US says Chinese companies could face sanctions for AI intellectual property theft

US Treasury Secretary Scott Bessent said Wednesday that Chinese companies could face sanctions and export restrictions if they engage in large-scale theft of American artificial intelligence intellectual property.

"We support open-source AI and the innovation it unlocks. But open source is not open season on American IP," Bessent said on US social media company X.

He specifically warned against "covert" efforts by companies from China to extract or replicate US AI models and technologies through industrial-scale “distillation” techniques.

"When PRC (People's Republic of China) firms conduct covert, industrial-scale distillation attacks that cross the line into IP theft, sanctions and Entity List designations will be on the table," he added.