DATA & FIGURES
The average gap between US and Chinese AI models has shrunk to almost nothing, with China's latest open-model, GLM 5.2, viewed as just barely behind the latest comparable US offerings. $2 billion is the amount of Meta's acquisition of Chinese-founded AI startup Manus, which was ordered to be unwound by China's state planner in April.
THE SCENARIO
The overarching context is one of rising techno-nationalism, with both the US and China treating cutting-edge artificial intelligence as a critical national asset that needs controls. The US has already implemented export controls on certain AI models, and China is now considering similar measures to protect its homegrown AI industry.
DIRECT QUOTE
"China needs to develop its own Mythos" — Zhou Hongyi, founder of cybersecurity firm 360
BBN INSIGHT
The potential restrictions on overseas access to Chinese AI models could have significant implications for businesses and investors. The Positive Side: The move could lead to increased revenue for US AI companies, as they become the only available AI vendors to US corporations. The Negative Side: The restrictions could also lead to increased costs for businesses, as they are forced to rely on more expensive US AI models, and could deprive China's nascent AI ecosystem of US client revenues.
MARKET REACTION
The potential restrictions could lead to a boon for AI supplier stocks, which have plummeted in recent days due to fears of revenue declines from US users gravitating to cheaper Chinese alternatives.