Chinese authorities, led by the Ministry of Commerce, are exploring tighter restrictions on the export of AI models and semiconductor technologies to prevent the overseas access or production of advanced AI chips and models, sources said. [1, 2, 3, 4, 5, 6]
Regulators have consulted major domestic AI firms including Alibaba, ByteDance, and Zhipu AI about limiting transfers of key training data and restricting foreign users from downloading AI model weights. [1, 2, 3, 4, 5, 6] Potential rules under consideration would block overseas chip makers like Qualcomm and TSMC from manufacturing advanced semiconductors designed by Chinese companies such as Huawei and ByteDance. [1, 2, 3, 4, 5, 6]
China may also clamp down on foreign acquisitions of strategic tech firms in areas like agentic AI, responding in part to deals like Meta’s halted $2 billion acquisition of Chinese AI startup Manus. [2, 5, 6] These measures could be included in the forthcoming revision of China’s catalogue of prohibited or restricted export technologies. [1, 2, 3, 4, 5, 6]
Industry feedback remains mixed. Some Chinese tech leaders warn that excessively strict controls could hinder AI innovation and erode competitiveness. [2, 5, 6]
Tensions escalated recently when US officials accused Chinese AI lab Moonshot of illicitly copying capabilities from Anthropic’s flagship model Claude via a process called distillation. [7, 8, 9, 10, 11] Moonshot’s Kimi K3 model, released last month, reportedly outperforms Anthropic’s Opus 4.8 benchmark in several areas, highlighting China’s narrowing AI technology gap. [5, 6]
Treasury Secretary Scott Bessent called covert distillation "IP theft" and threatened sanctions against China, while the US Commerce Department is investigating some Chinese firms for allegedly circumventing export controls on Nvidia AI chips. [7, 8, 9, 10, 11] Michael Kratsios, director of the White House Office of Science and Technology Policy, said Moonshot had also bypassed US export curbs on Nvidia AI chips to develop its products. [8]
There is division within the US government; some officials push for tighter AI controls on China while parts of the Commerce Department find restrictions impractical. [10] Meanwhile, 179 US startups urged the Trump administration not to impose outright bans on foreign-made open-source AI models, warning such actions would unfairly favor US tech giants and reduce competition. [8, 9, 11] Bill Gurley, a former venture capitalist, said lobbyists framing open-model AI as a security threat were missing that "proper competition should be welcomed." [11]
China’s Ministry of Commerce continues to weigh these proposals with input from industry players before finalizing any changes to export control regulations. [1, 2, 3, 4, 5, 6]
