US security agencies say Chinese AI companies are stealing American AI work on an industrial scale — bad news for US tech firms, and another strain on US-China relations right before a Xi visit.

• The NSA and FBI named six Chinese firms — DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun and Zhipu AI — as copying US models.
• The method is "distillation": using a big, expensive model's answers to train a cheaper copy of it, skipping most of the cost.
• The models targeted reportedly came from Anthropic, OpenAI, Google and SpaceX, and US officials believe Beijing knew about it.
• The warning is that cheap copied models also boost China's military and hacking abilities against the US and its allies.
• China's embassy in Washington called it a deliberate attack on China's AI progress and warned against politicizing trade and tech.

Outlook: The accusation lands just before US-China talks on AI safety and Xi Jinping's late-September visit, so expect tougher pressure on Silicon Valley to lock down its models.