One year after DeepSeek, Chinese AI firms from Alibaba to Moonshot race to release new models
Just over a year ago, China-made DeepSeek rocked global markets with the release of an AI chatbot that undercut OpenAI’s ChatGPT on usage fees and production costs, raising questions about the efficacy of U.S. tech restrictions on China.
On Tuesday, Beijing-based startup Moonshot AI revealed Kimi K2.5, which claimed to have video-generation and agentic capabilities that outperformed all three of the leading U.S. AI models. Agentic AI broadly refers to AI systems capable of carrying out tasks on behalf of people. The ultimate goal is to have sophisticated agents that work autonomously with minimal user interaction.
The update came just about three months after Moonshot released its K2 model.
Hours earlier, e-commerce giant Alibaba announced its latest generative AI model, which can create text, pictures or video based on user commands. Alibaba claimed its Qwen3-Max-Thinking outperformed major U.S. rivals on a broad benchmark test called “Humanity’s Last Exam.”
Alibaba said the new model can automatically select the best AI tool for a range of tasks and draw on past conversations as context to generate new responses more efficiently, all at little additional cost.
A week earlier on Jan. 19, Z.ai released a free version of its recently launched GLM 4.7 model. Two days later, the company restricted new subscribers from signing up for its AI coding tool after demand strained its available computing power.
Demis Hassabis, the CEO of Google DeepMind, told CNBC this month that China’s AI models may be just “months” behind those developed in the U.S.
Trying other ways to compete
Beyond the rollouts, Chinese companies are pushing the adoption of homegrown technologies by making them more affordable for emerging economies.
Unlike many leading U.S.-developed AI models, those from China tend to be open-sourced, typically allowing free or low-cost access and the ability to customize the model’s underlying code.
“The hope is countries apart from China will use these models to ensure large amounts of applications are built on these Chinese models,” said Alex Lu, founder of LSY Consulting. “That’s one way for Chinese companies to penetrate the market.”
There are indications that the trend is already happening. Microsoft earlier this month noted estimates that DeepSeek usage in Africa is two to four times higher than in other regions.
Paying too much attention to AI benchmarks distracts from the tech’s real value — when it is integrated into existing gaming or entertainment ecosystems such as Tencent’s, Ivan Su, senior equity analyst at Morningstar, said in a note.
The Chinese tech giant operates the ubiquitous WeChat messaging app as well as other popular gaming and video streaming apps in China.
Tencent on Sunday announced that it will distribute 1 billion yuan ($140 million) in cash awards through its Yuanbao AI chatbot app during the Lunar New Year festival in February. The promotion mimics earlier “red envelope” campaigns that helped WeChat become one of the two dominant mobile payment apps just over a decade ago. It is customary for families to give relatives cash in small red envelopes during the holiday.
ByteDance and Baidu are also running AI-related promotions around the upcoming holiday in a bid to retain users on their AI applications.
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Earlier this month, Alibaba updated its Qwen AI app to encourage users interacting with the chatbot to shop, order food and pay without leaving the app — thanks to integration with the company’s existing e-commerce platforms such as Taobao. Qwen claims more than 100 million monthly active users.
This integration could generate more revenue for Alibaba, on the assumption that the greater the number of people who use Qwen, the more they will use Taobao and shop on it, Lu said. That would help offset the costs of developing and running the underlying AI model, he said.
Chinese companies are mostly competing for user traffic rather than developing the most advanced models, he said.
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