White House: China runs industrial-scale raids on U.S. AI labs

A White House memo says China-based actors ran industrial-scale campaigns to extract proprietary technology from U.S. frontier AI systems, using tens of thousands of proxy accounts and jailbreak techniques to ‘distill’ model behavior. The claim appears in a memo from Michael Kratsios, director of the White House Office of Science and Technology Policy.

Kratsios wrote that U.S. government information shows foreign entities based in China are using large networks of proxy accounts and methods to bypass protections and expose proprietary information. The memo described the operations as deliberate and industrial in scale, aimed at recreating or ‘distilling’ the capabilities of frontier models by extracting their behavior and internal responses through large numbers of automated queries and jailbreaks.

Distillation involves probing a model with automated queries and jailbreaks to collect outputs that can train a new model that mimics the original without accessing its source code or training data.

The administration plans to notify affected companies when it detects unauthorized distillation attempts and is evaluating options to respond. Officials declined to provide a public tally of incidents or name targeted firms, and characterized the activity as systematic rather than isolated.

The allegations come amid a separate dispute over shipments of advanced U.S.-made AI chips to China. At a Senate hearing, Commerce Secretary Howard Lutnick told senators that Nvidia’s H200 chips have not been delivered to Chinese firms and that China’s central government has blocked purchases to protect domestic industry. Lutnick added, “We have not sold them chips as of yet.”

Lutnick addressed a delayed rule that would further restrict U.S. tech exports to Chinese affiliates, saying, “I agree that the affiliates rule is a smart thing for the United States of America to consider, but it is part of the balance of that full trade agreement.” The affiliates rule was postponed for one year last November as part of trade negotiations.

The memo warned that using large numbers of accounts and jailbreak techniques can expose internal model behavior and intellectual property even when direct access to code or data is blocked.

Chinese companies are recruiting AI specialists and offering large pay packages for roles in embodied intelligence and robotics. Job listings show entry-level algorithm engineers in embodied AI earning about CNY30,000 per month and senior experts higher. Some firms advertise annual packages from CNY15 million to CNY124 million for top roles. One cloud unit reported monthly offers of CNY95,000 to CNY120,000 for senior algorithm experts.

The White House plans to coordinate with private-sector partners to detect and deter unauthorized extraction and to consider accountability measures for actors behind large-scale distillation campaigns.