China's Ministry of Commerce has warned it will "take all necessary measures" if the United States imposes new sanctions on Chinese AI companies, escalating a dispute over claims that Chinese firms distilled leading American AI models. The row began after Michael Kratsios, Donald Trump's Assistant for Science and Technology, and Treasury Secretary Scott Bessent alleged Chinese companies copied US models; Beijing rejected this and countered that American firms have themselves distilled Chinese models, raising the prospect of retaliatory trade measures between the world's two largest economies.

China's ministry argued Chinese developers lacked time to distil the latest frontier models, since US firms released them only days before Chinese equivalents appeared, and insisted "some Chinese models are already in a leading position", making distillation claims unfounded. It closed by calling for cooperation via the World Artificial Intelligence Cooperation Organization, a 29-member body China recently convened, and for wider open-sourcing of AI models. The spat coincides with 77 US tech companies signing an open letter urging lawmakers to support open-weight models, putting China on the same side as part of the American tech industry on that issue.