The United States State Department has instructed diplomatic and consular posts around the world to raise concerns with foreign governments about what it describes as widespread efforts by Chinese companies to extract and distill intellectual property from American artificial intelligence laboratories. The directive, contained in a diplomatic cable dated April 25, 2026 and seen by Reuters, names artificial intelligence startup DeepSeek along with Moonshot AI and MiniMax as firms of concern, and represents one of the most coordinated international pushes by Washington to frame Chinese artificial intelligence development as a form of technological appropriation rather than independent innovation. A separate communication was simultaneously dispatched to Beijing for direct engagement with Chinese officials on the matter, and the State Department did not immediately respond to requests for comment on the cable’s contents.
The cable instructs diplomatic staff to warn their foreign counterparts about the risks of utilising artificial intelligence models that have been distilled from United States proprietary systems, and to lay the groundwork for potential follow-up engagement by the United States government. Distillation, the process at the centre of the dispute, refers to the practice of training smaller, more cost-efficient artificial intelligence models using outputs generated by larger and more expensive proprietary systems, effectively allowing developers to replicate much of the performance of premium models without bearing the full weight of original training costs. The cable stated that models developed through what it characterised as surreptitious and unauthorised distillation campaigns enable foreign actors to release products that appear competitive on select benchmarks at a fraction of the cost, while not fully replicating the performance of the original system. It further alleged that such campaigns deliberately strip security protocols from the resulting models and undo mechanisms designed to ensure ideological neutrality and truthfulness in artificial intelligence outputs.
China has firmly rejected the allegations. The Chinese Embassy in Washington reiterated its position that the accusations are without foundation, describing them as deliberate attacks on China’s development and progress in the artificial intelligence industry. DeepSeek had previously stated that its Version 3 model was trained on naturally occurring data collected through web crawling, and that synthetic data generated by OpenAI was not intentionally used in its development process. OpenAI has separately warned United States lawmakers that DeepSeek had been targeting the ChatGPT maker and other leading American artificial intelligence companies in an effort to replicate their models for training purposes, a claim that China and DeepSeek have both contested.
The timing of the State Department cable carries significant diplomatic weight, arriving just weeks before United States President Donald Trump is scheduled to visit Chinese President Xi Jinping in Beijing, raising the prospect that the artificial intelligence intellectual property dispute could introduce fresh friction into what had been a period of cautious stabilisation following a technology detente brokered between the two countries in October 2025. DeepSeek, meanwhile, launched a preview of its highly anticipated Version 4 model on the same day the cable was issued, with the new release adapted specifically for Huawei chip technology, underlining China’s continued push toward greater self-sufficiency across the artificial intelligence hardware and software stack. The convergence of the diplomatic warning and a major new Chinese model release on the same day illustrates the pace at which both sides are simultaneously escalating rhetoric and advancing their respective technological capabilities in what has become one of the defining competitions of the current era.
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