A newly released investigation by the U.S. House Select Committee on the Chinese Communist Party paints a stark picture of Beijing’s aggressive, multi-pronged strategy to secure dominance in artificial intelligence. The report, bluntly titled “Buy What It Can, Steal What It Must: China’s Campaign to Acquire Frontier AI Capabilities,” details how China is utilizing both legal loopholes and sophisticated illicit networks to bypass U.S. export controls and acquire critical semiconductor technology.
The investigation concludes that artificial intelligence sits at the absolute center of U.S.-China competition, with Beijing seeking control over the entire AI stack to strengthen its military and insulate its economy from foreign pressure. South China Morning Post reports that “The pattern is clear,” stated Committee Chairman John Moolenaar during a congressional hearing. “China is dependent on our tech stack to continue their AI development. China is willing to buy what they can, and steal what they cannot, to advance their AI ambitions.”
Pillars of Acquisition
The committee’s findings highlight the following primary methods through which China is advancing its AI capabilities despite tightening U.S. restrictions:
1. Dominating the Equipment Market: Despite export controls, China remains the largest global market for chipmaking equipment. The report notes that Chinese firms are aggressively stockpiling legacy and unrestricted tools, building massive capacity that could eventually be leveraged for more advanced processes.
2. Lawful Procurement of AI Chips: Chinese entities continue to lawfully procure large volumes of advanced AI chips that fall just below the performance thresholds set by the U.S. Department of Commerce. These slightly degraded chips are still highly capable when clustered in large numbers.
3. Sophisticated Smuggling Networks: The investigation details the use of complex, multi-layered smuggling networks to acquire restricted, top-tier AI chips. These networks often involve shell companies and transshipment points in third countries, making enforcement exceedingly difficult. This aligns with recent reports that China is rerouting chip tool imports through Southeast Asia to evade scrutiny.
4. Industrial-Scale Model Distillation: Perhaps the most insidious method identified is the extraction of frontier capabilities from American AI developers through “industrial-scale fraud.” This refers to the practice of model distillation, where Chinese researchers use outputs from advanced U.S. models (like GPT-4) to train and refine their own domestic models, effectively copying the capabilities without needing the underlying architecture or massive compute resources.
The Compute Bottleneck
During the congressional hearing, expert witnesses emphasized that computational power—the hardware required to train and run AI models—remains the critical chokepoint. Dmitri Alperovitch, chairman of the Silverado Policy Accelerator, testified that compute is the “single most important input to winning” the AI race.
The report quotes the founder of Chinese AI champion DeepSeek, highlighting the reality of the situation: “Our problem has never been funding. It’s the embargo on high-end chips.” This underscores why Chinese firms are going to such extraordinary lengths to acquire U.S. hardware.
Policy Recommendations for a Tighter Net
To counter these tactics, the Select Committee proposed a suite of legislative measures to close existing loopholes. These include passing the MATCH Act to force allied alignment on export controls, and the AI OVERWATCH Act, which would require explicit export licenses for advanced AI chips destined for countries of concern, replacing the current review process with affirmative government oversight.
The committee also recommended the SCALE Act, which would set export limits based on China’s own domestic production capacity, preventing the importation of advanced American chips when China has no at-scale alternative. Finally, the Remote Access Security Act was proposed to give the Bureau of Industry and Security (BIS) the authority to restrict access to U.S. cloud computing resources, closing a major loophole that allows Chinese firms to rent the compute power they cannot physically import.
The report serves as a clear warning to U.S. policymakers: while export controls have created friction, they have not stopped China’s relentless pursuit of AI supremacy.