Donald Trump faces a mounting battle with China after an AI breakthrough in the country threatened to upend US dominance of the technology.

The unveiling of Kimi K3, an open-source AI model developed by Chinese company Moonshot, has rattled stock markets and Western tech executives amid fears that it will challenge business models and US tech supremacy.

The model is as powerful as the most advanced AI systems launched by US leaders OpenAI and Anthropic, while being cheaper to run. Moonshot also lets people freely download and modify the code underpinning the model.

Moonshot was forced to pause new subscriptions on Sunday after a stampede of demand to use its new model overwhelmed its servers.

Separately, Chinese tech giant Alibaba said it too was preparing to launch a new version of its open-source AI model Qwen that it claimed was “one of the most powerful models available” and only just behind Anthropic’s most advanced system.

The releases come as Xi Jinping, the Chinese president, seeks to promote Chinese AI across the developing world in a move that could embed the Beijing-controlled technology across nations.

Dean Ball, a senior executive at ChatGPT-developer OpenAI, wrote on X that China’s strategy of giving away its AI code would probably lead to “full AI communism, which is precisely what China proposes”.

Tech stocks around the world crashed last week and there are fears that the slump will continue on Monday after investors spent the weekend getting to grips with the implications of Kimi K3.

Mr Ball suggested that the Trump administration would look to limit the use of Chinese AI models as a result. Alibaba has been blacklisted by the White House because of national security concerns.

Kimi K3 is the world’s largest open AI model by parameter count, a measure of power, and analysis by Artificial Analysis and Arena.ai showed that it had a similar performance to the most advanced models developed by the US’s OpenAI and Anthropic.

Moonshot’s model is also cheaper to run, according to Artificial Analysis, at $0.95 (£0.70) for each intelligence index task compared to $1.04 for OpenAI’s most advanced model.

Read More: China’s moonshot threatens West with ‘full AI communism’