China has the benefit of vast solar power and rapidly increasing battery capacity. Yes, that's subsidized, but it pays for itself in the long run.

And, even with the price increases, Z.ai and Tencent are still much cheaper than Anthropic or OpenAI models. I think there's an efficiency focus among the Chinese models that is absent at OpenAI and Anthropic, and in the end I suspect efficiency will be the winning feature. Google seems to understand that. Gemini 3.5 Flash is pretty competitive with the big guys, and it's small enough for Google to run it profitably (I assume) for a price that's much less than the frontier models. Gemma 4 models are showing off a bunch of efficiency techniques (MTP, QAT, the 12B encoder-less vision model that soundly outperforms much larger vision models, DiffusionGemma), and I assume they have several more techniques that aren't published.