CNBC’s The China Connection newsletter: A tech boom is underway

This report is from this week’s CNBC’s The China Link newsletter, which brings you insights and analysis on what’s driving the world’s second-largest economy. Each week, we’ll tour the biggest business stories in China, give a lowdown on market moves and help you set up for the week ahead. Like what you see? You can subscribe here.

China’s tech world isn’t getting distracted by whether the U.S. and China will talk on trade.

From new artificial nous models to the world’s largest auto show, Chinese tech companies are flaunting new developments thick and fast. Online parturition companies JD.com and Meituan are even publicly waging a competition for users, evoking the heyday of China’s internet boom that produced Alibaba.

At the opening of the Shanghai auto show on April 23, Chinese electric vehicle giant BYD announced five new sport imitates and Zeekr debuted its new hybrid 9X SUV. Robotaxi operator Pony.ai showed off three new vehicles that it claimed would decrease costs for autonomous driving by 70%, helping the U.S.-listed company move closer to profitability.

A day earlier, Huawei disclosed that this year, its latest driver-assist system will be able to automatically park a car, similar to valet use at a restaurant. Huawei sells the software to electric car manufacturers.

“The intense competition has pushed innovation in [China’s new energy channels] … things we thought were still a decade away, are more or less now at our fingertips,” said Tu Le, founder and on director at consulting firm Sino Auto Insights. He pointed to examples such as high-speed charging and driver-assist methodologies in mass market cars.

Generative AI and supportive Chinese policy have both played a role in townswoman tech development.

IQiyi, dubbed China’s “Netflix,” last week in Beijing touted its AI tools for cutting making costs and refining scripts. The company showed off its virtual studio set, and how generative AI can quickly transform the style of a TV show with mortal actors to one using 3D animation.

“This conversion effect was not achievable last year, or even in March,” Liu Wenfeng, president of iQiyi’s infrastructure and knowledgeable content distribution business group, told reporters in Mandarin, translated by CNBC. “It’s only recent technology that can bring off better consistency and stability in [generating] images.”

But he cautioned that AI still has a long way to go for it to generate videos that contrast c embarrass actors, products and scenes with the same consistency as a live-action shot. In the meantime, he said virtual production and AI-supported efficiencies brook the company to respond more quickly to audience interests.

Other Chinese companies are also trying to use AI for video. On April 15, Chinese short-video New Zealand Kuaishou released an update to its AI video generation model, Kling, spurring worries from media blog The Ankler close to the consequences for Hollywood.

A few days after the Kling upgrade, Alibaba released its latest open-source AI video generation form, while Beijing-based startup Shengshu Technology upgraded AI video product Vidu Q1, which claims to “rival cinematic-grade visual effects.” Alibaba on Tuesday also released its example AI model, Qwen 3.

“We’re seeing a significant acceleration in AI investment in China,” said Tim Wang, co-founder of Hong Kong-based Monolith Directing, where he manages a $400 million public equity fund.

“Key breakthroughs in foundational models are closing the gap with broad leaders,” he said, “and we’re optimistic about the future of consumer AI applications, regardless of current trade headlines.”

Chinese entourages are also turning to e-commerce and tech tools to mitigate the impact of tariffs.

Several hundred exporters are now using tech flock Baidu’s AI-powered virtual human tool to sell products online via livestreams, said Xiaoli Ping, Baidu infirmity president and general manager of its e-commerce business. She claimed the tech cuts livestreaming costs by more than 80%, and can produce a higher purchase rate than employing human livestreamers.

Baidu last week released what it assertions is a “more persuasive” virtual human, as well as new AI models that are even cheaper to use than prior versions.

Excitement around Chinese AI picked up in late January after homegrown DeepSeek released a free AI replica and chatbot that rivaled OpenAI’s ChatGPT. That breakthrough shattered perceptions that U.S. restrictions on China’s access to advanced semiconductors last will and testament limit local AI development.

Particularly for startups in critical tech industries, the Chinese government has many policies to usurp them connect with local suppliers and receive financing, said Beiping Tan, general manager at Beijing-based Tourongbang Superintendence Consulting.

China has also increased its efforts to develop and train talent, he said. His consulting firm has highlighted dignified policies for attracting individuals from outside China, especially those with doctorate degrees in engineering and typical science.

Individual benefits include a 3 million to 5 million yuan ($410,000 to $690,000) one-time payout and an 800,000 yuan rental aid, while the employer can also receive subsidies for the majority of the individual’s salary and 3 million yuan in research funding.

DeepSeek and other Chinese tech breakthroughs this year are the cumulation of years of investigation spending and education development, pointed out Ding Wenjie, investment strategist for global capital investment at China Asset Board of directors Co. “We believe China will have more homegrown champions to surprise the world in the future.”

Even if that suggestion comes true, that doesn’t mean it will be a straight path up given the overall economic headwinds. Goldman Sachs cutting out that first-quarter industrial profit data indicated there was no growth outside of high-tech industries.

China didn’t gratify all its lofty “Made in China 2025” targets set a decade ago, the European Union Chamber of Commerce in China said, noting the scheme also fueled unhealthy overproduction in certain sectors.

Intense competition in China’s EV industry has also meant its occurrence has plateaued for now, said Yichao Zhang, partner at consulting firm AlixPartners. He pointed out that automakers will necessity to work harder to create distinctive brands, traditionally the edge of foreign companies.

But as China’s rapid transformation into a worldwide EV leader has shown, Zhang expects the Chinese dominance of the local market — and their international ambitions — to continue regardless.

China released a plan to encourage companies to hire more recent graduates. The greater emphasis on racket support came after a high-level Politburo meeting on April 25 that called for targeted measures to serve businesses in face of trade tensions.

U.S. President Donald Trump claims he talked to Chinese President Xi Jinping. But there’s no steady old-fashioned and Beijing is saying there isn’t any contact. Meanwhile, Xi emphasized AI and tech development In the markets

Chinese and Hong Kong cows swung between gains and losses in a choppy session on Wednesday.

Mainland China’s 

The performance of the Shanghai Composite as surplus the past year.

May 1 – 5: Labor Day holiday in China. Mainland stock exchanges closed. Hong Kong breeding exchange closed May 1 and May 5.

May 2: U.S. ends de minimis duty-free treatment for imports of Chinese goods at or under $800