A smartphone screen shows the OpenAI and Anthropic logos against a blurred American flag background. (Photo by Imen Ben Youssef / Hans Lucas / AFP via Getty Images)
Hans Lucas/AFP via Getty Images
The release of a groundbreaking AI model by Chinese AI startup Moonshot has rocked major US AI labs. What should have been a significant lead is now measured in a matter of months, if not weeks. It’s harder to claim that export restrictions work, and it’s clear that China will soon be able to replicate the entire AI supply chain, all the way to lithography. From there, it is already well-positioned to move into robotics and the physical world faster than us.
Necessity is the mother of invention, and as it turns out, China is getting better at driving innovation in AI.
Of course, benchmarks are highly imperfect, and some would argue that we lack neutral and useful benchmarks to begin with. They are quickly becoming saturated, and some of the institutions driving them have their own political, if not philosophical, agenda for AI security.
But early reactions confirm that Moonshot’s model is solid, even if it’s more rugged in some applications than Anthropic’s Fable or OpenAI’s Sol.
Frontier Labs’ lobbying efforts are in full swing. And several flavors of Cope have emerged. The classic is the distillation theory: China is stealing and it must be stopped. The irony, of course, is that Frontier Labs trained with all sorts of copyrighted material, so they were the first to distill.
But increasingly, China’s progress cannot be explained by distillation attacks alone (or, more precisely, by training on model results). And we may soon have to experience a “Sputnik moment” in which the United States becomes a follower in the AI race.
Following this isn’t necessarily a bad thing, provided the government doesn’t listen to the lobbyists and instead exploits the United States’ comparative advantage. Historically, our economy wins when we embrace openness and competition. This was true for the internet, it is what is happening with dollar-denominated stablecoins around the world, and it will be true for AI too.
What’s confusing now is that on the surface it looks like China is playing our own game. President Xi Jinping has reiterated his strong commitment to an open source ecosystem. Of course, open source AI plays to China’s strengths, as the country has the necessary complement in robotics and manufacturing. Additionally, throughout the 20th century, many countries have taught Hollywood that when you own the content, your values are spread across borders. And there are real safety risks when relying on open-weight models from abroad.
Intelligence services are the most important infrastructure that countries and companies will rely on in the future. So using open weight models to advance a Chinese stack is no different than the US using the dollar and SWIFT to project (soft) power in the financial system.
The lobbyists for the US border laboratories have a recipe for the US government’s victory:
“You don’t need to ban open source (one of the stupidest themes in AI policy discussion). You just need to direct every agency to enact soft law that creates FUD. “A Federal Reserve Advisory Bulletin noted that there may be backdoors in Chinese AI models.” It doesn’t have to be so well justified. They create just enough regulatory risk that every regulated company backs down.” —Dean Ball
However, it is a recipe that only serves them, not the country. The real response to Chinese open weight competition is US open weight models. That’s what Thinking Machines delivered to all of us on Wednesday, and we need more labs in the US and beyond to follow suit.
Intelligence is too important to fall into the hands of a few. We need a wide variety of models, approaches and values. Frontier Intelligence will only thrive and serve us if we can create enough competition. This is what American capitalism is all about. No protection for incumbents.
Ironically, these companies have become increasingly vocal in this regard as Frontier Labs increasingly intervenes in other companies’ businesses. From Microsoft to Palantir to Salesforce, CEOs are realizing that the current path is where the labs will absorb your talent, your context, and your intellectual property and displace you.
The issues of corporate sovereignty and national sovereignty are therefore closely intertwined. A world where frontier AI is only in the hands of a few large labs is a world where too much market and political power is concentrated. A world with many options is a world where human creativity and ingenuity can flourish.
The lobbyists for the big AI labs will keep saying that the only path to safe AGI is through them. The reality is that we all own the advantage and have to take responsibility for making it actually work.
While China is using the U.S. strategy of openness to undermine our leading centralized players, in reality it is also enabling a massive wave of American ingenuity and entrepreneurship. The same open weight models spread the power among many. And that has always been America’s strength.
https://www.forbes.com/sites/christiancatalini/2026/07/17/theres-one-way-to-win-the-ai-race-and-the-big-labs-are-lobbying-against-it/
