Bessent warns China could face sanctions over AI IP theft

Treasury Secretary Scott Bessent warned Tuesday the Trump administration could sanction China over intellectual property (IP) theft amid concerns about whether Beijing is relying on American AI to develop its own advanced models.

“We’ve seen a lot of talk about you know open-source models coming and threatening the large language models in the U.S.” Bessent told Fox Business’s Maria Bartiromo.

“What I will tell you is this administration supports open-source models, but what we do not support is IP theft,” he continued. “And if we see, especially that overseas models are stealing from our great companies, we have the ability to sanction them because of this theft.”

The release of Kimi K3, a new model from the Chinese startup Moonshot AI, last week has spurred fears in both Silicon Valley and Washington about America’s ability to maintain its lead in the AI race.

The company claimed the model could perform on par with Anthropic and OpenAI’s leading models. This was reinforced by an AI evaluator’s decision to bump Kimi to the top of its rankings for front-end coding, above models from the two U.S. AI labs.

Unlike its American counterparts, Kimi is also an open-weight model. While these types of models are not entirely public like their open-source counterparts, the way they are trained to sift through information and formulate answers is made public.

The panic over Kimi has once again prompted discussions about distillation, a technique used to transfer the knowledge of a larger, more capable model to a smaller model.

“We are finding watermarks of our U.S. large language models on many of the Chinese models, and that that’s unacceptable, Maria,” Bessent said Tuesday. “So, we’re going to be looking at that in the coming days or weeks.”

“The other question might be: Should companies that are using Chinese models have to disclose that to their customers?” he added.

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