CNBC’s The China Connection newsletter: A rival AI strategy
This report is from this week’s CNBC’s The China Connection newsletter, which brings you insights and analysis on what’s driving the world’s second-largest economy. Like what you see? You can subscribe here.
$115 billion through 2029, while Washington has made splashy announcements — including billions of dollars in domestic pledges by Apple and Meta.
Beijing, in contrast, is spending less and focusing on practical use cases. At the start of the year, Beijing discreetly launched a 60.06 billion yuan ($8.42 billion) national AI fund, and in recent weeks has rolled out sweeping plans to integrate the tech across the economy and society — part of a wide-ranging initiative called “AI+.”
China is “consolidating its energy to do something big,” Shan Zhiguang, a director at the State Information Center, a government-affiliated policy think tank, told reporters Tuesday.
Students and parents take a photo with the “AI Intelligent Professor” humanoid robot on Aug. 30, 2025, at the Chongqing Intelligent Engineering Vocational College.
Cfoto | Future Publishing | Getty Images
Even if China lags behind in advanced chips, the country is on a different path versus the U.S., which Shan sees as pursuing human-level artificial general intelligence.
China’s chips are “usable,” Shan said, and that’s sufficient. He oversees the information and industrial development department.
Just this week, the government announced plans to integrate AI into the power grid and coal sector. That builds on a broader plan released in August to promote AI across six priority areas, from industry to consumption and international cooperation.
latest investment round, according to Chief Operating Officer Yang Qian. X Square Robot on Monday released an open-source AI model for robotics, and announced a raise of around $100 million led by Alibaba Cloud.
While foreign investment in Chinese startups has slowed, local government-backed funds have already ramped up their investments in companies working in hardware, a sharp pivot from the app and software-heavy investments of earlier years.
more than 1 billion yuan was wasted in corporate fraud.
China’s early semiconductor ambitions weren’t so successful. More than a decade ago, McKinsey pointed out that one of the Chinese government’s earliest attempts to build the chip industry since the 1990s “had mixed results because funding plans and incentives were focused more on research and academia than on business.”
Another attempt at a national semiconductor policy in 2014 fell short of the most ambitious targets, particularly in high-end technological capabilities and complete self-sufficiency.
Ostensibly, China’s tech investors and developers have come a long way since then.
Today, more than 40% of U.S. firms in China say local rivals are ahead in AI adoption, according to an AmCham Shanghai survey that wrapped in late June. Chinese search engine giant Baidu on Tuesday also announced AI tools geared toward senior citizens.
However, analysts are warning about problems stemming from overbuilding.
“Our focus is more on the risk of the overcapacity of AI infrastructure, including AI chips and upstream supply chain (e.g., data centers) as we believe that AI progress is driven by innovation on algorithm, not infinite compute,” said Zerlina Zeng, Head of Asia Strategy, CreditSights, referring to how smarter algorithms can make the same hardware go further.
“This was evidenced by DeepSeek’s success in delivering a competitive foundational model with constrained access to advanced chips,” Zeng said.
Even before DeepSeek or OpenAI were on the map, China laid out its AI ambitions in a 2017 policy, aiming to become the world’s AI innovation center by 2030.
With five years to go, the jury is still out on whether China can succeed. But it may be that the third time’s the charm.
grew by their slowest since February.
Chinese EVs descend on Europe. At the IAA Mobility show in Germany, Xpeng CEO He Xiaopeng told CNBC the company plans a global launch next year of its mass-market Mona brand — which has been a major boost to domestic deliveries already.
Former China securities regulator probed. Yi Huiman is under investigation, authorities said Saturday. Chinese business news site Caixin, citing sources, said it’s a corruption probe likely linked to the state-owned bank ICBC.
