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China narrows AI gap with US 3 years after initial ChatGPT shock
The turning point came when DeepSeek released its V3 and R1 models, which were on par with OpenAI’s GPT and Meta’s Llama models at the time
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US start-up OpenAI’s launch of ChatGPT on November 30, three years ago, sent China’s technology industry scrambling to get up to speed on the latest artificial intelligence developments.
Chinese government authorities sent urgent requests to various experts, including professors from Tsinghua University, to provide briefings on the implications of generative AI technology, according to people with knowledge of the matter.
China’s Big Tech firms and ambitious start-ups rushed to roll out their own versions of AI chatbots and large language models (LLMs), as well as register them with the government, as part of efforts to keep American AI services away from the country’s more than 1 billion internet users.
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In the first few months after ChatGPT’s release, maintaining a walled garden approach on AI services was thought to be China’s best strategy until domestic tech firms could develop products that effectively competed against those built by Western AI providers.
Even over a year after ChatGPT’s launch, venture capitalist Allen Zhu Xiaohu said he had no interest in funding Chinese start-ups building LLMs – the technology behind generative AI services like ChatGPT – because they had neither a clear path to monetisation nor data for such a business to prosper.
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Zhu, known for his early investment in ride-hailing giant Didi Chuxing, asked rhetorically: “How do you make money out of just developing an LLM?”
Fast-forward to the second half of 2025, and expectations about the technical capabilities of Chinese AI companies and the LLM business have changed.
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