China’s Ministry of Commerce on Monday warned the United States that it will take “all necessary measures” to defend its interests if Washington proceeds with sanctions against Chinese artificial intelligence companies. A ministry spokesperson called the ongoing threats an example of “AI hegemony” and said they lack factual or legal grounding.
The escalating dispute centers on allegations that Chinese labs have used “distillation” – a technique where one model bombards another with prompts to learn its workings – to replicate American models. Senior U.S. officials are reportedly considering adding Chinese AI firms to the Entity List and imposing new procurement rules. China pushed back by noting that many U.S. firms have also distilled Chinese models, and that nearly 200 American startups have urged their own government not to cut access to Chinese open-source models, warning it would blunt their competitiveness.
Against this backdrop, Chinese models are rapidly gaining ground. Data from OpenRouter shows that Chinese systems now handle 46.4% of routed token traffic, versus 35.7% for U.S.-built models, with DeepSeek alone contributing 17.6%. A Hugging Face study found Chinese open-source models accounted for 41% of all open-source downloads. Analysts attribute the surge to far cheaper compute costs and export limits on top-tier U.S. models like Anthropic’s Claude Mythos 5.
In a separate but related development, Anthropic CEO Dario Amodei published a blog post clarifying his company’s position. He stated that Anthropic has never advocated for banning open-weight AI models, calling them a public good when safe. However, he warned that the real danger comes from authoritarian governments – especially China – that could leverage powerful AI for military dominance or domestic repression. Amodei called for a formal crackdown on distillation, reiterated support for restricting China’s chip access, and urged globally coordinated safety testing that includes China. His remarks came after Nvidia CEO Jensen Huang and other tech leaders signed an open letter urging policymakers to avoid broad restrictions on open-weight AI.
