Key Takeaways
- Chinese AI companies are gaining momentum and sharpening their focus on innovation to stay ahead in the industry
- DeepSeek’s large language model (LLM) and reasoning model have surpassed or matched the performance of rival models at a fraction of the cost and computing power
- Analysts expect China to continue its momentum in AI development, thanks to policy support, improved funding, and a growing talent pool
- A domestic AI start-up’s co-founder predicts that China will overtake the US to become the world’s leading AI power in 2027
- China’s advantage in AI development lies in its deep talent pool and breakthroughs in domestic semiconductor development
Introduction to Chinese AI Companies
The recent release of DeepSeek’s large language model (LLM) and reasoning model has sent shockwaves through the tech industry, with many analysts taking notice of the significant progress made by Chinese AI companies. As the world was celebrating the Christmas holiday season, Chinese AI companies were making headlines with their innovative approaches to AI development. As one analyst noted, "It was around this time last year when DeepSeek started to get widely noticed days after releasing its namesake large language model (LLM), DeepSeek-V3." This release was a fitting reminder to the world of the sharpened focus on innovation in the Chinese AI industry.
DeepSeek’s Models and Their Impact
The release of DeepSeek’s models, including the DeepSeek-V3 and DeepSeek-R1, has been a game-changer in the industry. These models have either surpassed or matched the performance of rival models across a range of industry benchmark tests. What’s more impressive is that they were built at a fraction of the cost and computing power that major US tech companies invest to build LLMs. As the article notes, "The two models either surpassed or matched the performance of rival models across a range of industry benchmark tests. They were also built at a fraction of the cost and computing power that major US tech companies invest to build LLMs." This has resulted in a significant impact on the tech industry, with a massive sell-off on January 27 wiping out nearly US$1 trillion in tech stocks, including US$600 billion from Nvidia alone.
China’s Advantage in AI Development
So, what’s behind China’s success in AI development? According to a domestic AI start-up’s co-founder, who declined to be identified, China’s advantage lies in its deep talent pool. The co-founder predicted that China would overtake the US to become "the world’s leading AI power in 2027". This prediction is not unfounded, given the significant progress made by Chinese AI companies in recent years. As Chinese President Xi Jinping noted in his New Year’s address, "The domestic market has ‘many large AI models competing in a race to the top’, while new breakthroughs were being achieved in domestic semiconductor development." This has turned China into one of the economies with the fastest-growing innovation capabilities, according to Xi.
Future Prospects for Chinese AI Companies
Analysts expect the momentum of Chinese AI companies to continue this year, thanks to Beijing’s policy support, improved funding prospects, greater adoption of AI systems across industries, and a growing number of talent being recruited for innovative projects. As one analyst noted, "Analysts expected the momentum of Chinese AI companies to continue this year, thanks to Beijing’s policy support, improved funding prospects, greater adoption of AI systems across industries and a growing number of talent being recruited for innovative projects." With the Chinese government’s support and the growing talent pool, Chinese AI companies are well-positioned to take the lead in the industry. As Xi said, "has turned China into one of the economies with the fastest growing innovation capabilities". This is a significant indication of the country’s commitment to innovation and its determination to become a leader in the AI industry.
https://www.scmp.com/tech/tech-war/article/3338528/tech-war-china-takes-confident-strides-develop-more-ai-innovation-2026