China’s AI startups can match the U.S.’s models. They can’t yet match the U.S.’s money

Alvin Yap is the chief executive officer for Asia at EquitiesFirst

By many measures, China is fast catching up with the U.S. in AI development. Moonshot’s Kimi K3—the world’s largest open-weight model—has approached the performance of America’s frontier systems. Analysts estimate the best Chinese models are now just four months behind the most sophisticated releases from OpenAI and Anthropic, compared to seven months at the start of the year.

Chinese models have gone from 1.2% of token traffic (a common way to calculate AI usage) in 2024 to more than half of the total by the summer of 2026.

 But the biggest threat to that next wave is not technology. It’s money. Between 2023 and 2026, venture funding into U.S. AI companies topped $380 billion; China’s start-ups received barely a tenth of that figure, according to Boston Consulting Group.

In the past, Chinese entrepreneurs looked to state guidance funds and venture capital backing, but policy-driven funds are known to prioritize later-stage startups while early-stage venture capital is only just recovering from a three-year fundraising drought.

There are three reasons why broader funding channels should be a priority for entrepreneurs in the AI economy.

First, inflation is taking hold inside the AI economy. CXMT, for example, has been raising memory prices for months and held firm even when Huawei, one of its largest customers, demanded relief.  

The war for AI talent is just as fierce: postings for AI-related roles surged roughly twelvefold year-on-year in........

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