"AI Tiger" from China has unveiled a new model. Will it give OpenAI a run for its money?

The Chinese AI startup Z.ai, also known as Zhipu, has released a new version of its flagship AI model, adding to the ranks of Chinese open-source developments. This intensifies competition with leading U.S. players, although Z.Ai cannot yet compete with them in terms of performance, nor with DeepSeek in the domestic market in terms of price.

The new GLM-5.3 model will feature enhanced programming capabilities. Zhipu plans to open-source the new large language model within two weeks, allowing developers to download the system and customize it for their own tasks. The company has published test results showing that the latest release will be significantly more effective than the popular GLM-5.2 and will come close to matching—and in some cases even surpass—the capabilities of Anthropic’s Fable 5 model, according to Bloomberg.

Z.ai has released a new model, GLM-5.3, two months after the release of the previous version, GLM-5.2. The new model is based on the same system with approximately 700 billion parameters.

Z.ai shares fell as much as 9% during trading in Hong Kong on August 14, but partially recovered and closed down 3.6%.

Analysts attributed the decline in Z.ai’s stock to investors exercising caution and taking profits ahead of the company’s quarterly earnings report, amid extreme volatility in the artificial intelligence sector in recent weeks, Bloomberg notes.

"This company remains in an extremely precarious financial position. The development of agent-based artificial intelligence will lead to an increase in Z.ai's inference costs and a rise in losses," said Robert Lee, an analyst at Bloomberg Intelligence.

China is challenging the U.S. in the field of artificial intelligence. Although American companies OpenAI and Anthropic are considered market leaders, Chinese companies have managed to achieve comparable results at a lower cost, Bloomberg noted. For example, Moonshot’s Kimi, DeepSeek’s V4, and Alibaba Group’s Qwen ranked highly in artificial intelligence tests. Z.ai is releasing an open-source model in an effort to attract a wide range of users and developers, the agency added.

At the same time, Z.ai’s models are more expensive than DeepSeek’s, even taking into account DeepSeek’s recently announced price increase (up to four times in some cases), but they received the same third-party intelligence rating of 53, according to Bloomberg. He noted that both lag behind leading American products—Claude Fable 5 and GPT 5.6 from OpenAI.

In addition, leading U.S. AI labs, including OpenAI and Anthropic, are also releasing cheaper models in an effort to retain cost-conscious customers who are switching to budget alternatives from Chinese competitors, the Financial Times notes. For example, on July 30, OpenAI announced an 80% price cut for GPT-5.6 Luna—its “fastest and most affordable model.” For its part, Anthropic introduced Claude Opus 5, stating that the system offers “cutting-edge intelligence… at half the price” of Fable 5—the company’s most powerful model.

Pressure on the market is mounting as OpenAI and Anthropic prepare to go public, while investors are demanding proof that their multibillion-dollar investments will pay off, the FT notes.

Z.ai is one of the pioneers in the field of artificial intelligence in China and the world’s first publicly traded developer of large language models. At its peak following the release of GLM-5.2, its market value surged to $137 billion, surpassing internet giants such as PDD Holdings and NetEase. Since then, it has fallen to about $75 billion, which is still ten times higher than its valuation at the time of its Hong Kong listing in January, Bloomberg notes. The Wall Street Journal has called Zhipu one of China’s “AI tigers”—companies that could become national leaders in the field of generative AI.

In July, Bloomberg reported that Z.ai had completed construction of a data center where it installed at least 10,000 Chinese-made chips for the development and deployment of its models. Its annual recurring revenue—projected annual sales from developers and companies using its services—reached $1 billion that same month, Bloomberg reported.

This article was AI-translated and verified by a human editor