Op-Ed: The US narrative about Chinese AI distillation theft ignores too many hard realities

AI distillation theft is becoming an almost monotonous daily theme in the news. The responses never vary and rarely offer any insight into what actually happened or what happens next.

It’s a cut-and-paste and often melodramatic PR exercise, most of the time:

Media coverage is somewhere between saturation and footnote levels.

The US invariably blames China.

China inevitably denies responsibility.

No resolution of any kind is achieved.

No problems are solved, and new problems are supposedly discovered.

The world moves on to the next iterations of the same situations.

There are supposedly no third parties involved and no stakeholders trying to get advantages for themselves. The only possible bad actors are too easily identifiable. There are miraculously no active AI learning initiatives distilling furiously from every possible global source 24/7.  

There is above all a rather smug, overriding, and dangerously unrealistic image of unquestioned US AI supremacy. The top-down model of US AI policy is looking far too much like the Vietnam War, with grandiose statements, very high casualties, and no attention to the realities on the ground.

“So what’s new?”, you may well ask.

The hugely expanded global AI frame of reference is what’s new. Two years ago, this would have been an almost totally credible narrative. Not now. The AI universe has changed, and the roles of the players have changed with it.

The realities of AI vs the narrative

AI technology never stops evolving. It’s driven by its own nature. Distillation is a natural and necessary default capability of most AI models. Distillation is always happening. You might as well complain about birds flying. The technological status quo in AI realities is therefore always changing.

There are other considerations:

The US approach to AI governance barely exists on any level in reality. There is no functional leadership of any sort.

OpenAI’s optimistic but worth reading “democratic vision for AI” is maybe the only positive mindset or proposed initiative in this wasteland of inactivity. There are no indicators of the sort of solid cohesion required for effective governance. OpenAI and Anthropic are actually pro-regulation, but is there any real movement?

The resulting dawdling and ever-growing US policy desert is creating future gaps and traps for AI development. Who knows what they’re supposed to comply with, or when?

The Moonshot OpenAI debacle simply highlighted gaping weaknesses in everything from access to restricted Nvidia chips to drastically improved uptake of Moonshot’s Kimi K3 services. The White House has effectively been trumpeting its own failures.

The AI Cold War is already obsolete, and the US may already have lost

Convenient as it may be for politicians to turn AI into just another vague and totally counterproductive Cold War, China has long since moved on from the folksy stage to hard business initiatives.

The US is trailing along behind and damaging its own credibility badly in the process. The unilateral, useless ongoing trade war declared by the Trump administration isn’t helping.

This isn’t a Cold War, and if it was one, it’s already over. It’s now the shoddy equivalent of MIT vs the picture of a complacent hot dog stand with questionable hygiene credentials, in terms of technological geopolitics.

Let’s try being blunt:

China is physically deploying ready-to-go, fully supported AI and automated systems in the real world. They’re doing this in just about every market much faster than the US. There’s not even really a contest for market reach.

China has much to gain from building a very strong global market position, which it seems to be achieving with very little real resistance from the US.

China has been very effectively pushing the cost buttons compared to the US AI market positions with every new AI model since DeepSeek.

China also has much to lose if it doesn’t exploit these market opportunities. They’re rather obviously not hanging around waiting to cash in.

Is there any form of arcane, opaque, tortuous logic whereby you can assume they won’t do just that?

Distillation is the least of America’s problems with China and AI.

Historically, we’re at the sharp stick level setup for the AI Age. Fire hasn’t been invented yet, but it’s coming.  AGI or even a near-equivalent level of AGI technology will take AI far beyond these issues.

Adorable as America’s habit of shooting itself in the foot with every noun in the English language may be, it’s time to get functional. The current state of affairs is near-total failure, with a few chips between.

America’s market image has been severely damaged by this lack of leadership and lack of direction. The world doesn’t care about Big Tech’s ridiculously verbose high opinion of itself, boom-and-bust IPOs, or brattish billionaire tantrums.

The world needs to learn how to live with emerging AI realities.  A clear direction is what’s needed. Can America deliver?