Why Chinese AI Models Are 95% Cheaper — The Economics Explained

When DeepSeek launched V3 at $0.27 per million input tokens, the developer world collectively did a double take. At the time, GPT-4o was charging $2.50 per million input tokens — roughly 9x more. Today, the gap has widened further. Chinese frontier models routinely operate at $0.10–$0.50 per million tokens while their Western counterparts hover at $2.00–$15.00. This isn't a temporary discount strategy. It isn't loss-leader pricing to capture market share. The 90–95% price gap reflects structura...