Washington is preparing an ultimatum for dozens of countries: decide whose side you are on in the technological confrontation with China. Executive Director of RAKIB Alexander Brazhnikov sees behind this not strength, but a deep crisis of the American artificial intelligence model.
The Ultimatum as a Symptom
In mid-August, reports emerged that the State Department had sent letters to 35 countries that had previously signed the American "Declaration on AI Opportunities." Those who choose the Chinese side face exclusion from the Pax Silica initiative—a project to control chip and semiconductor supply chains launched a year earlier. About two dozen states joined the American initiative. Kazakhstan drew particular attention, having entered both coalitions simultaneously, causing concern in Washington over its dual position.
Beijing is acting symmetrically: Chinese President Xi Jinping announced the creation of a World Organization for AI Cooperation, promoting Chinese technology as an alternative to American influence. However, according to Brazhnikov's assessment, the balance of power is no longer so obvious. The United States retains primacy in fundamental research and development of advanced models, but China is rapidly closing the gap—primarily in efficiency, applied use, and robotics.
An Economy That Doesn't Add Up
The expert sees the key vulnerability of the American approach in the gap between investments and real returns. Since 2023, U.S. tech giants have poured hundreds of billions of dollars into AI, but monetization remains minimal. Microsoft's capital expenditures reached $116 billion, while direct revenue from its AI business is estimated at $40–45 billion. The ratio of investments to revenue jumped from the usual 7–10% to 35%, and cash flow over seven years grew only 1.6 times against a 2.7-fold increase in revenue.
Google for the first time posted negative operating cash flow, halted share buybacks, and over fifteen months grew its debt from $30 billion to $120 billion. Amazon went into the red by $25 billion over six months, and Meta spends 97% of its operating cash flow on AI. Direct revenues are incomparable to the scale of costs: Microsoft 365 Copilot gathered only about 30 million subscriptions against investments of $190 billion, while Meta's advertising, thanks to AI, adds only about 1% in conversions.
China's Bet on Cheapness and Openness
Instead of racing for "intelligence" at any cost, Chinese developers have bet on cost efficiency and open access. The example of DeepSeek V4 Flash is telling: the model costs almost nothing—about $0.08 per million input tokens—yet delivers performance on par with American flagships from spring 2026. OpenAI's response was forced price cuts. The GLM-5.3 model from Z.ai, at a price of about $2.5 per million tokens, reached a level between GPT-5.5 and GPT-5.6 and is optimized for Chinese Huawei accelerators, reducing dependence on Nvidia.
The result has directly impacted the market: according to data from the largest traffic router OpenRouter, a year ago American models accounted for 75–85% of requests, while now 60–70% of traffic is provided by Chinese solutions—DeepSeek, GLM, and others. The reason is simple: for mass tasks like code generation, expensive "genius" is not needed. What is required is reliability, speed, and low price—and all of this is offered by China.
By releasing powerful models almost for free, China devalues American investments: each such release pushes the price bar down and deprives the United States of any chance to ever recoup its giant investments.
Technology Parity and the Price of Isolation
The quality gap, on which Americans counted to maintain a premium, has almost disappeared in the mass segment. Flagships like GPT-5.6 and Opus-5 still lead in complex tasks, but models like Kimi K3, GLM-5.3, and Qwen-3.8 have come very close to them, while working faster and cheaper. Brazhnikov allows that at this pace, China could take the lead as early as 2027.
Google's position is especially telling: possessing data, chips, and engineers, the company lost its leadership and is now catching up through cheap models and dumping. This points to a systemic flaw in the American approach—a reliance on computing scale without proper optimization. It is economic weakness that is pushing Washington toward political measures. The demand to choose a side is a sign of vulnerability: the United States is trying to isolate China administratively because it can no longer maintain sales of expensive models through market means.
Such a strategy carries serious risks. The world could split into two technological blocs with duplicative standards, developing countries, due to coercion, could demonstratively leave the American coalition, and restrictions would only accelerate China's development of its own chips and algorithms.
My view: The final picture is paradoxical. In terms of investment, the United States is far ahead, but that money is not paying off and is growing debt; in terms of actual use, China already dominates the mass segment; in terms of technology, parity has been reached with a trend not in America's favor. Administrative barriers rarely work if a competitor's product is cheaper and good enough, so artificial isolation risks only accelerating the formation of an independent Chinese AI bloc. Investors should closely watch how this dynamic affects valuations of American chip and cloud giants.