The Deep Think: China’s newest AI model costs 87% less than DeepSeek

Posted on July 29, 2025 by michelleclarke2015

China’s newest AI model costs 87% less than DeepSeek
DeepSeek rattled global markets in January by demonstrating that China could build competitive AI on a budget. Now, Beijing startup Z.ai is making DeepSeek look expensive.
The company’s new GLM-4.5 model costs just 28 cents per million output tokens compared to DeepSeek’s $2.19. That’s an 87% discount on the part that actually matters when you’re having long conversations with AI. We recently discussed how the further along in the conversation you are, the more impact it has on the environment, making this topic especially interesting.
Z.ai CEO Zhang Peng announced the pricing Monday at Shanghai’s World AI Conference, positioning GLM-4.5 as both cheaper and more efficient than its domestic rival. The model runs on just eight Nvidia H20 chips (half what DeepSeek requires) and operates under an “agentic” framework that breaks complex tasks into manageable steps.
This matters because Zhang’s company operates under US sanctions. Z.ai, formerly known as Zhipu AI, was added to the Entity List in January for allegedly supporting China’s military modernization. The timing feels deliberate: just months after being blacklisted, the company is proving it can still innovate and undercut competitors.
The technical approach differs from traditional models, which attempt to process everything simultaneously. GLM-4.5’s methodology mirrors human problem-solving by outlining the steps first, researching each section and then executing.
Performance benchmarks suggest this approach works:
GLM-4.5 ranks third overall across 12 AI benchmarks, matching Claude 4 Sonnet on agent tasksOutperforms Claude-4-Opus on web browsing challengesAchieves 64.2% success on SWE-bench coding tasks compared to GPT-4.1’s 48.6%Records a 90.6% tool-calling success rate, beating Claude-4-Sonnet’s 89.5%
The model contains a total of 355 billion parameters, but activates only 32 billion for any given task. This reliability comes with a trade-off: GLM-4.5 uses more tokens per interaction than cheaper alternatives, essentially “spending” tokens to “buy” consistency.
Z.ai has raised over $1.5 billion from Alibaba, Tencent and Chinese government funds. The company represents one of China’s “AI Tigers,” considered Beijing’s best hope for competing with US tech giants.
Since DeepSeek’s breakthrough, Chinese companies have flooded the market with 1,509 large language models as of July, often using open-source strategies to undercut Western competitors. Each release pushes prices lower while maintaining competitive performance.
This feels like China’s tech strategy crystallizing into something Washington should worry about. Z.ai just proved that a sanctioned company can deliver state-of-the-art AI while undercutting everyone on price. The 87% cost reduction targeting output tokens specifically shows an understanding of where users feel pricing pain most.
Most concerning for US policymakers is that export controls clearly aren’t slowing Chinese AI development. A blacklisted company just delivered competitive performance while operating under restrictions designed to cripple such capabilities.

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About michelleclarke2015

Life event that changes all: Horse riding accident in Zimbabwe in 1993, a fractured skull et al including bipolar anxiety, chronic fatigue …. co-morbidities (Nietzche 'He who has the reason why can deal with any how' details my health history from 1993 to date). 17th 2017 August operation for breast cancer (no indications just an appointment came from BreastCheck through the Post). Trinity College Dublin Business Economics and Social Studies (but no degree) 1997-2003; UCD 1997/1998 night classes) essays, projects, writings. Trinity Horizon Programme 1997/98 (Centre for Women Studies Trinity College Dublin/St. Patrick's Foundation (Professor McKeon) EU Horizon funded: research study of 15 women (I was one of this group and it became the cornerstone of my journey to now 2017) over 9 mth period diagnosed with depression and their reintegration into society, with special emphasis on work, arts, further education; Notes from time at Trinity Horizon Project 1997/98; Articles written for Irishhealth.com 2003/2004; St Patricks Foundation monthly lecture notes for a specific period in time; Selection of Poetry including poems written by people I know; Quotations 1998-2017; other writings mainly with theme of social justice under the heading Citizen Journalism Ireland. Letters written to friends about life in Zimbabwe; Family history including Michael Comyn KC, my grandfather, my grandmother's family, the O'Donnellan ffrench Blake-Forsters; Moral wrong: An acrimonious divorce but the real injustice was the Catholic Church granting an annulment – you can read it and make your own judgment, I have mine. Topics I have written about include annual Brain Awareness week, Mashonaland Irish Associataion in Zimbabwe, Suicide (a life sentence to those left behind); Nostalgia: Tara Hill, Co. Meath.
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