China might be winning the AI race. Does it matter?

A Beijing company recently released China’s smartest artificial intelligence model yet — narrowing the gap between that country and the U.S. in a race that some have likened to a new cold war.

Kimi K2 Thinking, which was developed by Moonshot AI, is a generative AI-powered chatbot similar to OpenAI’s ChatGPT and Anthropic’s Claude. 

“It’s the closest a Chinese model has come to matching a U.S. or Western model’s performance since Deepseek in January,” said Michael Deng, a geoeconomics technology analyst at Bloomberg. That model caused a market meltdown over fears of Chinese AI advancement. 

Kimi K2’s release flew under the radar by comparison. But it scored high on Humanity’s Last Exam, a notoriously difficult, 2,500-question benchmark that tests an AI’s reasoning abilities beyond regurgitating information, placing just behind recent ChatGPT models and surpassing both Claude 4.5 and Meta’s Llama.

“It is definitely [still] the case that the U.S. is ahead of China on AI,” said Dan Wang, the author of Breakneck: China’s Quest to Engineer the Future. But, according to those same benchmarks, that lead “is narrowing in all sorts of ways.”

Whether China’s advancements against the U.S. matter depends on who you ask, according to experts who spoke with CBC News. 

That some North American companies and consumers are choosing Chinese-made AI “just tells you about the technical sophistication that we’re seeing from China and that it really rivals the best from what we’re seeing in the U.S. right now,” said Sheldon Fernandez, the Toronto-based co-founder of DarwinAI, which developed AI for quality control in manufacturing and has since been acquired by Apple.

Open-source AI models like the ones being developed in China “are cheaper and you can control them in your own environment,” he said. They can be modified to suit a user’s needs, though that might require some technical expertise. 

Lamenting that ChatGPT wasn’t “quite robust enough,” Airbnb CEO Brian Chesky said last month that the vacation rental company relies heavily on Chinese-owned Alibaba’s Qwen model to power its AI agents.

And venture capital firm Social Capital recently migrated its workload to Kimi K2 because it performed more efficiently and was “frankly just a ton cheaper than OpenAI and Anthropic,” said Chamath Palihapitiya, the company’s Canadian-American CEO, while co-hosting the All In podcast.

Deng, the Bloomberg analyst, says he doesn’t expect Chinese models to take over the market anytime soon.”But they will always be there to put competitive pressure on U.S. models,” maintaining a price ceiling on the cost of AI, he said.

Beyond the marketplace, there are those who view the race to improve AI in the harsher light of potential real-world conflict. 

“It is a sense that the U.S. and China are in a new state of cold war,” said Wang,…