The growing use of Chinese AI models by US startups has triggered anxiety among Silicon Valley executives and Washington lawmakers, but this panic misses the core issue. China's strategy of offering low-cost, open-weight models has naturally appealed to developers, who are the backbone of AI innovation. The controversy centers on "knowledge distillation," a technique where one model trains on another's outputs. While US frontier labs accuse Chinese companies of illicit copying, Elon Musk has stated this is "standard practice" across the industry. The term "knowledge theft" is now being used to rebrand what was once called "knowledge distillation," reflecting Silicon Valley's fear of losing its competitive edge.