China is closing 2025 with renewed confidence in its economic resilience and growing influence across technology, manufacturing and global markets. Breakthroughs in AI, electric vehicles, green energy and biopharmaceuticals have reshaped perceptions of the country, moving it beyond its long-standing image as the world’s factory towards a centre of innovation.
Despite trade tensions with the United States and ongoing challenges in property and consumer spending, China is expected to meet its 5% growth target for the year. Exports remained robust as firms diversified away from reliance on the US market, while a temporary trade truce eased pressure on global supply chains. Competition with Washington is increasingly shifting from tariffs to technology leadership in areas such as AI, advanced chips and biotechnology.
AI emerged as a defining theme, with Chinese companies pushing large language models into widespread industrial and consumer use. Government-backed initiatives are accelerating integration across manufacturing, transport and healthcare, while tighter rules aim to address risks such as deepfakes and data security.
At the same time, Chinese electric vehicle manufacturers expanded rapidly overseas, and domestic sales of new energy vehicles surpassed those of traditional cars for the first time.
Capital markets and global outreach also strengthened China’s position. Hong Kong reclaimed its status as the world’s largest IPO market, while Shanghai advanced its role as a financial and fintech hub. Looking to 2026, analysts expect China’s growth story to depend less on volume expansion and more on technological competitiveness, global integration and the ability to navigate a more fragmented geopolitical landscape.
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China’s AI industry entered 2025 as a perceived follower but ended the year transformed. Rapid technical progress and commercial milestones reshaped global perceptions of Chinese innovation.
The surprise release of DeepSeek R1 demonstrated strong reasoning performance at unusually low training costs. Open access challenged assumptions about chip dominance and boosted adoption across emerging markets.
State backing and private capital followed quickly, lifting the AI’s sector valuations and supporting embodied intelligence projects. Leading model developers prepared IPO filings, signalling confidence in long term growth.
Chinese firms increasingly prioritised practical deployment, multilingual capability, and service integration. Global expansion now stresses cultural adaptation rather than raw technical benchmarks alone.
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China has proposed new rules to restrict AI chatbots from influencing human emotions in ways that could lead to suicide or self-harm. The Cyberspace Administration released draft regulations, open for public comment until late January.
The measures target human-like interactive AI services, including emotionally responsive AI chatbots, that simulate personality and engage users through text, images, audio, or video. Officials say the proposals signal a shift from content safety towards emotional safety as AI companions gain popularity.
Under the draft rules, AI chatbot services would be barred from encouraging self-harm, emotional manipulation, or obscene, violent, or gambling-related content. Providers would be required to involve human moderators if users express suicidal intent.
Additional provisions would strengthen safeguards for minors, including guardian consent and usage limits for emotionally interactive systems. Platforms would also face security assessments and interaction reminders when operating services with large user bases.
Experts say the proposals could mark the world’s first attempt to regulate emotionally responsive AI systems. The move comes as China-based chatbot firms pursue public listings and as global scrutiny grows over how conversational AI affects mental health and user behaviour.
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Chinese robotics firm AI² Robotics has launched ZhiCube, described as a modular embodied AI service space integrating humanoid robots into public venues. The concept debuted in Beijing and Shenzhen, with initial installations in a city park and a shopping mall.
ZhiCube places the company’s AlphaBot 2 humanoid robot inside a modular unit designed for service delivery. The system supports multiple functions, including coffee, ice cream, entertainment, and retail, which can be combined based on location and demand.
At the core of the platform is a human–robot collaboration model powered by the company’s embodied AI system, GOVLA. The robot can perceive its surroundings, understand tasks, and adapt its role dynamically during daily operations.
AI² Robotics says the system adjusts work patterns based on foot traffic, allocating tasks between robots and human staff as demand fluctuates. Robots handle standardised services, while humans focus on creative or complex activities.
The company plans to deploy 1,000 ZhiCube units across China over the next three years. It aims to position the platform as a scalable urban infrastructure, supported by in-house manufacturing and long-term operational data from multiple industries.
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Chinese researchers have reported a significant advance in quantum computing using a superconducting system. The Zuchongzhi 3.2 computer reached the fault-tolerant threshold, at which point error correction improves stability.
Pan Jianwei led the research and marks only the second time globally that this threshold has been achieved, following earlier work by Google. The result positions China as the first country outside the United States to demonstrate fault tolerance in a superconducting quantum system.
Unlike Google’s approach, which relies on extensive hardware redundancy, the Chinese team used microwave-based control to suppress errors. Researchers say this method may offer a more efficient path towards scalable quantum computing by reducing system complexity.
The breakthrough addresses a central challenge in quantum computing: qubit instability and the accumulation of undetected errors. Effective error management is crucial for developing larger systems that can maintain reliable quantum states over time.
While practical applications remain distant, researchers describe the experiment as a significant step in solving a foundational problem in quantum system design. The results highlight the growing international competition in the quest for scalable, fault-tolerant quantum computers.
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China’s Tsinghua University has emerged as a central hub in the country’s push to become a global leader in AI. The campus hosts a high level of research activity, with students and faculty working across disciplines related to AI development.
Momentum has been boosted by the success of DeepSeek, an AI startup founded by alums of Tsinghua University. The company reinforced confidence that Chinese teams can compete with leading international laboratories.
The university’s rise is closely aligned with Beijing’s national technology strategy. Government backing has included subsidies, tax incentives, and policy support, as well as public endorsements of AI entrepreneurs affiliated with Tsinghua.
Patent and publication data highlight the scale of output. Tsinghua has filed thousands of AI-related patents and ranks among the world’s most cited institutions in AI research, reflecting China’s rapidly expanding share of global AI innovation.
Despite this growth, the United States continues to lead in influential patents and top-performing models. Analysts note, however, that a narrowing gap is expected, as China produces a growing share of elite AI researchers and expands AI education from schools to advanced research.
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ByteDance plans a major jump in AI spending next year as global chip access remains uncertain. The firm is preparing heavier investment in processors and infrastructure to support demanding models across its apps and cloud platforms.
The company is budgeting nearly nine billion pounds for AI chips despite strict US export rules. A potential trial purchase of Nvidia H200 hardware could expand its computing capacity if wider access is approved for Chinese firms.
Rivals in the US continue to outspend ByteDance, with large tech groups pouring hundreds of billions into data centres. Chinese platforms face tighter limits and are developing models that run efficiently with fewer resources.
ByteDance’s consumer AI ecosystem keeps accelerating, led by its Doubao chatbot and growing cloud business. Private ownership gives the firm flexibility to invest aggressively while placing AI at the heart of its long-term strategy.
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The US tech giant NVIDIA has largely remained shut out of China’s market for advanced AI chips, as US export controls have restricted sales due to national security concerns.
High-performance processors such as the H100 and H200 were barred, forcing NVIDIA to develop downgraded alternatives tailored for Chinese customers instead of flagship products.
A shift in policy emerged after President Donald Trump announced that H200 chip sales to China could proceed following a licensing review and a proposed 25% fee. The decision reopened a limited pathway for exporting advanced US AI hardware, subject to regulatory approval in both Washington and Beijing.
If authorised, the H200 shipments would represent the most powerful US-made AI chips permitted in China since restrictions were introduced. The move could help NVIDIA monetise existing H200 inventory while easing pressure on its China business as it transitions towards newer Blackwell chips.
Strategically, the decision may slow China’s push for AI chip self-sufficiency, as domestic alternatives still lag behind NVIDIA’s technology.
At the same time, the policy highlights a transactional approach to export controls, raising uncertainty over long-term US efforts to contain China’s technological rise.
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Investors keen to buy TikTok’s US operations say they are left waiting as the sale is delayed again. ByteDance, TikTok’s Chinese owner, was required to sell or be blocked under a 2024 law.
US President Donald Trump seems set to extend the deadline for a fifth time. Billionaires, including Frank McCourt, Alexis Ohanian and Kevin O’Leary, are awaiting approval.
Investor McCourt confirmed his group has raised the necessary capital and is prepared to move forward once the sale is allowed. National security concerns remain the main reason for the ongoing delays.
Project Liberty, led by McCourt, plans to operate TikTok without Chinese technology, including the recommendation algorithm. The group has developed alternative systems to run the platform independently.
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Huawei Technologies is intensifying its AI strategy with the establishment of a dedicated foundation model unit within its 2012 Laboratories research arm, reflecting the heightened competition among China’s major tech companies to develop advanced AI systems.
A recruitment advertisement posted in October signals that the Shenzhen-based telecom and tech giant is proactively wooing global AI talent to assemble a world-class team focused on foundational model development.
Huawei has confirmed the establishment of the unit but has offered few operational details.
Richard Yu Chengdong, head of Huawei’s consumer group and newly appointed chairman of the Investment Review Board overseeing AI strategy, has personally promoted the drive on social media, urging young engineers to help ‘make the world’s most powerful AI.’
This movement underscores Huawei’s broader ambition to challenge both domestic rivals and Western AI leaders in core areas of generative AI technology.
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