China’s Ministry of Commerce fired back at Washington on July 27, accusing the United States of “AI hegemonism” and warning it would take “all necessary measures” to defend its technology interests. The statement came in response to growing US pressure over allegations that Chinese AI startup Moonshot AI essentially copied the work of Anthropic, one of America’s most prominent AI companies.

What actually happened

The dispute centers on a technique called model distillation. US officials, including White House Office of Science and Technology Policy Director Michael Kratsios, alleged that Moonshot AI used industrial-scale model distillation of Anthropic’s Claude models to build its own Kimi K3 AI system. In English: Washington believes Moonshot essentially trained its AI by feeding it outputs from Claude, absorbing the intelligence of Anthropic’s model without doing the underlying research work.

The alleged operation wasn’t small. Anthropic reported over 3.4 million interactions connected to Moonshot through fraudulent accounts back in February 2026.

Moonshot has denied everything, insisting that Kimi K3’s performance improvements stem from original architectural innovations rather than distillation.

US officials have hinted that Moonshot could face consequences similar to what Huawei experienced starting in 2019, when the Chinese telecom giant was placed on the Commerce Department’s Entity List, effectively cutting it off from American chips, software, and technology partnerships. US officials have specifically noted the company allegedly used Nvidia GB300 chips in the distillation process, which would make access to advanced American semiconductors a critical vulnerability.

China’s response has framed the US actions as an attempt to suppress Chinese technological advancement, positioning itself as a champion of open-source AI cooperation, particularly with developing nations.