China’s AI push, once seen as an immediate threat to U.S. tech leadership, is drawing a more measured response. When DeepSeek released its open-source R1 model in January 2025, markets recoiled—about $1 trillion in value was erased from U.S. tech stocks—and lawmakers floated bans on government use. A year later, Z.ai’s GLM-5.2 arrived with similar performance claims but little drama, signaling a shift in sentiment. The muted reaction suggests investors and policymakers have adjusted to rapid model progress and open releases from China, even as the U.S.–China contest for AI leadership continues to shape policy and markets.
A surprising twist in the U.S.–China race to dominate AI
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