Your Portfolio

This is not just about bragging rights in AI. It is policy risk that can swing sentiment around the named companies and the suppliers tied to them.

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