Washington: Chinese military researchers have used outputs from leading US artificial intelligence models developed by OpenAI and Anthropic to train domestic AI systems to advance China’s defence capabilities, according to a Reuters review of more than 80 Chinese academic papers and patents.
The previously unreported findings offer a rare glimpse into how military and security-linked institutions in China are leveraging cutting-edge US AI models as a shortcut to developing specialised systems of their own, despite Washington’s efforts to restrict Beijing’s access to advanced chips and other strategic technologies.
The documents show widespread use of a technique known as “model distillation,” in which outputs from a powerful AI system are used to train smaller, specialised models that can be deployed locally without the enormous computing requirements needed to build frontier AI systems from scratch.
Reuters’ review, which included research compiled by the Washington-based Jamestown Foundation and shared exclusively with the news agency, showed distillation is widely used by researchers linked to the People’s Liberation Army and other military institutions.
The papers suggest Chinese defence institutions see leading US AI models as both a source of technical insight and a way to close the gap with American rivals. The dispute centres on unauthorised extraction, not distillation itself, a widely used industry practice.
The issue has emerged as a major flashpoint ahead of US-China talks on AI governance and safety. US officials have accused some Chinese entities of using distillation to extract capabilities from American AI models, potentially undermining export controls and infringing intellectual property rights.
China has rejected the accusations, saying Washington is pursuing AI “hegemonism” while arguing that US firms have engaged in similar practices. Chinese developers have also disputed claims that their AI advances rely on foreign models. AI startup Moonshot last week denied allegations by the Trump administration that its Kimi K3 model was built using distillation, saying it was driven by proprietary innovations.
Sunny Cheung, a Jamestown fellow who analysed over 60 of the papers, said Chinese military scientists are systematically capturing the reasoning steps of Western models to adapt them for surveillance, cyber warfare and tactical decision-making.
“Teaching a model the right answer is one thing but teaching it the reasoning behind the answer is much harder,” said Cheung. “These papers show Chinese military-linked researchers are trying to transfer that expensive, proprietary reasoning from Western models into smaller systems they can control and deploy locally.”
