China criticized a U.S. order barring federal civilian agencies from using products from Chinese artificial intelligence developer DeepSeek and warned it would act to protect Chinese companies, the Associated Press reported Wednesday. The response turns a U.S. procurement decision into a diplomatic dispute, raising the stakes for companies caught between the two governments and for software vendors whose products may include DeepSeek technology.
What Happened
Foreign Ministry spokesperson Mao Ning said Tuesday that China "will resolutely safeguard the legitimate rights and interests of Chinese companies" and that it opposes stretching the concept of national security too far, according to the AP.
In a statement late Tuesday, China's Commerce Ministry expressed "strong dissatisfaction and firm opposition," the AP reported. The ministry said Washington had ignored the consensus reached between Chinese President Xi Jinping and President Donald Trump and was using discriminatory restrictions to suppress and contain China. It said it would closely monitor the situation and take all necessary measures to defend Chinese interests. Neither ministry named a specific countermeasure.
DeepSeek did not immediately respond to the AP's request for comment.
The Chinese statements answer an order from the Department of Homeland Security that The Primary Wire reported Tuesday. Posted for public inspection Monday and published in the Federal Register Tuesday, the order requires civilian agencies to remove DeepSeek products, along with third-party products and services built using DeepSeek, from their systems and bars new purchases. The AP reported that the order dates to late July. DHS said DeepSeek's models present multiple threat vectors, including concerns that its servers are in China and that Chinese authorities could gain access to sensitive U.S. data.
Why It Matters
For U.S. companies, the most direct effect comes from the American side. Because the order reaches third-party products built with DeepSeek, as BleepingComputer also reported, contractors and software vendors selling to civilian agencies need to know whether any of their products rely on its models. DeepSeek's open-source models are widely available in the U.S. and mostly free to use, the AP noted, which makes them easy to build into commercial tools without a formal purchase.
The Chinese reaction adds a second risk. Beijing has not said what it might do, but both ministries framed the order as an attack on Chinese companies rather than a narrow security measure. George Chen, a partner at Washington-based consultancy The Asia Group, told the AP the exchange reflects deep strategic distrust, even as Trump and Xi try to keep their personal relationship on good terms.
For executives and policymakers, the dispute shows how quickly a federal procurement decision can become a trade issue, and how AI models are joining chips as a point of friction between the two countries.
Context
The U.S. has accused Chinese AI startups, including DeepSeek, of large-scale "distillation," or training their systems to copy capabilities from leading American models, a claim Beijing has dismissed, the AP reported. U.S.-led restrictions still keep some of the most advanced AI chips and chipmaking equipment from China. Last week, Beijing proposed its own limits on exports of certain advanced AI models.
The two governments have also made some progress on AI governance, the AP reported, including a U.S. proposal for a system to notify each other of AI incidents related to national security.
What to Watch
- Whether Beijing names concrete countermeasures and which U.S. companies or products they target.
- How the order's third-party provision is applied to contractors, including any exception requests agencies file with the Cybersecurity and Infrastructure Security Agency.
- Whether AI restrictions feature when Trump and Xi meet on the sidelines of the Asia-Pacific Economic Cooperation summit in Shenzhen, China, in mid-November.
