A US congressional committee is recommending that the State Department investigate whether Chinese firms are using 'adversary distillation' to illegally copy American AI models, according to arstechnica.com.
The committee has urged the State Department to assess if these distillation attacks violate the Economic Espionage Act and the Computer Fraud and Abuse Act. Lawmakers want 'adversarial distillation' to be officially categorized as a controlled technology transfer to prevent fraudulent access to US models.
If these measures are implemented, the US could prosecute bad actors and impose heavy financial penalties. The committee’s report suggests such penalties might stop Chinese firms from treating 'serious violations as a tolerable cost of doing business.'
China labels accusations 'pure slander'
The threat of a crackdown arrives ahead of a scheduled meeting between Donald Trump and Chinese President Xi Jinping next month. Trump has described the upcoming summit as 'special' and predicted that 'much will be accomplished.'
However, analysts suggest Trump's leverage may be limited. One analyst told the South China Morning Post that the ongoing war in Iran means Trump has 'lost almost all his bargaining chips' while attempting to stabilize a tense trade relationship.
China has responded sharply to the allegations. Liu Pengyu, a spokesperson for the Chinese embassy in Washington, DC, told FT that the White House accusations constitute 'pure slander.'
'China has always been committed to promoting scientific and technological progress through cooperation and healthy competition,' Pengyu said. He added that China 'attaches great importance to the protection of intellectual property rights.'
Industry experts say Chinese AI firms are already using these methods to bypass hardware limitations. Chris McGuire, a technology security expert at the Council on Foreign Relations, told FT that 'Chinese AI firms are relying on distillation attacks to offset deficits in AI computing power and illicitly reproduce the core capabilities of US models.'
To halt these attacks, the US may need to reverse previous export control loosenings. Experts have criticized past moves, such as allowing Nvidia chip sales to China in exchange for a 25 percent US cut, as ineffective. McGuire noted that such a deal 'made no sense' and potentially allowed China to demand access to America's most advanced AI chips.
