US warns Chinese firms face sanctions over AI IP theft
01:15, 23/07/2026, ThursdayU: Update: 01:33, 23/07/2026, Thursday
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US Treasury Secretary Scott Bessent warned on Wednesday that Chinese companies could face sanctions and export restrictions if they engage in large-scale theft of American artificial intelligence intellectual property, stating that Washington would target firms conducting covert industrial-scale "distillation" attacks.
US Treasury Secretary Scott Bessent warned on Wednesday that Chinese companies could face sanctions and export restrictions if they engage in large-scale theft of American artificial intelligence intellectual property. The senior official singled out covert efforts by firms from the People's Republic of China to extract or replicate US AI models through industrial-scale techniques.
'Open Season' Warning
"We support open-source AI and the innovation it unlocks. But open source is not open season on American IP," Bessent said on the social media platform X. He specifically cautioned against industrial-scale "distillation" techniques used to compromise proprietary systems.
Entity List Designations
"When PRC (People's Republic of China) firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table," he added. The Treasury Department has increasingly scrutinized technology transfers as competition intensifies between Washington and Beijing across strategic sectors.