HONG KONG (AP) — Artificial intelligence from China is making waves in the United States marketplace.
Raffi Krikorian, the chief technology officer at Mozilla, based in San Francisco, started using the new Kimi K3 model from Chinese startup Moonshot for his regular work shortly after its release last week. He remarked on its responsiveness, finding it quicker than the more established and pricier Claude Fable chatbot from Anthropic. Before K3, he was utilizing another strong Chinese model, Z.ai’s GLM-5.2, for tasks like managing his calendar and emails.
Krikorian's switch to Chinese AI reflects a broader trend among Americans who are increasingly picking Chinese AI solutions that offer higher efficiency at lower costs. Companies such as Coinbase, a cryptocurrency exchange based in the U.S., are turning to these models as a means to cut expenses.
The rise of these Chinese systems has generated concern among some U.S. tech leaders, yet unless there is a broad ban, their appeal to independent developers both in the U.S. and globally is likely to persist.
U.S. policy has restricted China’s access to some advanced technologies, including state-of-the-art AI chips. Treasury Secretary Scott Bessent has suggested that additional sanctions could be implemented to safeguard American intellectual property.
The administration of former President Donald Trump accused Moonshot of potentially using "covert" methods to develop K3, implying some reliance on Anthropic’s Fable. Meanwhile, some U.S. politicians and AI firms, notably Anthropic, have accused Chinese startups of illegally using techniques to replicate their models—a claim that China refutes as unfounded.
The emergence of powerful Chinese AI models this year indicates a shift in the U.S.-China AI rivalry, following the disruptive entry of DeepSeek’s AI model early last year that demonstrated performance similar to U.S. offerings but at a lower cost.
Recent models from startups such as Z.ai (released in June) and Moonshot (released in July) are becoming nearly as capable as leading models from OpenAI and Anthropic. Additionally, Alibaba showcased its Qwen 3.8 Max AI model in July, while DeepSeek revealed a preview of its V4 model earlier in April.
These advancements are yielding tangible results. Curt Meinhold, a technology executive from Greensboro, North Carolina, noted his growing preference for DeepSeek for its utility in generating sales leads and conducting business.
“Most of us don’t really need cutting-edge models like Anthropic’s Mythos or Fable,” he commented. “We just want something that works well enough.”
A July report from Goldman Sachs characterized the Chinese AI models as being at a pivotal moment for broader adoption, spurred by a rising global demand for "agentic" AI that can efficiently manage complex tasks.
As AI services often charge based on output token counts, the cost differences with Chinese models are significant, as noted by analysts including Alex Colville of the Australian Strategic Policy Institute. “The Chinese models are quite competitive in quality,” Meinhold pointed out, emphasizing the financial advantages.
Currently, the Kimi K3 model from Moonshot is leading in popularity, with recent tracking data showing that the five most utilized models on OpenRouter are Chinese. According to Sensor Tower, K3 amassed over 930,000 downloads shortly after its July debut, marking a staggering 200% increase from the previous week, with around 86,000 of those downloads occurring in the United States—an impressive jump of 387%.
So much interest in K3 led Moonshot to temporarily halt new subscriptions due to overwhelming demand.
Nevertheless, while Chinese AI systems are advancing rapidly, experts indicate they still fall short when it comes to comprehensive capabilities compared to their American counterparts. Anastasios Angelopoulos, co-founder and CEO of Arena, noted that American firms are also exploring competitive models to drive down prices.
The advantage of open-source development is another aspect where Chinese models are thriving, allowing anyone to modify and improve them, in stark contrast to the closed-source models from U.S. companies like Anthropic and OpenAI. Chinese developers could capitalize on this openness to enhance their global reach and adoption, according to Lian Jye Su from the advisory group Omdia.
As the quality of Chinese open-source AI models increasingly rivals their U.S. counterparts, Krikorian pointed out that the landscape is shifting towards models that are predominantly Chinese-built. While discussions around tightening restrictions on Chinese AI models occur in the U.S., several American tech giants, including Microsoft, Meta, and Nvidia, have endorsed a commitment to open AI initiatives.
Moreover, specific U.S. policies have inadvertently given Chinese firms an advantage. For instance, shortly after the U.S. government imposed export controls on Anthropic’s models, Z.ai launched its GLM-5.2, quickly filling the gap left by the U.S. restrictions.
"Whenever an American model faces restrictions, a Chinese alternative can quickly emerge," Angelopoulos explained.
China is also focused on promoting AI technologies internationally. At a recent tech summit in Shanghai, President Xi Jinping advocated for open-source AI and emphasized the objective of increasing global equity, while articulating China’s aim to enhance AI capabilities, particularly in developing nations.
The competitive landscape is shifting, with Chinese firms eager to extend their reach globally. Leading AI startups in China are in the process of securing more investment to subsidize their expansion efforts, including through public offerings.
Both nations are driven to encourage a wide uptake of their AI technologies while carefully safeguarding developments that could enhance their strategic competitors, explained Chelsey Tam from Morningstar.
"The competition has evolved beyond the U.S. versus China, with Chinese labs increasingly competing against each other as well," Angelopoulos noted.
Nevertheless, the surge in AI investment, while promising, raises sustainability questions for these rapidly growing Chinese companies. For instance, Z.ai reported a remarkable 132% revenue increase to 724 million yuan ($107 million) last year, but their net losses rose to 4.7 billion yuan ($694 million).
Looking ahead, the momentum of Chinese AI models is likely to persist, particularly in the U.S. “I encourage anyone serious about their AI needs to evaluate these options,” Krikorian recommended.
