Q&A with Kai-Fu Lee on China's open-model advantage, AI's impact on jobs, US export restrictions on chips, Chinese AI's role in developing countries, and more
Chinese AI companies are rapidly closing the gap with US rivals, even after years of restrictions on their access to advanced chips.
BloombergMishal Husain
Context & Ripple Effects
Kai-Fu Lee has framed China’s AI catch-up as a long-running competitive question since 2020. In 2025, Chinese firms including Alibaba, Baidu and DeepSeek pursued open-sourcing models to work around US technology curbs, decentralizing refinement and drawing on outside developers.
The interview arrives after China’s push to develop and adopt local AI chips intensified. Its significance is that Chinese model capability is being discussed alongside constraints on advanced-chip access, rather than as a contest determined by hardware availability alone.
First-order effects
Chinese AI companies narrowing the gap with US rivals gain a stronger basis to market open models and AI products despite years of restricted access to advanced chips.
US AI suppliers face a more credible Chinese alternative for developers and organizations weighing model access, particularly where open-model availability matters.
Second-order effects
China’s push for local AI chips becomes more consequential: improving models can create demand for a domestic hardware-and-software stack rather than leaving model progress dependent on imported accelerators.
Open-model distribution gives Chinese developers a channel to gather external refinement and adoption, reducing the degree to which proprietary US model access alone defines reach.
Third-order effects
AI competition is shifting toward a two-layer contest: control of advanced compute on one side, and model availability, developer participation and deployment on the other.
If Chinese firms continue to improve under export restrictions, hardware controls may shape the cost and pace of progress without fully determining which AI ecosystems reach global users.
The trend: The AI rivalry is broadening from a race for advanced chips into a contest over open-model distribution and the ecosystems that build on it.
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