{"id":44336,"topic":"ai","source":"DW.com","title":"US-China AI rivalry heats up as Chinese models gain ground - DW.com","url":"https://www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","url_hash":"507f2798c88c94ac2500a60d3d189042cf3717a0","author":"","summary":"US-China AI rivalry heats up as Chinese models gain ground DW.com","content":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months.\nWhile US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.\nFaced with US curbs on high-end chips that help AI to do its most advanced thinking, Chinese tech firms have prioritized dozens of open-source AI models built on \"good enough\" technology.\nThese platforms, including DeepSeek, Alibaba's Qwen and Xiaomi's MiMo, are now widely deployed across Chinese businesses, government services and consumer devices.\nChinese AI models narrow gap with US leaders\nIn the latest sign of the gap closing, Chinese startup Moonshot AI last week unveiled Kimi K3, a model that rivals one of the most advanced AI models — Anthropic's Claude Fable 5 — on key benchmarks.\nIn some tests, Kimi K3 matches or even surpasses Claude with far less computing power and at a fraction of the cost.\nGlobal technology specialist Alvin W. Graylin thinks Kimi K3's arrival turns high-end AI from an expensive luxury into something practical and affordable.\nKimi K3 \"commoditizes frontier models,\" Graylin told DW.\n\"For 98% of customers, the 1 to 2% difference [in knowledge] isn't worth paying 10 to 20 times more.\"\nWashington raises concerns over AI distillation\nChina's latest advance has already drawn a strong reaction from Washington, with US President Donald Trump now threatening to block US access to Chinese AI models.\nTreasury Secretary Scott Bessent, meanwhile, warned on Tuesday the US could sanction Chinese models over alleged intellectual property (IP) theft.\nAnthropic and OpenAI have accused Chinese labs of using their models to train their own systems, a process known as distilling.\nWhile distilling is a common practice by AI labs worldwide to a limited extent, the companies say their models have been bombarded with queries to harvest advanced reasoning. The White House warned in April that China was doing it on an \"industrial scale.\"\nBeijing has hit back, rejecting the accusations as baseless and calling US threats of sanctions and model bans \"technological bullying\" to contain China's rise.\nGiulia Neaher, a research analyst at the Strategic Foresight Hub at the Washington-based Stimson Center think tank, downplayed the role of distilling in Kimi's progress.\n\"A great degree [of its success] is due to the talent, infrastructure and the resources that were poured into building this model,\" Neaher told DW.\nWhy China's open-model approach is gaining traction\nEarly in the development of modern AI, the US chose to keep the inner workings of its leading models closed.\nThis approach allows Big Tech to maximize profits through subscriptions, licensing to businesses and pay-per-token usage.\nBy contrast, many leading Chinese AI developers have embraced open models. This means companies and developers can download and run the model on their servers and then fine-tune it to their specific needs.\n\"Open source allows the Chinese labs to enlist the global AI community in improving and testing their models,\" Graylin told DW, adding that US chip curbs had forced them to be \"more creative and efficient.\"\nWashington doubles down on frontier AI\nYet, while China has the edge in pricing and deployment, Washington still sees maintaining the lead in frontier AI as critical, as whoever controls the most advanced AI systems is likely to dominate militarily, economically and technologically for years to come.\nFrontier models can also accelerate breakthroughs in science and medicine.\nWhile distilling may have helped some of China's AI models reach the Top 10 rankings, Neaher equates the approach with schools that teach students to pass tests rather than fully understand the subject.\n\"You might have really great test scores, but the actual learning might not be reflected,\" she told DW.\nNeaher, whose research covers AI policy and governance, predicted a continued escalation in US antipathy toward China's AI advance as Washington reconsiders its \"laissez-faire\" approach to AI policy.\nCould China overtake US investment frenzy?\nThe AI race could also be setting up another new rivalry — this time over plans to take the most successful AI labs public.\nSome US AI firms have already been valued at close to a trillion dollars and both Anthropic and OpenAI are reportedly preparing for IPOs later this year, to capitalize on massive investor interest.\nOn the Chinese side, DeepSeek and Moonshot AI are also seeking to go public, with the latter planning a Hong Kong listing before early next year.\nWith China tech seemingly undervalued, US institutional investors have quietly increased allocations recently, betting they can sidestep a potential US AI bubble while positioning for China's momentum in what is fast becoming a neck-and-neck race.\n\"The long-term trend doesn't look good,\" argued Graylin. \"There is a major US AI bubble and it's ripe for correction in the next three to 12 months.\"\n\"The Chinese are building comparable models for 1/10th the cost and priced at 1/10 of US frontier.\"\nEdited by: Tim Rooks","image_url":"https://static.dw.com/image/78062721_6.jpg","lang":"en","published_at":"2026-07-23T10:03:36+00:00","fetched_at":"2026-07-23T10:15:04+00:00","status":"read","starred":0,"extract_state":"ok","summary_auto":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months. 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Graylin thinks Kimi K3's arrival turns high-end AI from an expensive luxury into something practical and affordable.\nKimi K3 \"commoditizes frontier models,\" Graylin told DW.\n\"For 98% of customers, the 1 to 2% difference [in knowledge] isn't worth paying 10 to 20 times more.\"\nWashington raises concerns over AI distillation\nChina's latest advance has already drawn a strong reaction from Washington, with US President Donald Trump now threatening to block US access to Chinese AI models.\nTreasury Secretary Scott Bessent, meanwhile, warned on Tuesday the US could sanction Chinese models over alleged intellectual property (IP) theft.\nAnthropic and OpenAI have accused Chinese labs of using their models to train their own systems, a process known as distilling.\nWhile distilling is a common practice by AI labs worldwide to a limited extent, the companies say their models have been bombarded with queries to harvest advanced reasoning. The White House warned in April that China was doing it on an \"industrial scale.\"\nBeijing has hit back, rejecting the accusations as baseless and calling US threats of sanctions and model bans \"technological bullying\" to contain China's rise.\nGiulia Neaher, a research analyst at the Strategic Foresight Hub at the Washington-based Stimson Center think tank, downplayed the role of distilling in Kimi's progress.\n\"A great degree [of its success] is due to the talent, infrastructure and the resources that were poured into building this model,\" Neaher told DW.\nWhy China's open-model approach is gaining traction\nEarly in the development of modern AI, the US chose to keep the inner workings of its leading models closed.\nThis approach allows Big Tech to maximize profits through subscriptions, licensing to businesses and pay-per-token usage.\nBy contrast, many leading Chinese AI developers have embraced open models. This means companies and developers can download and run the model on their servers and then fine-tune it to their specific needs.\n\"Open source allows the Chinese labs to enlist the global AI community in improving and testing their models,\" Graylin told DW, adding that US chip curbs had forced them to be \"more creative and efficient.\"\nWashington doubles down on frontier AI\nYet, while China has the edge in pricing and deployment, Washington still sees maintaining the lead in frontier AI as critical, as whoever controls the most advanced AI systems is likely to dominate militarily, economically and technologically for years to come.\nFrontier models can also accelerate breakthroughs in science and medicine.\nWhile distilling may have helped some of China's AI models reach the Top 10 rankings, Neaher equates the approach with schools that teach students to pass tests rather than fully understand the subject.\n\"You might have really great test scores, but the actual learning might not be reflected,\" she told DW.\nNeaher, whose research covers AI policy and governance, predicted a continued escalation in US antipathy toward China's AI advance as Washington reconsiders its \"laissez-faire\" approach to AI policy.\nCould China overtake US investment frenzy?\nThe AI race could also be setting up another new rivalry — this time over plans to take the most successful AI labs public.\nSome US AI firms have already been valued at close to a trillion dollars and both Anthropic and OpenAI are reportedly preparing for IPOs later this year, to capitalize on massive investor interest.\nOn the Chinese side, DeepSeek and Moonshot AI are also seeking to go public, with the latter planning a Hong Kong listing before early next year.\nWith China tech seemingly undervalued, US institutional investors have quietly increased allocations recently, betting they can sidestep a potential US AI bubble while positioning for China's momentum in what is fast becoming a neck-and-neck race.\n\"The long-term trend doesn't look good,\" argued Graylin. \"There is a major US AI bubble and it's ripe for correction in the next three to 12 months.\"\n\"The Chinese are building comparable models for 1/10th the cost and priced at 1/10 of US frontier.\"\nEdited by: Tim Rooks","excerpt":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months. While US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.","extraction":{"state":"ok","confidence":0.9,"error":null,"explanation":"High confidence: full text extraction produced 5223 characters.","diagnostics_url":"/api/diagnose?url=https%3A//www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","quality_profile":{"profile_version":"extraction_quality.v2","bucket":"high","confidence":0.9,"failure_kind":"none","retryable":false,"retry_after_attempts":0,"reason":"High confidence: full text extraction produced 5223 characters.","operator_guidance":{"severity":"ok","recommended_action":"trust_full_text","next_step":"Use the extracted full text as the primary article source.","operator_label":"Ready","can_retry":false,"can_use_summary":false,"diagnostics_required":false},"content_depth":{"contract_version":"content_depth.v1","category":"full_text","label":"Full text","has_full_text":true,"has_summary":true,"content_length":5223,"summary_length":362,"usable_text_length":5223,"source_field":"content"},"legacy_collapsed":false,"signals":{"extract_state":"ok","extract_error":null,"extract_retries":0,"content_length":5223,"summary_length":362}}},"display_formats":["compact","card","full","digest_section","json"]},"daily_stack_record":{"title":"US-China AI rivalry heats up as Chinese models gain ground - DW.com","url":"https://www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","summary":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months. While US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.","source":"DW.com","date":"2026-07-23T10:03:36+00:00","content":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months.\nWhile US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.\nFaced with US curbs on high-end chips that help AI to do its most advanced thinking, Chinese tech firms have prioritized dozens of open-source AI models built on \"good enough\" technology.\nThese platforms, including DeepSeek, Alibaba's Qwen and Xiaomi's MiMo, are now widely deployed across Chinese businesses, government services and consumer devices.\nChinese AI models narrow gap with US leaders\nIn the latest sign of the gap closing, Chinese startup Moonshot AI last week unveiled Kimi K3, a model that rivals one of the most advanced AI models — Anthropic's Claude Fable 5 — on key benchmarks.\nIn some tests, Kimi K3 matches or even surpasses Claude with far less computing power and at a fraction of the cost.\nGlobal technology specialist Alvin W. Graylin thinks Kimi K3's arrival turns high-end AI from an expensive luxury into something practical and affordable.\nKimi K3 \"commoditizes frontier models,\" Graylin told DW.\n\"For 98% of customers, the 1 to 2% difference [in knowledge] isn't worth paying 10 to 20 times more.\"\nWashington raises concerns over AI distillation\nChina's latest advance has already drawn a strong reaction from Washington, with US President Donald Trump now threatening to block US access to Chinese AI models.\nTreasury Secretary Scott Bessent, meanwhile, warned on Tuesday the US could sanction Chinese models over alleged intellectual property (IP) theft.\nAnthropic and OpenAI have accused Chinese labs of using their models to train their own systems, a process known as distilling.\nWhile distilling is a common practice by AI labs worldwide to a limited extent, the companies say their models have been bombarded with queries to harvest advanced reasoning. The White House warned in April that China was doing it on an \"industrial scale.\"\nBeijing has hit back, rejecting the accusations as baseless and calling US threats of sanctions and model bans \"technological bullying\" to contain China's rise.\nGiulia Neaher, a research analyst at the Strategic Foresight Hub at the Washington-based Stimson Center think tank, downplayed the role of distilling in Kimi's progress.\n\"A great degree [of its success] is due to the talent, infrastructure and the resources that were poured into building this model,\" Neaher told DW.\nWhy China's open-model approach is gaining traction\nEarly in the development of modern AI, the US chose to keep the inner workings of its leading models closed.\nThis approach allows Big Tech to maximize profits through subscriptions, licensing to businesses and pay-per-token usage.\nBy contrast, many leading Chinese AI developers have embraced open models. This means companies and developers can download and run the model on their servers and then fine-tune it to their specific needs.\n\"Open source allows the Chinese labs to enlist the global AI community in improving and testing their models,\" Graylin told DW, adding that US chip curbs had forced them to be \"more creative and efficient.\"\nWashington doubles down on frontier AI\nYet, while China has the edge in pricing and deployment, Washington still sees maintaining the lead in frontier AI as critical, as whoever controls the most advanced AI systems is likely to dominate militarily, economically and technologically for years to come.\nFrontier models can also accelerate breakthroughs in science and medicine.\nWhile distilling may have helped some of China's AI models reach the Top 10 rankings, Neaher equates the approach with schools that teach students to pass tests rather than fully understand the subject.\n\"You might have really great test scores, but the actual learning might not be reflected,\" she told DW.\nNeaher, whose research covers AI policy and governance, predicted a continued escalation in US antipathy toward China's AI advance as Washington reconsiders its \"laissez-faire\" approach to AI policy.\nCould China overtake US investment frenzy?\nThe AI race could also be setting up another new rivalry — this time over plans to take the most successful AI labs public.\nSome US AI firms have already been valued at close to a trillion dollars and both Anthropic and OpenAI are reportedly preparing for IPOs later this year, to capitalize on massive investor interest.\nOn the Chinese side, DeepSeek and Moonshot AI are also seeking to go public, with the latter planning a Hong Kong listing before early next year.\nWith China tech seemingly undervalued, US institutional investors have quietly increased allocations recently, betting they can sidestep a potential US AI bubble while positioning for China's momentum in what is fast becoming a neck-and-neck race.\n\"The long-term trend doesn't look good,\" argued Graylin. \"There is a major US AI bubble and it's ripe for correction in the next three to 12 months.\"\n\"The Chinese are building comparable models for 1/10th the cost and priced at 1/10 of US frontier.\"\nEdited by: Tim Rooks","confidence":0.9,"diagnostics_url":"/api/diagnose?url=https%3A//www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","quality_bucket":"high","failure_kind":"none","retryable":false,"quality_reason":"High confidence: full text extraction produced 5223 characters.","quality_profile":{"profile_version":"extraction_quality.v2","bucket":"high","confidence":0.9,"failure_kind":"none","retryable":false,"retry_after_attempts":0,"reason":"High confidence: full text extraction produced 5223 characters.","operator_guidance":{"severity":"ok","recommended_action":"trust_full_text","next_step":"Use the extracted full text as the primary article source.","operator_label":"Ready","can_retry":false,"can_use_summary":false,"diagnostics_required":false},"content_depth":{"contract_version":"content_depth.v1","category":"full_text","label":"Full text","has_full_text":true,"has_summary":true,"content_length":5223,"summary_length":362,"usable_text_length":5223,"source_field":"content"},"legacy_collapsed":false,"signals":{"extract_state":"ok","extract_error":null,"extract_retries":0,"content_length":5223,"summary_length":362}},"tags":[]},"fallback_formats":["markdown","json","html"],"actions":{"read":"/item/44336","export_markdown":"/api/items/44336/export?format=markdown","export_json":"/api/items/44336/export?format=json","diagnose":"/api/diagnose?url=https%3A//www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558"},"formats":{"full":{"id":44336,"title":"US-China AI rivalry heats up as Chinese models gain ground - DW.com","url":"https://www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","source":"DW.com","author":null,"published_at":"2026-07-23T10:03:36+00:00","locale":"en","topic":"ai","tags":[],"excerpt":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months. While US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.","full_text":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months.\nWhile US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.\nFaced with US curbs on high-end chips that help AI to do its most advanced thinking, Chinese tech firms have prioritized dozens of open-source AI models built on \"good enough\" technology.\nThese platforms, including DeepSeek, Alibaba's Qwen and Xiaomi's MiMo, are now widely deployed across Chinese businesses, government services and consumer devices.\nChinese AI models narrow gap with US leaders\nIn the latest sign of the gap closing, Chinese startup Moonshot AI last week unveiled Kimi K3, a model that rivals one of the most advanced AI models — Anthropic's Claude Fable 5 — on key benchmarks.\nIn some tests, Kimi K3 matches or even surpasses Claude with far less computing power and at a fraction of the cost.\nGlobal technology specialist Alvin W. Graylin thinks Kimi K3's arrival turns high-end AI from an expensive luxury into something practical and affordable.\nKimi K3 \"commoditizes frontier models,\" Graylin told DW.\n\"For 98% of customers, the 1 to 2% difference [in knowledge] isn't worth paying 10 to 20 times more.\"\nWashington raises concerns over AI distillation\nChina's latest advance has already drawn a strong reaction from Washington, with US President Donald Trump now threatening to block US access to Chinese AI models.\nTreasury Secretary Scott Bessent, meanwhile, warned on Tuesday the US could sanction Chinese models over alleged intellectual property (IP) theft.\nAnthropic and OpenAI have accused Chinese labs of using their models to train their own systems, a process known as distilling.\nWhile distilling is a common practice by AI labs worldwide to a limited extent, the companies say their models have been bombarded with queries to harvest advanced reasoning. The White House warned in April that China was doing it on an \"industrial scale.\"\nBeijing has hit back, rejecting the accusations as baseless and calling US threats of sanctions and model bans \"technological bullying\" to contain China's rise.\nGiulia Neaher, a research analyst at the Strategic Foresight Hub at the Washington-based Stimson Center think tank, downplayed the role of distilling in Kimi's progress.\n\"A great degree [of its success] is due to the talent, infrastructure and the resources that were poured into building this model,\" Neaher told DW.\nWhy China's open-model approach is gaining traction\nEarly in the development of modern AI, the US chose to keep the inner workings of its leading models closed.\nThis approach allows Big Tech to maximize profits through subscriptions, licensing to businesses and pay-per-token usage.\nBy contrast, many leading Chinese AI developers have embraced open models. This means companies and developers can download and run the model on their servers and then fine-tune it to their specific needs.\n\"Open source allows the Chinese labs to enlist the global AI community in improving and testing their models,\" Graylin told DW, adding that US chip curbs had forced them to be \"more creative and efficient.\"\nWashington doubles down on frontier AI\nYet, while China has the edge in pricing and deployment, Washington still sees maintaining the lead in frontier AI as critical, as whoever controls the most advanced AI systems is likely to dominate militarily, economically and technologically for years to come.\nFrontier models can also accelerate breakthroughs in science and medicine.\nWhile distilling may have helped some of China's AI models reach the Top 10 rankings, Neaher equates the approach with schools that teach students to pass tests rather than fully understand the subject.\n\"You might have really great test scores, but the actual learning might not be reflected,\" she told DW.\nNeaher, whose research covers AI policy and governance, predicted a continued escalation in US antipathy toward China's AI advance as Washington reconsiders its \"laissez-faire\" approach to AI policy.\nCould China overtake US investment frenzy?\nThe AI race could also be setting up another new rivalry — this time over plans to take the most successful AI labs public.\nSome US AI firms have already been valued at close to a trillion dollars and both Anthropic and OpenAI are reportedly preparing for IPOs later this year, to capitalize on massive investor interest.\nOn the Chinese side, DeepSeek and Moonshot AI are also seeking to go public, with the latter planning a Hong Kong listing before early next year.\nWith China tech seemingly undervalued, US institutional investors have quietly increased allocations recently, betting they can sidestep a potential US AI bubble while positioning for China's momentum in what is fast becoming a neck-and-neck race.\n\"The long-term trend doesn't look good,\" argued Graylin. \"There is a major US AI bubble and it's ripe for correction in the next three to 12 months.\"\n\"The Chinese are building comparable models for 1/10th the cost and priced at 1/10 of US frontier.\"\nEdited by: Tim Rooks","reading_time_min":4,"extraction":{"state":"ok","confidence":0.9,"error":null,"explanation":"High confidence: full text extraction produced 5223 characters.","diagnostics_url":"/api/diagnose?url=https%3A//www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","quality_profile":{"profile_version":"extraction_quality.v2","bucket":"high","confidence":0.9,"failure_kind":"none","retryable":false,"retry_after_attempts":0,"reason":"High confidence: full text extraction produced 5223 characters.","operator_guidance":{"severity":"ok","recommended_action":"trust_full_text","next_step":"Use the extracted full text as the primary article source.","operator_label":"Ready","can_retry":false,"can_use_summary":false,"diagnostics_required":false},"content_depth":{"contract_version":"content_depth.v1","category":"full_text","label":"Full text","has_full_text":true,"has_summary":true,"content_length":5223,"summary_length":362,"usable_text_length":5223,"source_field":"content"},"legacy_collapsed":false,"signals":{"extract_state":"ok","extract_error":null,"extract_retries":0,"content_length":5223,"summary_length":362}}},"quality_profile":{"profile_version":"extraction_quality.v2","bucket":"high","confidence":0.9,"failure_kind":"none","retryable":false,"retry_after_attempts":0,"reason":"High confidence: full text extraction produced 5223 characters.","operator_guidance":{"severity":"ok","recommended_action":"trust_full_text","next_step":"Use the extracted full text as the primary article source.","operator_label":"Ready","can_retry":false,"can_use_summary":false,"diagnostics_required":false},"content_depth":{"contract_version":"content_depth.v1","category":"full_text","label":"Full text","has_full_text":true,"has_summary":true,"content_length":5223,"summary_length":362,"usable_text_length":5223,"source_field":"content"},"legacy_collapsed":false,"signals":{"extract_state":"ok","extract_error":null,"extract_retries":0,"content_length":5223,"summary_length":362}},"actions":{"read":"/item/44336","export_markdown":"/api/items/44336/export?format=markdown","export_json":"/api/items/44336/export?format=json","diagnose":"/api/diagnose?url=https%3A//www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558"}},"digest":{"id":44336,"title":"US-China AI rivalry heats up as Chinese models gain ground - DW.com","url":"https://www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","source":"DW.com","topic":"ai","published_at":"2026-07-23T10:03:36+00:00","excerpt":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months. 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While US players, including…","badges":["quality:high"],"links":{"read":"/item/44336","original":"https://www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","diagnose":"/api/diagnose?url=https%3A//www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558"},"quality_warning":null},"export":{"title":"US-China AI rivalry heats up as Chinese models gain ground - DW.com","url":"https://www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","summary":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months. While US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.","source":"DW.com","date":"2026-07-23T10:03:36+00:00","content":"In what seems like the blink of an eye, China has gone from being up to five years behind the United States in top-tier artificial intelligence (AI) to lagging by just a few months.\nWhile US players, including Anthropic's Claude and OpenAI's ChatGPT, have spent hundreds of billions of dollars to push the frontier of AI, China has pursued a very different path.\nFaced with US curbs on high-end chips that help AI to do its most advanced thinking, Chinese tech firms have prioritized dozens of open-source AI models built on \"good enough\" technology.\nThese platforms, including DeepSeek, Alibaba's Qwen and Xiaomi's MiMo, are now widely deployed across Chinese businesses, government services and consumer devices.\nChinese AI models narrow gap with US leaders\nIn the latest sign of the gap closing, Chinese startup Moonshot AI last week unveiled Kimi K3, a model that rivals one of the most advanced AI models — Anthropic's Claude Fable 5 — on key benchmarks.\nIn some tests, Kimi K3 matches or even surpasses Claude with far less computing power and at a fraction of the cost.\nGlobal technology specialist Alvin W. Graylin thinks Kimi K3's arrival turns high-end AI from an expensive luxury into something practical and affordable.\nKimi K3 \"commoditizes frontier models,\" Graylin told DW.\n\"For 98% of customers, the 1 to 2% difference [in knowledge] isn't worth paying 10 to 20 times more.\"\nWashington raises concerns over AI distillation\nChina's latest advance has already drawn a strong reaction from Washington, with US President Donald Trump now threatening to block US access to Chinese AI models.\nTreasury Secretary Scott Bessent, meanwhile, warned on Tuesday the US could sanction Chinese models over alleged intellectual property (IP) theft.\nAnthropic and OpenAI have accused Chinese labs of using their models to train their own systems, a process known as distilling.\nWhile distilling is a common practice by AI labs worldwide to a limited extent, the companies say their models have been bombarded with queries to harvest advanced reasoning. The White House warned in April that China was doing it on an \"industrial scale.\"\nBeijing has hit back, rejecting the accusations as baseless and calling US threats of sanctions and model bans \"technological bullying\" to contain China's rise.\nGiulia Neaher, a research analyst at the Strategic Foresight Hub at the Washington-based Stimson Center think tank, downplayed the role of distilling in Kimi's progress.\n\"A great degree [of its success] is due to the talent, infrastructure and the resources that were poured into building this model,\" Neaher told DW.\nWhy China's open-model approach is gaining traction\nEarly in the development of modern AI, the US chose to keep the inner workings of its leading models closed.\nThis approach allows Big Tech to maximize profits through subscriptions, licensing to businesses and pay-per-token usage.\nBy contrast, many leading Chinese AI developers have embraced open models. This means companies and developers can download and run the model on their servers and then fine-tune it to their specific needs.\n\"Open source allows the Chinese labs to enlist the global AI community in improving and testing their models,\" Graylin told DW, adding that US chip curbs had forced them to be \"more creative and efficient.\"\nWashington doubles down on frontier AI\nYet, while China has the edge in pricing and deployment, Washington still sees maintaining the lead in frontier AI as critical, as whoever controls the most advanced AI systems is likely to dominate militarily, economically and technologically for years to come.\nFrontier models can also accelerate breakthroughs in science and medicine.\nWhile distilling may have helped some of China's AI models reach the Top 10 rankings, Neaher equates the approach with schools that teach students to pass tests rather than fully understand the subject.\n\"You might have really great test scores, but the actual learning might not be reflected,\" she told DW.\nNeaher, whose research covers AI policy and governance, predicted a continued escalation in US antipathy toward China's AI advance as Washington reconsiders its \"laissez-faire\" approach to AI policy.\nCould China overtake US investment frenzy?\nThe AI race could also be setting up another new rivalry — this time over plans to take the most successful AI labs public.\nSome US AI firms have already been valued at close to a trillion dollars and both Anthropic and OpenAI are reportedly preparing for IPOs later this year, to capitalize on massive investor interest.\nOn the Chinese side, DeepSeek and Moonshot AI are also seeking to go public, with the latter planning a Hong Kong listing before early next year.\nWith China tech seemingly undervalued, US institutional investors have quietly increased allocations recently, betting they can sidestep a potential US AI bubble while positioning for China's momentum in what is fast becoming a neck-and-neck race.\n\"The long-term trend doesn't look good,\" argued Graylin. \"There is a major US AI bubble and it's ripe for correction in the next three to 12 months.\"\n\"The Chinese are building comparable models for 1/10th the cost and priced at 1/10 of US frontier.\"\nEdited by: Tim Rooks","confidence":0.9,"diagnostics_url":"/api/diagnose?url=https%3A//www.dw.com/en/us-china-ai-rivalry-reaches-critical-flashpoint/a-77899558","quality_bucket":"high","failure_kind":"none","retryable":false,"quality_reason":"High confidence: full text extraction produced 5223 characters.","quality_profile":{"profile_version":"extraction_quality.v2","bucket":"high","confidence":0.9,"failure_kind":"none","retryable":false,"retry_after_attempts":0,"reason":"High confidence: full text extraction produced 5223 characters.","operator_guidance":{"severity":"ok","recommended_action":"trust_full_text","next_step":"Use the extracted full text as the primary article source.","operator_label":"Ready","can_retry":false,"can_use_summary":false,"diagnostics_required":false},"content_depth":{"contract_version":"content_depth.v1","category":"full_text","label":"Full text","has_full_text":true,"has_summary":true,"content_length":5223,"summary_length":362,"usable_text_length":5223,"source_field":"content"},"legacy_collapsed":false,"signals":{"extract_state":"ok","extract_error":null,"extract_retries":0,"content_length":5223,"summary_length":362}},"tags":[],"format_contract_version":"news_item_formats.v1"}}}