US sanctions Chinese firms over Google AI theft; China vows retaliation

China has pushed back against US sanctions targeting five Chinese companies over alleged trade secret theft, warning it will take countermeasures if Washington does not reverse course.

China's state-run Xinhua news agency reported Wednesday that the Ministry of Commerce on Tuesday condemned Washington's actions, saying the United States had "exaggerated the so-called 'trade secret theft' issue to smear Chinese companies and impose sanctions — a malicious act that seriously infringes on the legitimate rights and interests of Chinese enterprises."

The ministry added that it "urges the United States to promptly correct its erroneous actions," warning that China "will take necessary measures to respond and firmly safeguard the legitimate rights and interests of Chinese companies" if it does not.

The statement came in response to the Department of State's sanctions Tuesday (local time) on five Chinese companies linked to the theft of AI-related trade secrets from Google. Among those sanctioned was Shanghai Zhisuan Technology, a company founded by Ding Linwei after he left Google, where he had worked as a software engineer. Chinese venture capital firm MiraclePlus, which invested in the company, and three related entities were also placed on the sanctions list. Ding was found guilty by a US federal jury in January on charges of stealing confidential materials related to Google's AI supercomputing systems.

The Commerce Ministry argued that the rapid development of China's AI industry is the result of years of investment in basic research and continuous innovation, saying it "benefits not only China and the United States but the entire world and has nothing whatsoever to do with so-called 'trade secret theft.'" It also called on the United States to "view the development of Chinese companies correctly, stop smearing and pressuring them," and to "create a market environment for fair competition and maintain the overall relationship of China-US economic and trade cooperation."

On the same day, Washington issued an executive order barring federal agencies from using AI models developed by DeepSeek. The Department of Homeland Security said using DeepSeek's AI models posed a risk of transferring sensitive domestic data to China, and directed federal agencies to remove DeepSeek products from their IT systems.

China's state-run English-language Global Times was sharply critical of the US sanctions, saying that "the more pressure the United States applies, the more it reveals its own anxiety and helplessness in the face of China's rising AI sector," and that Washington "has issued countless punitive orders yet still cannot keep up with DeepSeek."

On the move to ban DeepSeek, the paper claimed "there is not a single piece of solid evidence for any of the allegations," while asserting that "numerous American technology products have repeatedly been caught conducting surveillance and leaking data through backdoors."