The cable said its purpose was to "warn of the risks of utilising AI models distilled from US proprietary AI models, and lay the groundwork for potential follow-up and outreach by the US government."
Distillation is the process of training smaller AI models using output from larger, more expensive ones as part of an effort to lower the costs of training a powerful new AI tool.
DeepSeek, the Chinese startup whose low-cost AI model stunned the world last year, on Friday launched a preview of a highly anticipated new model adapted for Huawei chip technology, underlining China's growing autonomy in the sector.
The Chinese Embassy in Washington on Friday reiterated its stance that the accusations are baseless.
"The allegations that Chinese entities are stealing American AI intellectual property are groundless and are deliberate attacks on China's development and progress in the AI industry," it said in a statement to Reuters.
DeepSeek did not immediately respond to a request for comment. In the past, the Chinese AI startup has said its V3 model used data naturally occurring and collected through web crawling and it had not intentionally used synthetic data generated by OpenAI.
The cable also mentioned Chinese AI firms Moonshot AI and MiniMax. Neither company immediately responded to a request for comment.
This week, the White House made similar accusations, which the Chinese Embassy in Washington called "baseless allegations," adding that Beijing "attaches great importance to the protection of intellectual property rights."
The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about "concerns over adversaries' extraction and distillation of US A.I. models."
"A separate demarche request and message has been sent to Beijing for raising with China," the document states.
The cable, which has not been previously reported, signals the Trump administration is taking seriously the growing concerns about Chinese distillation of US AI models.
"AI models developed from surreptitious, unauthorised distillation campaigns enable foreign actors to release products that appear to perform comparably on select benchmarks at a fraction of the cost but do not replicate the full performance of the original system," the cable said.
It added that the campaigns also "deliberately strip security protocols from the resulting models and undo mechanisms that ensure those AI models are ideologically neutral and truth-seeking."
OpenAI warned US politicians that Chinese artificial intelligence startup DeepSeek was targeting the ChatGPT maker and the nation's leading AI companies to replicate models and use them for its own training, Reuters reported in February.
The memo and follow-up cable, released just weeks before US President Donald Trump is set to visit Chinese President Xi Jinping in Beijing, promise to raise tensions in a long-running tech war between the rival superpowers, which had been lowered by a detente brokered last October.
