Amazing stuff, and sooner than even I expected. China’s Kimi is now about equal to GPT and Claude:
For the first time, a Chinese model Kimi K3 has taken #1 on the Frontend Code Arena and is scoring at or near the frontier on other benchmarks.
And the majors are noticing:
there it is – microsoft will use kimi k3 to power their flagship copilot ai assistant saving up to 60% per token or $600M on every $1B spent on inference spend.
if microsoft chooses to self-host the model once Kimi open sources it on the 27th then this cost reduces even more… pic.twitter.com/BwrXXZvAim
— Ejaaz (@cryptopunk7213) July 20, 2026
Meanwhile Trump is talking about banning Chinese AI.
Alternatively, the smart lads at Open AI have a regulatory plan:
I would guess that the Trump Administration will at some point realize that their best strategy here would be to create large amounts of regulatory risk around the use of open-weight Chinese models. You don’t need to “ban open source” (one of the dumber motifs of AI policy discussion). You just need to direct every agency to issue soft law that creates FUD. “A Federal Reserve Advisory Bulletin found that there may be backdoors in Chinese AI models.” It needn’t be that well justified. You just create enough regulatory risk that every regulated enterprise backs off. You probably don’t want to create so much regulatory risk that you scare off the hyperscalers from serving Chinese models; this will just drive startups to sketchier providers. There’s a happy middle ground here. I’d assume they will do some version of this.
Even more fun, the Feds want to approve all AI releases and not allow everyone the full models.
The Trump administration has taken new steps to assert more control over the rollout of future artificial intelligence model releases by dictating which companies and entities are allowed access to the latest frontier models, two people familiar with the matter told CNBC…
….
This week, the administration launched its own program, dubbed “Gold Eagle,” aimed at collaborating with the private sector to find and fix cyber vulnerabilities.
The so-called clearinghouse would put the White House in charge of greenlighting which companies can access new AI models, according to a person familiar with the matter, who spoke on condition of anonymity in order to discuss information that is not public.
China is going to eat America’s lunch on this. If they ban Chinese AI (harder than it seems, given it’s open source) all that means is writing off the rest of the world. And since American models are handicapped, smaller American companies will be stuck with worse AI.
Since Chinese AI is far cheaper, as well, I’d expect American companies to set up subsidiaries overseas to use it, rather than be stuck with American AI.
The entire situation is a complete clusterfuck. Major companies have taken on serious debt in order to build data centers which have a lifespan of five to seven years, and often less (since new generations of GPUs are much better.) But the Chinese product is cheaper, open source, lacks nearly as much sovereign risk and I’ll bet multiple models will soon be about as good as Anthropic and OpenAI’s.
Where’s the business case that spending all these trillions of dollars is going to produce enough revenue from US AI to pay for all of it?
There isn’t one. It doesn’t exist.
And that means that, at least in America, this is an AI bubble. All bubbles burst and this will not be an exception. If the government bails them out it will be the last major US bailout.
This is also very likely one of the last major tech revolutions which will start in the US (which it did.) Going forward they China will produce the vast majority of them.
This is the endgame. The turning point where China obtains not just the industrial base but the absolutely undisputed tech lead. From now on China will like America in the 1950s — it’s where almost everything new is created, the dynamic center of the world, and soon people will be competing to move there, because everyone knows it is the future.
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Purple Library Guy
All true, but there are some races that aren’t really worth running anyway.
different clue
Purple Library Guy said what I was going to say anyway. So China wins the race to flood the world with even more AI slop and AI sewage? Well . . . isn’t that special.
America will have to fall back on NHI. NHI? Natural Human Intelligence.
America may still be able to do simple task-focused machine-learning stuff. That could be good enough for actual practical uses. If not, oh well . . . .
Meanwhile, I am sure that China has won or will win the race to be 5G dominant. If America had self-government, 5G might well have been banned within America’s borders. Then we could spend the next 50 years watching to see whether marinating the entire Chinese population in a filthy electrosmog soup of 5G rays would have a measurable effect on population-scale public health or not.
cc
If even Microsoft was already going to provide DeepSeek to its CoPilot customers and is now considering Kimi, too, why couldn’t Canada also adopt these open-weight models? We could run these open-source models on our own systems located in Canada to benefit Canadians, possibly as a public service.
Doesn’t Canada now have its first-ever Minister of Artificial Intelligence and Digital Innovation, former CBC News personality Evan Solomon? What’s he doing to provide Canada with Canadian AI sovereignty?
In general, why are we locking ourselves into overdependence of the US, for example, via overpriced boondogle F-35’s, General Dynamics armoured combat vehicles for “and overseas use”, and US-based overpriced AI (OpenAI/Anthropic) that all have de facto kill-switches whenever the US wants Canada to bend over and submit? Isn’t “Elbows Up” just cheap posturing when we continue to send billions of dollars south to US corporations instead of seeking better, less expensive, and more diversified deals for Canadians?
Carney had just announced that another $2 billion in borrowed Canadian taxpayer money would go to US military company General Dynamics (again, “General Dynamics Land Systems Canada” is just a wholly-owned subsidiary of the US corporation which ultimately gets the profits. If Palantir started a “Palantir Canada” subsidiary, it would still be Palantir – don’t fall for the cheap “Canada-washing” trick.)
Barely a few days after that, the US announced that it will now impose 50% tariffs on many products that had been tariff-free under our “free trade” agreement (CUSMA) that had been negotiated and signed by Trump after he tore up the previous “free trade” agreement, NAFTA. As the world has seen time and time again, the US is non-agreement-capable.
Perhaps part of Canada’s response could be retaliatory 50% tariffs on US AI (ChatGPT, etc.) and offering Canadians open-weight models like DeepSeek/Kimi run on Canadian systems so that our prompts and data can stop going to foreign US servers run by US corporations and accessible to US 3-letter agencies.
cc
typo: “overdependence of the US” should be “overdependence on the US”
spud
what america must have, is not something stupid like the chips act, which as Keen says, “they can’t even make the lab coats used in making chips”.
the idiots that took over in 1993, and made rubbish out of the new deal/fair deal/ Gatt and the great society. have led us up to this point.
as chinese cars flood mexico and canada, it will not matter about the tariffs, the U.S.A. car makers are under the control of bill clintons hedge funds, in the end, they can never compete, the chinese stuff will make it into here, no matter what. the grey market will see to that.
you already see some of that with e-bikes, and now e-trikes.
to compete, you have to go back to ben franklins writings, and that is what lincoln did, and FDR-NIXON did, smoot hawley plus the new deals.
the bailouts will end us for sure.