Chinese LLMs + Weight-loss drugs + Chinese telcos build AI models

Welcome to the first issue of the newsletter for the China Tech Observatory (CTO) – our new project funded by the German Ministry for Education and Research (BMBF). Over the next three years, the project will take stock of China's progress in six selected technology areas critical not only for China but for the world: artificial intelligence (AI), semiconductors, green technologies, internet and communication technologies, biotechnology and quantum technology.

You can read a summary below or read the full version on our website.

Third Plenum: With self-reliance as a mainstay, China is becoming a fortress economy

Science and technology as the linchpin of Xi Jinping’s vision for China featured squarely in July at the Third Plenum of the Central Committee of the Chinese Communist Party (CCP), a major meeting on long-term social and economic plans. The president and CCP leader emphasized the need to boost “new-quality productive forces” – meaning growth led by technology innovation – to strengthen China’s geopolitical clout. Antonia Hmaidi, project lead for the CTO, says: “China is preparing for a fortress economy, with export-driven growth fueled by high-tech. Science and technology are especially important for achieving self-reliance, now a mainstay and central pillar of China’s efforts across the board.“?Read more

Large language model development in China thrives, but geopolitics may spell trouble

China’s large language models (LLMs) for generative artificial intelligence were off to a late start due to heavy state-imposed regulatory requirements but has made much progress ever since. The list of approved LLMs has grown to 117. IT giant Alibaba alone has invested billions of dollars in at least five of the leading generative AI startups, in addition to developing its own open-source LLM, Qwen. Tencent, ByteDance and Huawei are among other large tech firms working on their own generative AI offerings.?

MERICS Analyst?Wendy Chang: “What happens next is as much about tech as about geopolitics: the US could hobble Chinese developments if it manages to cut off hardware and software access. China’s own progress in building AI chips and indigenizing software architecture will also be key to its staying competitive in the AI race.”?Read more

Chinese firms prepare to take a piece of the weight-loss drug market

The weight-loss drug market is a golden opportunity for China to become a dominant player in global pharma. Aided by state support and domestic procurement, Chinese weight-loss products will first take over the domestic market (estimated at USD 10 billion by 2033), so that by the 2030s, they will compete in a global market expected to exceed USD 100 billion.?China’s innovation and industrial policy is designed for this. Now that the key innovation in weight-loss drugs has been made (targeting the GLP-1 receptor), China can concentrate on incremental innovation and economies of scale.?

MERICS Head of Program Jeroen Groenewegen-Lau says: “Chinese firms will become major players in the global weight-loss drug market by 2030, which will be a harbinger of China’s rising stock in global pharma more generally.” Read more

Chinese telcos join rush to build AI models despite chip shortage

In their effort to optimize China’s digital infrastructure for artificial intelligence, China’s state-owned telecommunications companies are venturing beyond their traditional remit to develop AI models. These changes are driven by a saturated 5G base station market and skyrocketing demand for smart computing power centers – big data infrastructure equipped for handling AI model training and use.

MERICS Lead Analyst?Rebecca Arcesati?says: “Scarcity in computing power is likely to affect China more in the future. Having telecommunications operators develop their own LLMs could hamper the efficient use of the limited computing power available.” Read more

Huawei: From telecommunications provider to technology manufacturing leader

Huawei has emerged as the leader for semiconductors in China. It designed the first domestically produced 5G-capable smartphone chip, the Kirin 9000S and is invested in 97 companies through its Hubble Investment arm. In the global technology competition between China and the US, Huawei thus now plays a key role in two of the most critical technologies, mobile internet and semiconductors. With its solar inverters, forays into autonomous driving and its own AI framework, PaddlePaddle, Huawei is now active across many of the technology areas the government has identified as critical.?Read more

Continue reading the full version of the MERICS China Tech Observatory newsletter on our website.

And make sure to also check out the project website where you can find our regularly updated research and analysis of developments in the six critical technology areas.