SAN FRANCISCO, July 1 — In mid-June, artificial intelligence company Anthropic shut down its two most powerful AI systems after an unexpected demand from the US government to cut access to them. Days later, a Chinese start-up, Z.ai, released an AI model that is nearly as powerful as Anthropic’s models, Fable and Mythos. But Z.ai’s new technology costs much less to use, and no one in the United States was putting restrictions on it.
It quickly landed on a closely watched leaderboard of the world’s 10 most popular models. Z.ai is on the cutting edge of a wave of powerful but inexpensive AI from China that is challenging the lock that OpenAI, Anthropic and Google have had on the industry.
Six of the models now on the AI leaderboard were developed in China. Z.ai’s new model, GLM-5.2, arrived just as US businesses realised that they had to find ways to cut down on how much they were spending on AI. It also landed when executives in Silicon Valley were becoming worried that the Trump administration was leaning toward regulating the technology.
“With Fable restricted, the gap between the US and China is very slim,” said Rehaan Ahmad, a co-founder of the Silicon Valley start-up alphaXiv, who has been using Z.ai’s new model for more than a week. When performing certain tasks, GLM-5.2 costs about an eighth as much as comparable US models, according to the company.
That price advantage is winning converts among US businesses looking to rein in spending. The Chinese models still face two big hurdles to widespread use in the US. Concerns about their ties to the Chinese government remain a significant barrier.
There are also complaints that Chinese companies have unfairly used US technology to build these cheaper models. But their low cost is winning converts. About 18 months ago, Chinese start-up DeepSeek shocked Silicon Valley when it demonstrated that it could build effective AI far more affordably than many of its American counterparts.
Z.ai is doing something similar. The rapid succession of Chinese models challenging US dominance suggests a structural shift in the industry’s economics.
The timing of GLM-5.2’s release appears deliberate. With US businesses under pressure to cut AI spending and Silicon Valley executives worried about potential regulation from the Trump administration, a cheaper alternative from China arrives at a moment of maximum demand. The leaderboard now shows six Chinese-developed models among the top 10, figures show, underscoring how quickly the competitive landscape has changed.
For now, the question is whether US businesses will prioritise cost savings over concerns about data security and government ties. The early signs, according to industry watchers, suggest that price is winning.
Z.ai’s GLM-5.2 is already being used by Silicon Valley start-ups, including alphaXiv, and its presence on the leaderboard indicates growing adoption. The gap between US and Chinese AI capabilities is narrowing. With Anthropic’s Fable and Mythos restricted, and Z.ai’s GLM-5.2 proving nearly as powerful at a fraction of the cost, the competitive dynamics of the industry are shifting.
What comes next will depend on how US regulators and businesses respond to the new reality of cheaper, capable AI from China.
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