SINGAPORE, July 7 (Reuters) - Chinese authorities have held meetings with top tech firms over the past month about potentially restricting overseas access to China's most advanced AI models, including those yet to be released, three people familiar with the discussions said.

The talks follow a number of steps by Beijing to keep homegrown AI within the country and underscore how China, like the U.S., is now treating cutting-edge artificial intelligence as a critical national asset that needs controls.

Companies present at the talks included tech giants Alibaba and ByteDance as well as startup Z.ai, said the people, who were not authorised to speak to media and declined to be identified.

Since the emergence of DeepSeek's R1 model last year, Chinese AI models have made big inroads globally thanks to their low costs and increasing capabilities. Any decision by Beijing to limit access to those products could ripple across AI markets as costs for many businesses would likely increase.

TOUGHENING UP PENALTIES FOR AI THEFT DISCUSSED

At the meetings, led by China's Ministry of Commerce, participants discussed putting limits on the most advanced AI models - both closed-source and more open versions, according to two of the sources.

Officials talked about making any leak or theft of proprietary AI technology an offence under China's stringent national security law, one of the sources said. 

The officials also raised the possibility of implementing new measures to restrict who can fund domestic AI startups, the source added.

The scope of the potential restrictions is still being discussed, two sources said, adding that they may only apply to future models. It was not immediately clear when or even if they would come into force.

China's commerce ministry, which oversees export regulations, and the National Development and Reform Commission - the country's state planning agency whose officials also attended the meetings - did not respond to Reuters requests for comment.

Alibaba, ByteDance and Z.ai also did not respond to Reuters queries.

All three companies have a range of AI models, some closed-source while others are open-weight, meaning users can download, run and customise the underlying systems.

Alibaba's Qwen and ByteDance's Doubao are two of the most widely used AI models in China. Z.ai has recently set Silicon Valley abuzz as the capabilities of its GLM-5.2 model come close to leading U.S. offerings but at a fraction of the cost.

AI MODELS AND NATIONAL SECURITY CONCERNS

U.S. President Donald Trump's administration has also been deeply concerned about national security implications of AI - in particular the potential for American AI products to be misused by military intelligence in China, Russia and other countries of concern.

In June, it ordered that foreign nationals not have access to Anthropic's most advanced Fable and Mythos models, which prompted the company to disable the models for all users globally as nationality could not be verified in real time.

Export controls for Fable, which is designed for the general public, have since been lifted after new safeguards were put in place. But Mythos, designed for cybersecurity professionals, is still only available to some "trusted" U.S. organisations.

Some U.S. AI experts have also said the U.S. needs to regulate the use of Chinese AI models.

ANGST IN CHINA ABOUT MYTHOS THREAT

According to two of the sources, Chinese authorities are deeply worried about the potential for Mythos to exploit software vulnerabilities and that Washington might deploy the model against Chinese interests.

That echoes concerns publicly voiced by state media and Zhou Hongyi, founder of cybersecurity firm 360, a major vendor to government and enterprise clients, who has said China needs to develop its own Mythos.

China this year has implemented numerous measures to protect homegrown AI.

In April, the country's state planner ordered Meta to unwind its $2 billion acquisition of Chinese-founded AI startup Manus. In early June, authorities issued sweeping new rules, tightening control of overseas deals that involve Chinese investors, technology, data and national security.

China had also launched investigations this year into Manus and other local AI startups that had moved abroad, seeking to establish whether they have broken export control laws, according to two of the sources and a third person.

Manus has not responded to requests for comment.

Reuters was not able to learn how any potential new restrictions on overseas access to Chinese AI models might work.

But some hints might be gleaned from a May roundtable of Chinese legal experts on regulations governing open-source AI.

According to a summary of the discussions published in an official Supreme People's Court journal, participants proposed a tiered system: basic open-source tools subject to a simple filing, more advanced technologies facing security reviews, and the most sensitive frontier models barred from public release or restricted to domestic use.