China Vows Response to US Sanctions Threat Against AI Firms - Bloomberg.com

The warning was issued by China's Ministry of Commerce in response to threats from the Trump administration, according to a Bloomberg report published on July 27, 2026.

The Ministry of Commerce criticized the US accusations of intellectual property theft through a process known as model distillation, where one AI model is trained using the outputs of another. The US has not yet imposed sanctions but has raised concerns that Chinese firms are using American AI models without authorization to develop competing systems. The specific companies targeted were not named in the report.

The US has previously restricted exports of advanced AI chips to China and added Chinese AI firms to trade blacklists. China has retaliated in the past with export controls on critical minerals used in electronics. The outcome of this dispute could affect global AI supply chains and the development of open-weight AI models.