A review of more than 80 Chinese academic papers and patents has found that researchers connected to China’s military have reportedly used outputs generated by leading U.S. artificial intelligence models from OpenAI and Anthropic to help develop domestic AI systems for defense-related applications.

According to a Reuters investigation, the documents suggest that Chinese military-linked institutions are relying on a technique known as model distillation, allowing them to train smaller AI models using responses from more advanced systems instead of building frontier models entirely from scratch.

What is model distillation?

Model distillation is an AI training method in which a smaller model learns from the outputs of a larger, more capable AI system. The approach significantly reduces computing requirements while retaining specific capabilities needed for specialized tasks.

Reuters’ review, which included research shared by the Jamestown Foundation, indicates that researchers associated with the People’s Liberation Army (PLA) have widely adopted this technique for military-focused AI development.

Military applications identified

The reviewed research highlights several defense-related projects involving distilled AI models:

• Processing military software code using OpenAI’s GPT-3.5 before training an internal model.
• Generating synthetic training data for social media monitoring and content moderation using Anthropic’s Claude 3 Haiku.
• Deploying lightweight AI models on drones for navigation, live video analysis, and targeting.
• Running target-recognition systems on military hardware during simulated maritime operations involving drones and unmanned submarines.

Security concerns grow

The findings come amid increasing concerns in Washington over whether model distillation could allow foreign organizations to replicate valuable AI capabilities while bypassing restrictions on advanced computing hardware.

Reuters reported that U.S. officials have accused some Chinese entities of using distillation to extract capabilities from American AI systems, while China has rejected those claims, arguing that similar AI development practices are used globally.

Experts say distilled models still have limits

Researchers cited in the report note that distilled AI models cannot fully match the capabilities of the frontier systems from which they learn. Instead, they inherit selected skills optimized for specific tasks.

Experts also warned that while distillation lowers computing costs, it may remove some of the original model’s built-in safety protections and remains an area of active research for both offensive and defensive AI development.

Industry and government responses

OpenAI, the Pentagon, the White House, China’s Foreign Ministry, and the PLA did not respond to Reuters’ requests for comment at the time of publication. Anthropic stated that it does not provide commercial access to Claude models in China and uses monitoring systems to detect policy violations.