Gavekal Technologies

The popular framing of cheap Chinese open-weight models challenging expensive US closed models is becoming less useful as both sides adopt tiered strategies. LLM pricing is increasingly defined by model tier and business strategy rather than a model’s origin. The key questions are whether US labs can advance the frontier fast enough to preserve premium pricing, and whether Chinese labs can convert adoption into durable revenue to sustain frontier development.

In May, presidents Donald Trump and Xi Jinping promised a new era of “constructive strategic stability.” What we have seen since then is a simmering tension, as the US has tried to restrict Chinese tech imports through a series of measures by a new actor, the Federal Communications Commission. China finally responded in early August with a calibrated set of its own restrictions, designed to respond to the US but not to escalate.