China AI Intelligence: Evolving competition dynamics on capability and cost efficiency

While a narrowing capability gap and cost advantages have increased recognition of Chinese models' global competitiveness, recent developments have complicated the competitive outlook and contributed to weak momentum in listed model companies (MiniMax/Zhipu down c.20/40% MTD): 1) the regulatory landscape continues to evolve, with debate over potential restrictions on open-weight models adding uncertainty to overseas adoption, and tighter anti-distillation measures by global leaders and growing US policy focus on industrial-scale distillation raising questions over the pace of capability catch-up;