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Artificial intelligence
TechTech War

Tech war: China takes confident strides to develop more AI innovation in 2026

‘China’s tech innovation is poised for policy-driven growth in 2026, with AI placed at the centre of the country’s economic agenda,’ NYU’s Winston Ma says

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Illustration: Henry Wong
Ben Jiangin Beijing
On the last day of 2025, DeepSeek published a new technical paper, with founder and CEO Liang Wenfeng among the 19 co-authors, about “manifold-constrained hyper-connections” – a general framework for training artificial intelligence systems at scale, which suggested “promising directions for the evolution of foundational models”.

That release was a fitting reminder to the world, especially during the peak of the Christmas holiday season, about Chinese AI companies’ sharpened focus on innovation to stay ahead in this fast-developing industry.

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. Weeks later on January 20, reasoning model DeepSeek-R1 was released.
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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. The result: a massive sell-off on January 27 wiped out nearly US$1 trillion in tech stocks, including US$600 billion from Nvidia alone.

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.

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A domestic AI start-up’s co-founder, who declined to be identified, predicted that China would overtake the US to become “the world’s leading AI power in 2027”. China’s advantage was its deep talent pool, according to the co-founder.

In his New Year’s address, Chinese President Xi Jinping pointed out that 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. All of that “has turned China into one of the economies with the fastest growing innovation capabilities”, Xi said.
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