Transcription
Every time the United States government tries to slow China's rise, it backfires into long-term success for China.
In 2019, the US government blacklisted Huawei with the specific goal of strangling China's largest tech company. But Huawei came back stronger than ever by building its own chips, its own operating system, and its own AI ecosystem, and today operates in over 170 countries serving over 3 billion people worldwide.
In 2022, the US government banned the export of Nvidia's most advanced AI microchips in an effort to hopefully win the AI race. But just two years later, Chinese developers shock Silicon Valley by launching DeepSeek, an advanced language learning model that is open-source, was developed for 120th the cost of Open AI, and produced the same quality results.
And now in 2026, we have the latest Chinese breakthrough that was once again inspired by the US government's overreaching controls. This is China's Lineshine supercomputer and it just became the world's fastest supercomputer overtaking the US for the first time since 2017. But the real story is not just the speed, it's how China achieved it. Once again, China defied the odds, found a way around US sanctions, and built this entire supercomputer using homegrown microchips and exclusive Chinese technology. And trust me, China's new breakthrough could change the entire future of the AI race between the United States and China.
China's Lineshine achieved a computing speed 20% faster than its American competitor. As Chinese engineers were able to do something we've never before seen with the supercomputer. Instead of relying on GPUs, the specialized chips made by companies such as Nvidia and AMD, Lineshine uses CPUs with specialized circuitry built inside them to perform GPU-style calculations. China's new supercomputer packs nearly 40 million computing cores into just 90 hardware cabinets. Something engineers have never seen before in a supercomputer.
The US government is never going to stop Chinese engineers from inventing. I mean, just look at this fascinating chart which shows the country of origin of the world's top 20% of AI researchers. China makes up nearly half of the best AI researchers in the world. And now you can understand why Jensen Huang wants to sell his Nvidia products to China. He knows the future of AI is being developed in China right now. In fact, we've just seen one of America's largest financial companies dump Open AI and Anthropic and switch over to Chinese AI models. The story is wild. And in today's video, I'm going to show you how China has already won the AI race and why it now has the potential to break America's AI bubble.
But first, one of the questions I get asked most on this channel is, Cyrus, where do you actually research all these Chinese companies you're talking about? You see, whether it's BYD, Alibaba, Tencent, or CATL, I'm constantly following their earnings, financials, and the latest news. And one of the tools I rely on is Investing Pro, powered by investing.com. I want to show you exactly how I use it. I built a watch list with the Chinese companies I follow. And today, let's take a look at CATL. For those of you who don't know, CATL is China's top electric battery producer, and there isn't a company on the planet that is producing the technology they are. The stock is up over 124% the past 12 months. But is it overvalued or does it have room to grow? Well, instead of trying to value the company myself, I check investing.com's fair value tool. This combines multiple valuation models and analyst estimates. And right now, it's showing fair value at $817 Hong Kong dollars against a current price of 702. That gap is telling me the stock may still have upside and gives you another data point before making your own decision.
Another feature I really like is ProPix AI. It has profiles focused on areas like Hong Kong technology and Taiwan semiconductors, which fits perfectly with many of the topics we discuss on this channel. And these AI picked indexes are absolutely crushing it. The Taiwan Chip Champions Index is up 114% this past year, while the Hong Kong Tech Titan Index is up 61% in the same period. And finally, there's Warren AI, where I can ask questions like, "How does BYD compare with Tesla?" or "What are the biggest risks facing Alibaba?" And you get a detailed summary in seconds. It's a really useful starting point when I'm researching a company.
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But now, let me show you the exact moment Chinese AI beat American AI. Coinbase, which is one of the largest public crypto companies in the world, just dumped OpenAI and Anthropic and switched to open-source Chinese models from Jipu and DeepSeek. The reason for this is incredibly simple. Chinese AI models can perform the exact same computations as their American counterparts, but do so at a fraction of the cost. When Coinbase was using American AI models, their cost for the workload turned out to be $4,811. But running the exact same workload through China's Jipu cost the company only $544. What company in the world doesn't want to pay 1/9th the cost for the exact same level of service?
Just listen to this report from CNBC as they break the news to American investors that the AI bubble will be popping very soon. Jipu's latest model, it's called GLM 5.2, comes out of China. It has landed with a bang in Silicon Valley, blowing past all other open-source models, nearly matching the American frontier for just a fraction of the price. Developers. They're piling in. Open router token traffic showing much quicker adoption for GLM 5.2 than DeepSeek's V4 launch. GLM 5.2. This is different. It's strong at agentic work. And that is key. On one agentic benchmark, it is just one percentage point away from Opus 4.8 for a fifth of the cost. Now, Opus 4.8, that is Anthropic's most powerfully available model. So, basically, you're getting very close to the same horsepower for just a fraction of a cost. And it really comes at a time when expensive AI is already eating into budgets. And that is a really hard trade-off for enterprises, for companies, for Fortune 500 to ignore.
You see, Coinbase was the first American company we've seen do the simple math and decide to make the move to Chinese AI models. And as this CNBC report details, cheap AI could derail OpenAI and Anthropic's IPOs as adoption is already shifting with Chinese models taking a growing share of enterprise AI traffic. Now, here's a stat that's going to blow your mind. 45% of enterprise companies are now spending $100,000 per month on AI, up 20% from last year. And every one of those companies is one quarterly budget review away from dumping American AI platforms.
Honestly, this reminds me a lot of Trump's failed tariff war with China. Last April, Trump decided to go after the Chinese economy and slap tariffs on Chinese imports that at their peak reached an incredible 145%. Trump's thinking was too simple. He thought that if he could tariff Chinese imports at this extreme high rate, it would force American companies to abandon their Chinese manufacturing and reshore their factories to the United States. In theory, this would create a manufacturing boom in the US. Millions of new jobs could be added to the US economy. But this only worked on paper. In the real world, US companies like Apple and Nike have spent decades building dedicated supply chains throughout China. and there was no way US companies could afford to reshore their factories and still remain profitable. Eventually, Trump gave up his tariff war on China and Trump quietly retreated, never admitting defeat, but also never achieving anything with his failed tariff war.
And now the same logic is applying to the AI industry. As I mentioned at the start of the video, the US government banned the export of American AI chips, restricted model weights, blacklisted Alibaba and BYD as Chinese military companies, and just last month banned Anthropic's flagship model from every foreign national on the planet. But Chinese labs responded by building cheaper, more efficient models and priced them at 1/9th the cost of the American alternative. Anthropic confidently filed for an IPO targeting October at a $965 billion valuation. OpenAI followed days later with its own confidential filing. But here's the problem. Both companies built their financial models on the assumption that they could keep charging enterprise prices that are 9 to 33 times what Chinese competitors charge for the same task. There is no chance this is going to work out long term and these American AI companies will now have to reduce their pricing to compete with the Chinese AI platforms.
In fact, just listen to what Anthropic CEO told US lawmakers this week. The scaling of of of open-source models. I think it's going down a very dangerous path. If again, if the path continues, I think we could get to a very dangerous place. When you control a model and you're deploying it, you have the ability to monitor its usage. It might be misused at one point, but then you can alter the model. You can revoke a user's access. You can change what the model is willing to do. But I think here we're talking about something a little bit different, which is a more uncontrolled release of larger models by much larger entities that pay tens or even hundreds of millions of dollars to to train them. I think we should think of that in a little bit of a different category and their obligations in a little bit of a different category.
Let me translate that message into simple English. Anthropic CEO is essentially asking the US government to ban his competitors and target China's open-source models. But as I prove with numerous examples, every time the US goes down this path of trying to ban competition, it ends in complete failure and will ultimately backfire.
For some perspective on this, listen to this quote from futurist Daniel Jeff, who perfectly describes the situation between the US and China. We're following the old China playbook. Authoritarian, gated, controlled, fear-based. And China is following the old American playbook. Open, widely distributed, entrepreneurial, capitalistic. It doesn't take a genius to figure out who wins. We better change course fast.
And he's right because the United States better wake up and start planning on how to compete with the Chinese because President Xi has made it very clear the path that China will follow in the future. Bloomberg reported this week that China will now push all school levels to teach AI in a new tech drive coming directly from China's president. Earlier this week, China announced a new 5-year blueprint that will make AI a core capability for every Chinese student across every grade level. And this is a huge deal because one thing we've seen China do very successfully over its history is launch concrete 5-year plans and achieve significant success. In fact, if we look at the Chinese economy and its share of the world's GDP over the past 25 years, look at the significant growth China has achieved. While the United States has been declining every year since 2000. In fact, India, one of the fastest growing economies in the world, remains the competitor most likely to challenge America's status as the world's number two power.
The future of our global economy is China. As the world outside the US is increasingly driving Chinese electric vehicles, scrolling the web on Chinese smartphones, and powering their homes with Chinese solar panels. But China is also going to become the number one provider of AI models for US companies. Just look at how some of the biggest companies in the world have already began that transition. I've already mentioned the big shift from Coinbase, but how about Shopify moving over to Alibaba's Quanzhi AI platform. Airbnb and Uber Eats also followed the same path along with Germany's Siemens and even Microsoft. One of the staples of American tech is now testing China's DeepSeek version 4 which was released in April.
Once again, let me share with you the insights from one of America's AI CEOs. This is Alex Savani who runs Nansen AI and he shares, "I never expected China to win the AI soft power war. Dario and Sam, who are the CEOs of Anthropic and OpenAI, spend their airtime talking about how AI will destroy jobs. Meanwhile, Chinese labs are releasing cheap models and winning the open-source community. Did not see this coming."
And to give you an insight into how China is changing the future of AI, listen to this fascinating report from Shanghai Eye, which shows China is not only developing the world's best AI models, but also shipping processed tokens overseas via undersea cables. This is an absolute game-changer.
Data companies in southern China's GuangDong province are engaging in a new kind of foreign trade, exporting digital tokens. A token is the smallest unit of measurement that represents a word or part of a word that AI large models use to process text. Exporting tokens involves leveraging domestic computing power and sending processed results overseas via submarine optical cables. This year, with the surge in overseas AI demand, the digital token export business has experienced rapid growth. We have increased our daily overseas token outflow from 100 million to over 10 billion and it's still increasing. Data shows that in 2025, China's daily token calls increased exponentially from over 1 trillion at the beginning of the year to 100 trillion by the end.
Wow. In one year, China's token demand went from 1 trillion to 100 trillion. And trust me, this is just the beginning of China's domination of the AI industry. Everyone, you follow channels like this because we report on the stories that mainstream media misses. But as I've explained throughout today's video, China is inventing the future and doing so in a way that simply can't be ignored any longer. In the future, China will be able to offer the world cheaper, faster, and more efficient AI models. And it doesn't take a genius to understand that consumers will always choose the best price available. So, if you're interested in learning more about China's rise and the future of AI, make sure you hit that subscribe button.
And a huge thank you to investing.com for sponsoring today's important video. If you want the best platform to track Chinese and AI stocks like I do, make sure you click the links below and sign up for Investing Pro. With my discount code, you can save an incredible 75% off the retail price. Literally the lowest price you will see all year. My name is Cyrus. Thanks for spending time with me today on YouTube, and I look forward to seeing you all in our next video.