Cheaper, Open, and Smart: Chinese AI Models Are Winning Over American Users

China has a hot new product in the United States: artificial intelligence. Chinese AI tools are becoming more popular with American users because they are cheaper and work nearly as well as the best U.S. models. Tech workers, business owners, and big companies are all starting to take notice, and some are switching over from American AI products.

One early switcher is Raffi Krikorian, the chief technology officer at Mozilla, the company that makes the Firefox web browser. He started using a Chinese AI tool called Kimi K3, made by a startup called Moonshot, just days after it launched in July. He said K3 feels faster and more responsive than Anthropic's Claude Fable, a well-known and more expensive American AI chatbot. Before K3, he had already been using another Chinese model called GLM-5.2 for everyday tasks like managing his calendar and email.

More and more Americans are turning to Chinese AI systems because they cost less money. U.S. companies like Coinbase, a cryptocurrency exchange, say they are switching to Chinese AI models to save money. The growing popularity of these tools has frustrated some large U.S. technology companies, but experts say Chinese AI models will likely keep attracting users. This is especially true for independent software developers who watch their budgets closely.

The rise of strong Chinese AI models shows how much the competition between China and the U.S. has grown. It started gaining speed last year when a Chinese startup called DeepSeek surprised everyone with an AI model that performed as well as American ones but cost much less. Now, newer models from companies like Z.ai and Moonshot are almost as powerful as the best tools from U.S. leaders like OpenAI and Anthropic. China's Alibaba also showed off a new model in July, and DeepSeek previewed its latest model in April.

The cost difference is especially important as more people use AI 'agents' — programs that carry out long, complex tasks on their own. AI pricing is based on how much text the tool processes, measured in units called tokens. When AI agents handle many tasks, costs add up fast, which makes cheaper models very attractive. Some Chinese models cost just a few cents per million tokens, while some American models cost $30 to $50 for the same amount.

Chinese models are becoming very popular on AI tracking platforms. Data from OpenRouter showed that the top five most popular models over the past month were all Chinese. Downloads of Moonshot's Kimi app jumped 200% in the week after K3 launched, and in the U.S. alone it was downloaded about 86,000 times — a jump of 387%. Demand was so high that Moonshot had to temporarily stop accepting new subscribers.

Still, Chinese AI models have some limits. Experts say they still trail U.S. leaders when it comes to their full range of abilities. U.S. AI companies are also working on ways to lower their own prices to stay competitive. So the gap between American and Chinese AI may not stay the same for long.

One big reason Chinese AI models are spreading fast is that most of them are open-source, meaning anyone can look at the code and build new things with it. Most top U.S. AI models are closed-source, meaning the code is kept secret. As Chinese open-source models get better and better, experts say the open AI world is becoming more shaped by Chinese companies. A group of major U.S. tech firms including Microsoft, Meta, and Nvidia recently signed a letter supporting open AI models.

China wants to grow its AI influence around the world, not just at home. At a major technology summit in Shanghai, Chinese President Xi Jinping promoted open-source AI and pledged to help developing countries build up their own AI abilities. Leading Chinese AI startups are raising more money to support their global push, including through public stock offerings. Chinese tech giants like Huawei and Tencent are also putting AI into everyday devices like smartphones and glasses.

The competition is fierce, and it is not just China versus the U.S. — Chinese AI companies are also competing hard against each other. That pressure at home is pushing them to grow faster around the world. However, big spending on AI has raised concerns about money. Z.ai saw its revenue jump 132% last year, but it also lost the equivalent of $694 million, raising questions about how long some startups can keep going. Still, for now, Chinese AI models show no signs of slowing down.