Chinese AI Changes Global Markets

The topic is AI.

It is Saturday, 1 August 2026, at 4:43 am.

China has a new AI model called Moonshot AI's Kimi K3.

In short:

Chinese AI models are getting better and cheaper.

This is causing problems for financial markets.

What's next?

Investors will watch AI giant Nvidia's results later this month.

Last year, China's DeepSeek surprised the tech world.

Now, DeepSeek is not the only strong challenger.

Chinese AI developers have released new models.

Moonshot AI's Kimi K3 has shaken Wall Street.

Kimi K3 has made a splash in the global tech sector.

Markets are rattled.

Key AI indexes have been volatile.

The Nasdaq 100 had a brief correction.

Many analysts say the sell-off is due to concerns about AI spending.

The Korean Kospi fell 38% in July.

One reason for the fear is growing competition from cheaper Chinese rivals.

An analyst said Chinese AI is as good as some US models.

Australian businesses are reacting to the shift.

For some Australian businesses, the competition is changing the economics of AI.

Jacky Koh has seen this shift.

His company helps businesses build AI agents.

Jacky Koh said his company is using more models it can download and operate itself.

The models powering those agents fall into two camps.

Open models are free to download and come from Chinese developers.

Self-hosting allows businesses to avoid paying each time the model is used.

When it comes to AI, Australia is like a spectator in a fight between the US and China.

Leading proprietary models are controlled by their developers and are expensive.

Until recently, those agents were powered by US models.

Open models are free to download and come from Chinese developers.

His firm is now using more Chinese-developed 'open' models.

The economics are hard to ignore.

A major driver is cost.

As businesses use AI more, the number of tokens they consume rises.

Tokens are the currency of the AI economy.

Deepak John Joseph said inquiries about Chinese AI models have surged.

Some businesses are coming to him because their AI bills have ballooned.

He said customers want to reduce their token consumption.

Australian businesses are mixing models.

They reserve the most powerful systems for difficult jobs and use cheaper alternatives for simpler work.

Will Liang calls this approach 'model routing'.

He said Australian businesses are mixing models.

You use the top model to figure out what tasks to do and then route tasks to different models.

Some tasks can be done by cheaper models.

There are concerns about Chinese AI.

There have been concerns about bias in Chinese-developed models.

Toby Walsh said Chinese models may not tell you about sensitive subjects.

However, Mr Liang said a bigger barrier is the lack of trust and regulation.

There have been disturbing results from AI chatbots.

Mr Joseph said there is pushback to using Chinese-developed AI in healthcare and finance.

Kendra Schaefer said firms should ensure Chinese models are accessed through trusted providers.

While open models can be downloaded, they still pose a security risk.

A locally installed model can be a vector for compromise.

Every time you download software, you accept the risk of a malicious backdoor.

It is not a China-specific issue but a cybersecurity risk.

See more ABC coverage.

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