US left rocked by China’s ‘Grand Theft AI’ attack

Forget Grand Theft Auto. The biggest online game in town is Grand Theft AI, with Chinese high-tech labs literally stealing a march on their American rivals. To do this, they siphon off the brainpower of the most advanced artificial intelligence systems in the United States.

They do not even have to foot the staggering multi-billion-dollar research bill. They just clone the cutting-edge models built by industry leaders such as OpenAI and Anthropic. The result is a dramatic shortcut in the global AI race that risks fueling a technological power shift.

Computer scientists call it “knowledge transfer” or “distillation.” But it is basically intellectual property theft run riot. “Foreign entities like China are siphoning American AI models. It is outrageous [and] illegal,” Lance B Eliot, a leading AI scientist, pointed out in Forbes.

Behind the scenes is a network of China-sponsored state actors. Anthropic reported last year that it disrupted an “AI-orchestrated cyber espionage campaign.”

Then last month, it was revealed that the AI group sent a letter to US Senators Tim Scott and Elizabeth Warren, who head a Senate committee looking into artificial intelligence. It singled out Chinese tech giant Alibaba and its Qwen AI lab for “distillation attacks.”

“[They were] carried out illicitly, systematically and at industrial scale to harvest US AI capabilities across frontier labs and repackaging them as their own,” Anthropic told Scott and Warren, as reported by The New York Times.

China’s drive to steal technology [is only matched by] our failure to respond.

Derek Scissors, American Enterprise Institute

AI agents:

• Alibaba has denied the charges. Yet on June 13, Chinese start-up Z.ai, which had close funding links to Alibaba, released its GLM-5.2 AI prototype.
• Initial reactions were that it was nearly as powerful as Anthropic’s Fable and Mythos models. It was also launched days after an American export ban on Anthropic AI systems.

Delve deeper: So instead of being years behind in the battle for artificial intelligence supremacy, China is now just months away from catching up. Intellectual property theft on a colossal scale has narrowed the gap.

Between the lines: Derek Scissors, a senior fellow at the American Enterprise Institute, spelt out the dangers. “China’s drive to steal technology [is only matched by] our utter failure to respond,” he posted on AEIdeas last week.

Big picture: “China has stolen and will steal because it’s been a gigantic, world-changing success,” Scissors, who is also the chief economist of the China Beige Book, warned.

Bottom line: “They’ve gotten away with it for more than 30 years, starting with ‘copy watches’ and leading to transformative AI,” he added.

China Factor comment: His erudite assessment is difficult to argue against. The rise of the new industrial superpower was powered by imitation, not innovation, and the art of the steal. It continues into the second decade of the 21st Century.