Former CIA station chief and Fox News contributor Dan Hoffman previews an upcoming high-stakes meeting between President Donald Trump and China’s Xi Jinping on ‘The Bottom Line.’
The White House Office of Science and Technology Policy accused China of “industrial-scale” AI technology theft in a scathing Thursday memorandum just weeks before President Donald Trump is set to meet with Chinese President Xi Jingping in Beijing, China.
“The U.S. has evidence that foreign entities, primarily in China, are running industrial-scale distillation campaigns to steal American AI. We will be taking action to protect American innovation,” OSTP Director Michael Kratsios wrote in a Thursday morning X post.
Kratsios accused China and other foreign entities of using tens of thousands of proxies in a coordinated effort to siphon American AI innovation.
“Foreign entities who build on such fragile foundations should have little confidence in the integrity and reliability of the models they produce,” Kratsios wrote.
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Models built on such innovation theft cannot replicate the efficacy and innovation of the technologies they’re ripping off, an OTSP memo stated. They can, however, simulate select benchmarks at a fraction of the cost.
President Donald Trump speaks with Director of White House Office of Science and Technology Policy Michael Kratsios during a meeting in Washington, DC, on March 4, 2026. (ANDREW CABALLERO-REYNOLDS / AFP via Getty Images / Getty Images)
“These distillation campaigns also allow those actors to deliberately strip security protocols from the resulting models and undo mechanisms that ensure those AI models are ideologically neutral and truth-seeking,” the memo read.
The accusation precedes the historic Trump-Xi summit by just three weeks. Originally scheduled for the end of March, the Beijing talks were postponed to May 14.
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The pair is expected to discuss the ongoing war in Iran, with Trump telling reporters on Air Force One that China’s reliance on oil from the Strait of Hormuz means they should be open to joining a coalition to put pressure on Iran to keep the strategic waterway open.
President Donald Trump shakes hands with Chinese President Xi Jinping as they hold a bilateral meeting at Gimhae International Airport, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, in Busan, South Korea, on Oct. 30, 2025. (Evelyn Hockstein/Reuters / Reuters)
Technology was already on the docket before the OTSP announcement, as China will likely seek Washington to loosen technology controls on semiconductors and AI.
The OTSP announcement also comes one day after the House Judiciary Committee held a hearing named “Stealth Stealing: China’s Ongoing Theft of U.S. Innovation.” During the review, Sen. Chuck Grassley, R-Iowa, presented evidence showing Chinese technology theft cost the U.S. economy between $400-600 billion yearly.
China grabbed headlines in 2025 with its AI “Sputnik moment,” touting a cost-efficient breakthrough with its DeepSeek AI model.
But Anthropic, the company responsible for the increasingly-popular Claude model, accused China of stealing from Anthropic to build DeepSeek.
Anthropic CEO Dario Amodei, Chief Product Officer Mike Krieger and Head of Communications Sasha de Marigny give a press conference during Anthropic’s first developer conference in San Francisco, California, on May 22, 2025. (JULIE JAMMOT/AFP / Getty Images)
Anthropic claimed that China used a mass-proxy distillation process to siphon key data. The proxy strategy is the same one that OTSP outlined in the Wednesday memo.
“Foreign labs that distill American models can then feed these unprotected capabilities into military, intelligence, and surveillance systems — enabling authoritarian governments to deploy frontier AI for offensive cyber operations, disinformation campaigns, and mass surveillance,” Anthropic said at the time.
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After a public split between Anthropic and Washington that saw the Pentagon label it as a supply chain risk, Anthropic’s leaders were back in the White House on Friday, reportedly to discuss cybersecurity.
“Anthropic CEO Dario Amodei today met with senior administration officials for a productive discussion on how Anthropic and the U.S. government can work together on key shared priorities such as cybersecurity, America’s lead in the AI race, and AI safety. The meeting reflected Anthropic’s ongoing commitment to engaging with the U.S. government on the development of responsible AI. We are grateful for their time and are looking forward to continuing these discussions,” an Anthropic spokesperson previously told Fox News Digital.Â
Fox News Digital contacted the White House, OTSP, Anthropic and the Chinese Embassy to the U.S. for further comment but did not immediately receive a response.
Fox News Digital’s Morgan Phillips contributed to this report.
