Bloomberg Intelligence says US AI lead over China shrinks

The performance gap between US and Chinese artificial intelligence models has fallen to a record low. Top Chinese systems now trail their American rivals by just 3% on benchmark scores, according to a Bloomberg Intelligence report by senior analyst Robert Lea.bloomberg+1

The gap was about 9% in May and roughly 15% earlier in 2026. It narrowed after DeepSeek released its V4.1 Flash model in September, Lea wrote. He said the improvement points to further market share gains for Chinese contenders. China's progress "casts further doubt on the long-term sustainability of US technological supremacy in AI," he said.straitstimes+2

DeepSeek climbs the leaderboard

V4.1 Flash ranked sixth in the world on LiveBench in September. That is the highest any Chinese model has placed since DeepSeek's R1 reasoning model drew global attention in 2025. DeepSeek's latest LiveBench score was 81.1, compared with Anthropic's best score of 83.4. Lea said that means the Chinese model offers "comparable performance" to leading systems from Anthropic and OpenAI.straitstimes+1

Lea's view has shifted quickly. In May, after DeepSeek released preview versions of its V4 model, he told Bloomberg that the leading US model held a performance premium of about 10%.linkedin

Chinese models still make up a small part of the top tier. Only three of the 15 highest-ranked models on LiveBench are Chinese, and Lea cautioned that rankings shift.businesstimes

Lea credited China's rise to growing AI expertise and to researchers' ability to optimize their models for domestic hardware. The report says those gains raise questions about whether US export restrictions on Nvidia ↗ 1.34% chips are working. The controls were meant to slow Chinese AI progress and keep companies such as Huawei from advancing their own alternatives.businesstimes

A race without profits

The report comes as Anthropic and OpenAI pursue trillion-dollar valuations in planned stock market debuts, pointing to their models' superior capabilities. Meanwhile, cheaper Chinese models are catching up in user numbers.businesstimes

Leaderboard gains may not turn into revenue. Lea said China's AI industry could stay unprofitable until 2030. Firms are focused on selling low-margin tokens, and a price war is under way in a domestic market with more than 1,100 large language models. He said ByteDance's Doubao leads in making money from AI apps, while the chatbots from DeepSeek and Tencent remain free. Chinese models also face growing US regulatory scrutiny and possible bans, following allegations of model distillation.businesstimes

"Putting China's AI sector on a sustainable profit footing will require a cooling of competitive pressures, an industry shakeout, and a more rational approach to pricing," Lea said.businesstimes