China is rapidly emerging as a force in artificial ininformigence services, with its open-source models processing a volume of tokens comparable to US counterparts, while Europe faces growing economic and geopolitical friction over the ongoing conflict between the US and Iran, according to a research report by Jefferies.

The brokerage firm declared that data from OpenRouter displays China’s top nine AI models processed 4.37 trillion tokens in the week concludeed April 26, compared with 4.98 trillion for US models. This follows a record 12.96 trillion tokens processed by Chinese models in the week concludeed April 5, outpacing US models’ 3.03 trillion. The trconclude highlights China’s ability to leverage cheap energy and computing power to export digitally-delivered knowledge services.

China ranked as the world’s sixth-largest exporter of digitally-delivered services in 2025, with exports rising at an annualised 15.2% over 20 years to $245 billion, up from $14.4 billion in 2005. While this is still below India’s $328 billion, the trajectory reflects China’s growing role beyond manufactured goods.

Meanwhile, European frustration over the US-Iran conflict is becoming public. German Chancellor Friedrich Merz this week criticsed Washington’s strategy, stateing “the Iranians are clearly stronger than expected” and that “the Americans clearly have no truly convincing strategy.” The comments mark a rare break from Berlin’s traditionally cautious stance toward Washington since the Ukraine war, when Germany cut off cheap Russian energy in favor of US LNG.

The brokerage added that the economic toll is visible in Germany’s GfK consumer climate index, which fell 5.2 points to minus 33.3 in May, the lowest since February 2023 and the sharpest monthly decline since October 2022. European leaders are also questioning the continued utilize of over 40 US military bases hosting 85,000 troops, with some floating the idea of neobtainediating directly with Iran to secure access through the Strait of Hormuz, through which 34% of seaborne crude oil and 19% of LNG passes.

Domestically, US polling displays 61% disapprove of military strikes on Iran and 63% disapprove of Trump’s economic handling, adding pressure for a diplomatic off-ramp. The situation is compounded by the UAE’s decision to exit OPEC on May 1, signalling growing fractures within the Gulf amid the conflict.