People’s Daily rejects US claims of malicious AI distillation, warns of countermeasures

Beijing's warning of "countermeasures" against US efforts to contain its AI industry is not new. The People's Daily commentary, however, frames AI model distillation as a "normal technical and commercial practice." This suggests China views the US allegations as a pretext for trade restrictions, rather than a genuine concern about IP. The timing, a week before the Xi-Trump meeting, points to AI as a key negotiation point.

For Asian AI companies, this dispute highlights the growing pressure to develop indigenous models. South Korean and Japanese firms, for example, face increased scrutiny over their foundational model training data. This will accelerate investment in domestic data sets and sovereign AI capabilities across the region. The goal is to reduce reliance on US or Chinese models.

The thing to watch is the September 24 meeting between Xi and Trump. If the US escalates its containment efforts post-meeting, Beijing will likely respond with targeted policies. This could include export controls on critical AI components or data. This would further fragment the global AI supply chain.