Chinese AI Model Kimi K3 Sparks New US-China Tech Tensions Amid Copying Allegations

In January 2025, Chinese artificial intelligence model DeepSeek R1 made global headlines, briefly triggering market panic as it rivalled top US models at low cost. Now, a similar scenario is unfolding with Kimi K3, a model released earlier this month by Chinese company Moonshot AI.

Kimi K3 is being compared to US-based OpenAI and Anthropic's models, boasting capabilities in coding, financial consulting, deep research, and video editing. Demand surged so high that Moonshot AI paused sign-ups. However, its rise has been accompanied by accusations from Anthropic that Moonshot AI illicitly extracted capabilities from its Claude model. A US government official called it 'an assault on every economy that prizes the entrepreneur, rewards private capital, and relies on fair and honest competition.' In response, China's Commerce Ministry on Monday accused the US of 'AI hegemonism.'

Lizzi C Lee, a Fellow on Chinese Economy at the US-based Asia Society Policy Institute's Centre for China Analysis, said, 'Markets react strongly when a Chinese release challenges assumptions about permanent US technological leadership. Another sell-off is certainly possible.' She added that the Kimi story shows Chinese models are becoming more ubiquitous.

Moonshot AI was founded in 2023 by Yang Zhilin, a 34-year-old entrepreneur who earned his PhD at Carnegie Mellon University in the US and worked with American tech companies before returning to China. Kimi K3 is billed as the world's largest 'open-weight' AI system with 2.8 trillion parameters—settings that determine how the model responds based on training data. According to Poe Zhao, a China Tech Analyst, an open-weight model allows developers to download parameters and customise it, while open source typically involves broader disclosure of code and training information. US companies have generally avoided this open approach, while many Chinese AI labs have adopted it as a distribution strategy.

The open-close debate continues, with arguments about democratising technology versus security risks from malicious actors. The Kimi K3 episode highlights the intensifying competition and mutual accusations between the US and China in the AI race.