James Kynge

operating in the United States, there is very little way that the US can regulate those because head office for those companies is back in China.

The algorithm is back in China.

The staff are back in China.

It really is the genuine export of this Chinese technology.

And the more that Chinese tokens and Chinese chatbots and agentic AI is used in places like Silicon Valley, the more embedded it becomes

in one of the most critical and strategic sectors in the entire US economy, i.e.

AI, and more generally tech.

So that has to be a big concern.

But my question is, how do you actually stop it, given that this is basically a click away?

I can find a Chinese Gentic AI model or a Chinese LLM simply with a search on my computer.

So I don't know how the US could stop it,

if they decide that they wanted to do that.

Yep, completely.

I think that's the gold rush aspect of this.

But one thing I didn't quite explain clearly enough is why it is that Chinese tokens are cheaper than those tokens generated in America.

There are two main reasons.

One is that the cost of electricity in China is so much lower than it is in the U.S.

And the other is a more technical reason.

The way in which Chinese LLM models work is different in the sense that the Chinese AI architecture uses what's called a mixture of experts system, which uses much less compute power to generate these tokens than the similar system in the US.

That's a little bit technical, but I think that's a crucial piece of background as to why China has a structural advantage in producing tokens cheaply.