Key Points:
- China has rapidly closed the AI capability gap with Western models.
- Open-source collaboration is the main driver behind this fast progress.
- Chinese models like DeepSeek V3.2 cost significantly less to run than US rivals.
- The US is expected to regain a lead with the release of GPT-6 in 2026.
China is catching up to the United States in the artificial intelligence race much faster than anyone expected. According to a new report from Barclays analyst Jiong Shao, the progress Chinese developers made over the last year is “nothing short of astounding.” Despite having access to fewer high-end computing chips than their American counterparts, Chinese labs have managed to close much of the technology gap.
Shao explains that China’s secret weapon is open-source collaboration. Unlike some Western companies that keep their code secret, leading Chinese labs are sharing their work. This allows local developers to build upon existing technology and improve it quickly. This shared approach has created a thriving ecosystem where innovation happens at breakneck speed.
Cost is another major factor. The report highlights DeepSeek V3.2, a Chinese model that is incredibly efficient. Barclays estimates that running this model costs only about $0.42 per million tokens. That is roughly 3% of the cost to run OpenAI’s GPT-5.2. Because it is so cheap, more people can afford to use it, fine-tune it, and experiment with it.
However, the United States still holds the heavyweight champion title for now. Barclays predicts that American labs will jump ahead again later in 2026 with the arrival of “GPT-6 equivalent models.” While China will remain close behind, the US currently has more users. Western markets have about 500 million daily active AI users, compared to roughly 200 million in China.
There is also a massive difference in spending. The top five US tech giants are spending five times more on AI infrastructure than the entire Chinese sector combined. This financial muscle gives US companies a structural advantage in turning a profit.
Domestic Chinese apps like Doubao and DeepSeek are huge, boasting hundreds of millions of monthly users, but they have little presence in the West. As these companies mature, Barclays notes that Chinese AI labs have started launching Initial Public Offerings (IPOs), signaling that the industry is moving from research projects to serious business.
