Apparently open source models is an officially stated national strategy now, which is somewhat reassuring that we'll probably keep getting these for a while.

https://www.reuters.com/world/asia-pacific/chinas-xi-promote...

> Companies can still make money from commodities

Especially Chinese companies. Just think about all the other industries where Chinese companies dominate by extremely low cost.

- AI investment is basically the only thing keeping the American economy treading water at the moment, and kicking the chair out from under that industry benefits China tremendously.

I'm definitely not saying that's the only factor, but I think it's naive to assume it isn't at all a factor.

There is definitely strategy and direction coming from the top. CEOs have been summoned for conversations. There are new rules like no Ai lovers that certainly show they are thinking about things.

The AI CTO from The Linux Foundation, Matt White, spoke about his recent trip to talk to the Chinese Ai labs ~month ago.

https://www.youtube.com/watch?v=zHi0jy4MK4c

https://www.economist.com/china/2026/07/16/china-wants-to-en...

> Chinese labs only have 5-10% the valuation of OpenAI/Anthropic, so massive monopoly profits aren't necessary. Profit expectations for tech companies in China are really low in general, complete opposite of the US.

It’s really amazing to see that the competition is creating better quality models for everyone - and am really happy that some of these are open source (or partially os).

Regarding the valuation, that maybe points a finger to the over valuation of the US companies ?

Interesting times to be alive.

-Chinese labs only have 5-10% the valuation of OpenAI/Anthropic

Another reason could be that they want to close the gap between their valuations and OpenAI/Anthropic.

Either Chinese labs are worth more or OpenAI/Anthropic are worth less. One of those is true

Also at scale Kimi (or DeepSeek and others) don't have to worry about local deployment. The number of param keeps growing, I highly doubt consumer hardware will catch up. I am just glad Qwen team is still putting up great bangers.

Maybe they are overdoing it with “attention is all you need”

Google did this by creating Android to undercut Apple. Many US tech firms did this strategy in the 2000s and 2010s of supporting open source alternatives to their opponent's closed source money maker, to undercut the competition. Back then, it let open source have a big boost and we all benefited from that. Hopefully open weights models will do the same so that AI can be more democratized. I wouldn't want to live in a world where, for example only Anthropic or MSFT have top AI and the rest of us have nothing.

> Releasing free or cheap versions of the models undermines US economic growth.

This would be like saying that the creation of the PC undermined the 1980s economy because it hurt IBM's profits. Instead the consequences of cheap, ubiquitous personal computers grew the economy 10-fold.

There is an entire class of wholesale model providers that stand to gain from open source models. Then there are companies building platforms on top of LLMs that would otherwise be impossible with closed models due to cost. And there are entire enterprise use cases that would simply be non-viable at $50/million tokens, like OpenClaw, Hermes, etc.

> so much of US economy is invested in AI.

This is a talking point that plays into the frontier labs' desire to be seen as "too big to fail". While yes, several hundred billion dollars have been invested in AI, (a) much of this is in the form of circular Monopoly-money deals, and (b) the US GDP is over $30 trillion annually. The real economy - the one that makes food, builds homes, provides medical care, etc. - is so much bigger and more important than the AI industry.

That's not to say that an (inevitable?) AI crash won't be the spark that ignites a big recession. We are well overdue for one.

It's exactly the same strategy followed by the Silicon Valley for the past 3 decades to beat the IBM-era companies. Google gave everything free. Social media stuff was free. Video calls are free. Bloggers gave content for free. A lot ot open-source product developers did managed offerings of the free products.

Chinese companies also have invested money and people to grow AI model，though China's energy costs are far lower than everybody else's. Combined with lower labor costs and currency arbitrage, it's completely natural that Chinese models are priced so aggressively. I use them myself, and the price-to-performance ratio is honestly unbeatable.

It's just too much 5D chess to be possible. Government spending billions into AI companies and pressuring them to open source at a hope at denting openAI and co? Why not just pour the cash into electric cars or steel where there's a guaranteed return? It's just absurd.

At a state level it's a pretty good defensive strategy against the American AI industry, as a whole, gaining a monopolistic advantage. This prevents the US from using this as a coercive leverage through things such as tarrifs, export bans etc.

In a world, that's increasingly dependant on the AI "opium" that the US is dealing, it's conceivable that the current administration could try to sabotage something like, say Chinese-European relationships, by threatening to cut access to Anthropic or OpenAI products for Europeans, if China cosies up to the EU.

The disadvantage of trying to use these leverages, is that once the genie's out of the bottle, the other party will divert their focus quickly, so it only works if the US truly has a choke-hold on frontier AI. Otherwise, you just scared the other party into never trusting American frontier AI ever, and you didn't even truly hurt them, because they already have a quick fix from China.

Unfortunately behind a paywall, but there's an article in the previous issue of Foreign Affairs about how the Trump administration has fumbled this coercion strategy repeatedly because they overestimated their advantage in different markets (tariffs on Canada, Iran, etc) and what an actually effective strategy can look like https://www.foreignaffairs.com/united-states/how-fight-econo...

tl; dr: You need to have a monopoly, the enemy should not bounce back quickly, you shouldn't cripple your own economy doing it.

AI may just be the next economic offensive the Trump administration fumbles, because China planned ahead by incentivising development of close-second alternatives to their frontier models.

>Open sourcing models is not a commercial risk because barely anyone can run them locally

there are dozens of us!

It also allows companies to get broad, global exposure while satisfying both wary end users and host government policies & restrictions.

This. More people should read Simon Wardley.

Also China's silent but powerful support of Russia and its invasion.

First things first: the CCP must dominate China itself. For this job one is the global discrediting of democracy in favor of cults of personality. This is the single objective of the Putin-Xi-Khamenei information system. China global hegemony would merely be an instrument of CCP internal control. Similarly Khamenei supported Hezbollah, Hamas, Houthi, Iraq militias ... to control his own population.

US "AI tech giants" are foaming at the mouth about "dangers" ans "safety", about "how US customers can not be trusted with AI", how much everybody should pay them, and how many $Trillions should they make, at US customers' expense.

For each "AI tech giant", there are millions of other US companies that will benefit from broader AI availability. US economy (and US tech economy) != Anthropic + OpenAI.

Such narratives are always so US centric, as if every country in the world is obsessed by us. That's not the case.

There might be foreign policy implications but the biggest reason is really nurturing their own tech independence and entrepreneurship.

Not everything is an 8D chess conspiracy mate. If they wanted to do this, they’d wait until OpenAI and Anthropic were at their absolute peaks of investment and then release an open source model that was as good. That’s not what they’ve done at all.

Or maybe "complimenting your commodities"?

Granted I've only used it for a few hours, but to me K3 still appears below Sonnet, even below 4.5.

I have their highest subscription, so it's not that I can't find uses for it and it has sides to it I really like, and it performs really well in some situations, but 2.7 also gets totally lost on tasks Sonnet and Opus has no problems with, and it looks like that is still the case with K3.

That said, I'm doing things with these models that are a lot more complex than the average app people will throw these models at, so I'm sure there are lots of use cases where it will perform better than what I'm seeing.

Frontier labs release frontier models to the public only if there is market pressure to do so. Anthropic is not even hiding that they have been using Mythos internally for months now.

I wouldn’t be surprised if OpenAI (so much for “open”) is using GPT-6 internally already.

It appears that peasants like us are not going to get access to frontier AI anymore at any price.

That assumes progress is linear, which it certainly is not. We’re also assuming Chinese companies are releasing their best stuff when our own government is dictating what American companies can and cannot release.

I don’t know for sure that they are weeks or months behind. I doubt anyone outside of 3 letter agencies knows that. The pace of AI is crazy fast and China is notoriously secretive. We could be comfortably ahead or China could have the top model by the end of the year.

I don’t think any of us have enough information to know what’s really going on, but I suspect it’s a very tight race.

Mythos/Fable was trained 6 months ago.

If they were a few weeks behind, Moonshot would release a Fable level model in a couple of weeks.

I used fable more than a month ago, what are you talking about?

Are you saying if someone gives you something for free, it's immoral if they don't continue giving it to you for free forever?

The children's book "if you give a mouse a cookie" was about exactly this phenomenon

Google on it's own is spending 1000x that in a single year $280B in '26 alone iirc

I could also argue with GP's comment that some US companies are driving towards commoditization as well. One released a model this week and another announced their series d today.