U.S. Treasury Secretary Scott Bessent announced an investigation into whether Chinese artificial intelligence models illicitly use American technology. Bessent reported that watermarks from U.S. large language models appear in numerous Chinese models. He labeled the practice unacceptable intellectual property theft.
The administration is specifically examining "distillation," where developers train smaller AI models using outputs from more powerful systems. The government will review the issue in the coming days.
Confirmed theft could result in federal sanctions. This scrutiny follows the rise of Chinese open-weight AI models. High-stakes AI negotiations between the two nations are scheduled for September.