China’s AI Is 20x Cheaper — And Catching Up
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Today's number, 219. That's how many hours it takes on average for adults to go from friends to best friends. Today's other number is 1,000. That's how many hours I've spent with Scott Galloway. However, I still haven't made it out of the acquaintance zone. Money market's bad. If money is evil, then that building is hell. The show goes on! The folks in there have watched the show so, Welcome to Profiteer Markets. I'm Ed Elson. It is February 19th. Let's check in on yesterday's market vitals. The major indices' paired gains after the Federal Reserve minutes were released. The official record of their last meeting revealed rising concerns over inflation. It also showed several officials may want to raise rates if inflation persists.
That news sent treasury yields climbing. Meanwhile, Bitcoin fell to roughly $66,000. Okay, what else is happening? Anthropic and OpenAI have grabbed most of the headlines recently, but Chinese companies have been busy releasing very powerful AI models of their own. It seems that Lunar New Year, which began on Tuesday, has become China's unofficial launch season. Alibaba kicked things off with RinBrain, a model designed to help robots understand the physical world. They also unveiled Quen 3.5, a coding and agent-focused model that is up to five times faster than its predecessor. Meanwhile, ByteDance dropped C-Dance 2.0, a video generation tool, as well as Dubow 2.0, its deep reasoning model. And then Zipu released GLM5, which is engineered for agentic intelligence.
The throughline behind all of these announcements? All of these models are reportedly matching and even beating U.S. competitors on multiple key benchmarks. Okay, here to break down this season of launches, we're speaking with Profiteer Media's very own Alice Han, co-host of the China Decode podcast. Alice, good to see you.
Hi, Adam. Happy New Year. Happy Year of the Fire Horse.
Happy Year of the Fire Horse. That seems to be part of the story here, which is right as the Lunar New Year shows up, we see tons of new models coming out from these Chinese companies, these new AI models. Seadance, Dubao, GLM5. I mean, a lot of these names are kind of dominating the headlines, at least in China. What do you make of these new AI models that have come out of China? How important are they? What do they mean for consumers and investors?
Well, Ed, it's definitely true that Chinese AI has bolted from the stables, to borrow a horse metaphor. And as you rightly say, we've got a couple of models that have just come out. Zipo's GLM. We've also got Quen, the new Quen 5 Max model that's come out. We've also got new AI video generation models that that have taken Hollywood, I think, by huge surprise and shock and consternation. But generally, when I look at the models, and I've been using them in the last few days, what's clear to me is that they have improved. They are faster. They are more cost effective if you obviously compare them to the closed proprietor models offered by OpenAI, as well as by Claude, for instance. But really, my frustration with this debate is that it's apples to oranges.
People are going to use the Chinese models differently. I think the fact that Brian Chesky, the Airbnb CEO, says outright a couple months ago that a lot of his engineers are using this for agentic chatbots. because it's cheaper and faster, seems to suggest that the use cases for this are very different, the Chinese models that is, than the American closed models. Firstly, a lot of engineers and just everyday people are using and experimenting with the Chinese models. Quinn, for instance, they're downloading them locally, fine-tuning them and using them for their particular use cases, any kind of projects that they may be involved in. It's got improved privacy because they're downloading it locally.
It's cheaper, often 10 to 20 times cheaper than what's offered by OpenAI and Claude. So really, they're using this very differently from, say, potentially you and me, Ed. I use Claude a lot, the enterprise level, because the reasoning is exceptionally good when it comes to the geopolitical analysis, the financial analysis that I'm involved in.
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