China

Tencent sees surge in profits and revenue

Tencent, a leading Chinese tech giant, has reported impressive financial results for the fourth quarter and full year, boosted by its strategic investment in AI.

For the three months ending December 31, Tencent’s net profits soared by 90% year-on-year to 51.3 billion yuan ($7.1 billion), while its revenue increased by 11% to 172.4 billion yuan, surpassing analyst expectations.

The company’s strong performance was attributed to AI-driven enhancements in its advertising platform, growing video account engagement, and solid results from its gaming division.

For the full year, Tencent’s revenue reached 660.3 billion yuan, up 8% from the previous year, with net profits jumping 68% to 194.1 billion yuan.

CEO Pony Ma highlighted the role of AI in driving innovation, noting that Tencent had reorganized its AI teams to focus on fast product development and advanced model research.

The company’s stock price has surged to its highest in nearly four years, reflecting strong investor confidence.

The increased AI interest follows the unexpected global success of DeepSeek, a Chinese startup whose chatbot development caught the attention of investors, positioning China as a competitor to Western tech leaders like OpenAI.

Ma expressed Tencent’s admiration for DeepSeek and confirmed its active integration of their technology. Tencent has also started testing its own AI model, ‘Hunyuan Thinker’, which aims to offer more professional and human-like responses.

Despite its financial successes, Tencent faces ongoing challenges, including a sluggish domestic economy and political tensions, particularly with the US.

In January, the US added Tencent to a list of firms linked to China’s military, a move the company and the Chinese government have criticized as unjustified.

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Tencent unveils new AI tools for 3D visuals

Tencent has unveiled a suite of new AI tools aimed at converting text and images into 3D visuals, showcasing China’s growing presence in the generative AI field.

The company launched five open-source models based on its Hunyuan3D-2.0 technology, including turbo versions capable of producing high-quality 3D visuals in 30 seconds.

A release like this follows Tencent’s push to challenge US dominance in AI, with competitors like AI startup DeepSeek offering similar performance at lower costs.

The launch of Hunyuan3D-2.0 builds on the company’s earlier introduction of 3D AI models, targeting designers and game developers to establish a competitive edge in text-to-3D and image-to-3D generation.

Tencent’s new models are praised for superior text consistency, geometric accuracy, and visual quality compared to leading industry benchmarks.

Meanwhile, ByteDance, the parent company of TikTok, has also entered the text-to-3D market with its VeOmniverse model, though it remains proprietary.

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BMW to equip cars with Huawei HiCar system

BMW will integrate Huawei’s HiCar system into its locally produced models starting in 2026, strengthening its presence in the Chinese market.

The partnership will enable seamless connectivity between Huawei devices and BMW vehicles, enhancing smart driving applications through the Harmony operating system.

The German automaker emphasised its commitment to deeper collaboration with Chinese partners, aiming to integrate them more closely into its global innovation network.

By working with local suppliers, BMW seeks to foster long-term cooperation and technological advancement in one of the world’s largest automotive markets.

An approach that aligns with BMW’s broader strategy of leveraging local expertise to remain competitive in a fast-evolving automotive landscape.

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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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