China

Baidu launches new AI models to compete in global race

Baidu has unveiled two new AI models, including ERNIE X1, which it claims matches the performance of DeepSeek R1 at half the cost. The company says X1 is a deep-thinking model capable of autonomous tool use, with enhanced reasoning, planning, and adaptability.

Meanwhile, Baidu’s latest foundation model, ERNIE 4.5, boasts improved multimodal capabilities, advanced language understanding, and a better grasp of satire and internet culture.

The Chinese tech giant has been striving to compete in the rapidly evolving AI landscape, where startups like DeepSeek have disrupted the industry with high-performing, cost-effective models. While Baidu was one of the first Chinese companies to launch a ChatGPT-style chatbot, its Ernie LLM has faced challenges in achieving widespread adoption.

With growing competition from domestic and international AI firms, Baidu aims to solidify its position through continuous innovation. The company’s latest advancements highlight the push for more sophisticated AI systems capable of processing diverse forms of data, including text, images, and audio, as China intensifies its efforts to lead in AI.

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DeepSeek focuses on innovation instead of rapid commercial growth

Chinese AI company DeepSeek is prioritising research over revenue, resisting the rush to capitalise on recent sales growth.

Unlike its Silicon Valley counterparts, the firm has chosen to refine its technology rather than focus on immediate profits.

According to sources familiar with its operations, DeepSeek achieved financial stability last month for the first time, with revenues covering ongoing costs.

Despite the financial milestone, its billionaire founder remains committed to long-term innovation rather than aggressive commercial expansion.

The decision reflects a broader trend in China‘s AI sector, where some firms are investing heavily in research to compete globally.

As AI adoption accelerates, DeepSeek’s strategy signals confidence in future breakthroughs over short-term financial gains.

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China announces mandatory AI labelling requirements

Chinese authorities have announced new regulations requiring AI-generated content to be clearly labelled, with the rules set to take effect on 1 September 2025. Officials said the move aims to ensure transparency and support the ‘healthy development’ of AI.

The decision follows global discussions on the risks associated with AI-generated media, including misinformation and deepfakes.

By mandating labelling, China seeks to enhance accountability and distinguish AI-created content from human-generated material.

The new rules reflect the government’s ongoing efforts to regulate emerging technologies while maintaining control over digital information.

With AI playing an increasing role in content creation, policymakers worldwide are considering similar measures.

China’s regulations are expected to influence international approaches to AI governance as other nations evaluate their own strategies for handling AI-generated content.

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Chinese hedge funds boost AI for competitive edge

China’s hedge fund industry is undergoing a transformative shift, spurred by High-Flyer’s integration of AI in its trading strategies. The multi-billion-dollar fund not only uses AI to enhance its portfolio but also created DeepSeek, a game-changing LLM that has disrupted the dominance of Western AI firms like those in Silicon Valley.

The breakthrough has ignited an AI arms race among Chinese asset managers, including firms like Baiont Quant, Wizard Quant, and Mingshi Investment Management, as they rush to incorporate AI into their investment workflows.

AI-powered trading has gained momentum, with many hedge funds now using AI to process market data and generate trading signals based on investor risk profiles. As competition for “alpha” (outperformance) intensifies, the demand for AI talent is surging.

Companies like Wizard Quant and Mingshi are actively recruiting top AI engineers, and even mutual funds, such as China Merchants Fund, have adopted DeepSeek to boost their efficiency. The open-source model has democratised access to AI, lowering the entry barrier for smaller Chinese funds, which had previously been unable to compete with their Western counterparts due to high costs.

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China claims quantum supremacy with Zuchongzhi 3.0 chip

Chinese researchers have developed the Zuchongzhi 3.0, a quantum processor 1 quadrillion times faster than the world’s best supercomputers. The 105-qubit chip, created at the University of Science and Technology of China, achieved impressive results, completing a quantum task in mere seconds—1 million times faster than Google’s Sycamore chip.

A breakthrough like this marks a major step forward in quantum computing, especially with its enhancements in coherence time and quantum error correction. The processor’s transmon qubits, made from materials like tantalum and niobium, also show significant improvements in gate fidelity, leading to more accurate computations.

Despite these advancements, experts note that classical computing methods could still close the gap, as seen in past quantum supremacy claims.

Zuchongzhi 3.0’s exceptional performance paves the way for more practical quantum computing applications, promising a new era of solving complex real-world challenges. The progress made in quantum gate fidelity and reduced noise sensitivity places China’s quantum processing technology at the forefront of global developments.

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Zhipu AI raises 500 million yuan amid rising competition

Chinese startup Zhipu AI has secured 500 million yuan (£54.8 million) in funding from the state-owned Huafa Group, following a separate 1 billion yuan capital raise earlier this month.

Huafa Group, a government-backed conglomerate based in Zhuhai, Guangdong province, announced its investment as Chinese cities compete to support AI firms, a sector seen as critical in Beijing’s technological rivalry with the US.

The funding comes amid increasing competition in China’s AI industry, particularly with Hangzhou-backed DeepSeek, whose large language models have gained attention for their cost-effectiveness and performance against Western alternatives.

Zhipu AI, established in 2019 and recognised as one of China’s ‘AI tigers,’ has received investments from major tech firms including Tencent, Meituan, and Xiaomi. The startup was valued at 20 billion yuan (£2.2 billion) in a funding round last July, according to business registration platform Qichacha.

With the new funding, Zhipu AI aims to enhance technological innovation and further develop its GLM foundation model.

However, the company faces challenges on the international stage, having been added to the US Commerce Department’s export control list in January, restricting its access to American components.

Despite these hurdles, China continues to bolster its AI sector as it seeks to establish a leading position in global artificial intelligence development.

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OpenAI launches responses API to boost AI agents

OpenAI has unveiled new tools for developers to build advanced AI agents, stepping up its game amid rising competition from Chinese startups.

The latest offering, called the Responses API, allows developers to create AI systems that execute complex tasks independently. This new tool replaces the Assistants API, which will be phased out by mid-2026.

The launch comes as Chinese startups make rapid advances in AI, with some claiming their models rival or surpass those of leading US firms at a lower cost.

One such company, Monica, recently introduced its autonomous AI agent, Manus, which it says outperforms OpenAI’s DeepResearch agent.

Monica’s rise follows growing recognition of Chinese AI innovations, including DeepSeek, which has impressed Silicon Valley executives.

On Tuesday, Monica announced a partnership with the team behind Alibaba’s Qwen AI models, further intensifying the global AI race.

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ICBC unveils $11 billion innovation fund

China’s Industrial and Commercial Bank (ICBC), the world’s largest commercial lender by assets, has launched an 80 billion yuan ($11.04 billion) technology and innovation fund to bolster the private sector.

The state-owned bank announced that the fund will focus on ‘hard technology’ fields such as semiconductors and advanced manufacturing rather than ‘soft’ technology like internet services.

ICBC chairman Liao Lin emphasised that the initiative aligns with central leadership directives, aiming to turn supportive policies into tangible benefits for private enterprises. The bank described the fund as ‘patient capital,’ indicating a long-term investment strategy rather than a rush for quick profits.

The launch follows China’s recent policy priorities for 2025, unveiled at its annual parliamentary meeting, which stress boosting consumption and achieving technological advances amid ongoing tensions with the US.

Additionally, the government plans to establish a state-backed fund to raise 1 trillion yuan from private investment to support technology startups.

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Xpeng plans major investment in humanoid robots

Chinese electric vehicle maker Xpeng is making a long-term push into humanoid robots, with potential investments reaching up to 100 billion yuan ($13.8 billion), according to CEO He Xiaopeng. Speaking at the annual parliamentary session, He described the company’s current investment as conservative but signalled a willingness to scale up significantly over the next two decades. Xpeng, which entered the humanoid robotics sector in 2020, unveiled its Iron humanoid robot last November, positioning it as a rival to Tesla’s Bot.

Chinese automakers are increasingly venturing into robotics, encouraged by policymakers aiming for breakthroughs in the field. Stellantis-backed Leapmotor has also joined the race, forming a robotics team to develop machines for industrial applications such as factory assembly lines. CEO Zhu Jiangming stated that these robots are intended to enhance efficiency by replacing human labour in production processes.

Xpeng’s CEO suggested that automakers could invest between 1-2 billion yuan per year in developing and deploying humanoid robots in real-world scenarios. As the industry shifts towards automation, carmakers are betting that advanced robotics will play a crucial role in future manufacturing and mobility solutions.

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Chinese investors turn to AI for stock market edge

Chinese retail investors are rapidly embracing AI tools like DeepSeek to navigate the stock market, marking a striking shift from last year’s government crackdown on computer-driven quantitative trading.

Online courses and packed training rooms reflect a growing eagerness among small-time traders to use AI-powered models, with many seeing them as essential in the digital age.

DeepSeek, developed by a hedge fund in Hangzhou, has not only boosted Chinese stocks but also reshaped perceptions of the country’s $700 billion hedge fund industry.

Despite the initial backlash against quant funds, which were previously blamed for market volatility, investors are now paying thousands of yuan to attend AI trading seminars.

Social media is flooded with courses teaching traders how to use DeepSeek to analyse companies, pick stocks, and even code their own trading strategies.

While major US funds like BlackRock and Renaissance Technologies have long used AI for investments, DeepSeek’s open-source model makes these tools accessible to China’s smaller asset managers and individual traders.

Financial institutions are also adapting to the AI-driven shift. Brokers are rushing to integrate AI models into their platforms, with industry leaders predicting a complete transformation in how Chinese investors make decisions.

Many now seek trading advice from DeepSeek instead of human wealth managers, reflecting a deep trust in the technology. However, experts warn that AI models still have limitations and could create market risks, especially if large numbers of traders act on the same signals.

While some remain cautious about AI’s role in investing, DeepSeek has undeniably changed public attitudes towards quant fund managers.

Many now view them as contributors to market efficiency rather than as culprits behind retail losses. As China’s stock market continues to evolve, AI looks set to play an increasingly dominant role in shaping investor behaviour.

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