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@growing_daniel wrong
After reading @deanwball’s piece, I had the opportunity to read several expert-call transcripts. Having done so, I concluded that his argument is, to some extent, mistaken. Here is why. Take DeepSeek as an example. Even though DeepSeek has open-sourced its model weights and parts of its software architecture, competitors would still find it difficult to replicate its cost advantage. That is because, while DeepSeek has disclosed most of its model architecture, the critical implementation details and operational know-how remain proprietary. As a result, even if Chinese or U.S. hyperscalers deploy DeepSeek’s open-source models on identical hardware, DeepSeek’s own deployment environment can achieve—and is already achieving—greater operational efficiency and a lower average inference cost. This efficiency advantage allows DeepSeek to price tokens through its official API below third-party platforms while still maintaining an API margin of 70%. Ultimately, China’s decision to release model weights cannot simply be characterized as dumping. Chinese companies may lack sufficient compute capacity to serve all the inference demand themselves, but they are not selling at a loss or failing to recoup their training costs.
Okay, I’ll take a hack at Deans argument without his conflict of interest. What China is doing in AI is called dumping. They do it in literally every industry they enter. The goal is to kill all local competition by subsidizing their own industry so they can produce at a loss, then once all competitors are dead, they can charge profitable prices and control the market. In steel and automobiles this is just bad. In AI it’s potentially fatal to our country. Unfortunately, dumping is the a very common argument for rent seeking domestic firms who want protection, and Dean’s position here seems to be a Jones Act of sorts for AI. This has famously not saved our shipbuilding industry and I suspect it won’t save our AI labs. Stopping open weights it’s virtually impossible. So our only other option is governments taking stakes in labs and subsidizing our own industry. If you scream and yell about either Jones Acting AI or subsidizing GPUs then you should also explain how we will escape the dumping trap china is trying to push on us to destroy our labs and leave themselves with the only functioning AI industry in the world.
Some observations on Kimi: 1. It's a very good model! I don't think its performance can be explained away by distillation or anything like that. In agentic coding sessions, it seems pretty much on par with the best public models of Q1 2026. In my fairly limited use, it also seemed very token hungry. It's not obvious to me that this model is actually that cheap to run. 2. I am personally surprised the Chinese state continues to allow the open sourcing of models this good, given potential risks. To be clear, I *myself* might be fine with models presenting this level of marginal risk being open weight, but I am surprised that China is fine with it. I suspect the reason they are is 75% explained by strategic blindness/lack of AGI-pilledness (the CCP is very Yann Lecun-y in its views of AI). The other 25% or so is their lack of compute for customer inference (making China's open-weight strategy an unintended byproduct of US export controls) and the normal Chinese strategy of aggressive exports. For the companies, as opposed to the government, the decision to open source is partially ideological and partially because they are behind, and they know that very few people would pay for sub-frontier models from China. 3. Open-weight models are inherently decelerationist, and I'm continually surprised to see the so-called "accelerationists" so excited about open-weight models. I suspect the reason they are is that they know open-weight models are effectively ungovernable, and they simply like the overall cloak of ungovernability open-weight models create over the whole of AI. It's not a bad strategy; it reminds me of James Scott's recounting of the hill people in "the art of not being governed." Still, in the end, open-weight models deter further AI capex. 4. One probable outcome of an open-weight-model-dominant world is full AI communism, which is precisely what China proposes: rather than a market product, AI is a "public good" which will ultimately be provided by the state as a kind of "digital public infrastructure." This future strikes me as a dystopian hellscape, but I've never met an open-weight models advocate who doesn't ultimately concede this is where things end. You'd be surprised how many 'accelerationists' lobbied me, while I was in government, to support an eleven or twelve-figure federally funded data center so that startups could train models at a subsidy and then give them away for free. There was no other way for AI to progress, they said. Perhaps this is the logical end state of things. Nonetheless, I find myself surprised to see supposed accelerationists excited about such an outcome. I think many of them just don't know what they're doing. Many accelerationists do not view the creation and serving of frontier models as a legitimate business. 5. I would guess that the Trump Administration will at some point realize that their best strategy here would be to create large amounts of regulatory risk around the use of open-weight Chinese models. You don't need to "ban open source" (one of the dumber motifs of AI policy discussion). You just need to direct every agency to issue soft law that creates FUD. "A Federal Reserve Advisory Bulletin found that there may be backdoors in Chinese AI models." It needn't be that well justified. You just create enough regulatory risk that every regulated enterprise backs off. You probably don't want to create so much regulatory risk that you scare off the hyperscalers from serving Chinese models; this will just drive startups to sketchier providers. There's a happy middle ground here. I'd assume they will do some version of this. 6. It's probably true that open-weight models of this capability make the world a bit more dangerous, but not so much more that you'll really notice. At some point the models will be capable enough that you will notice. "A nonliving, invisible, dangerous, and infinitely self-replicating agent escaped from a Chinese lab," you say? Color me shocked.
@growing_daniel Great posting
@growing_daniel US can and should provide heavy incentives to local players in critical industries (interest free loans, tax subsidies, whatever) but banning foreign competition should not be the first reaction.