In his annual New Year’s address on Wednesday, Chinese President Xi Jinping celebrated China’s significant achievements in artificial intelligence and technology throughout 2025, positioning the nation as a leading force in the global AI race. Xi emphasized that China has “integrated science and technology deeply with industries, and made a stream of new innovations,” highlighting the country’s rapid advancement in AI capabilities.
The Chinese leader specifically praised the proliferation of large AI models competing domestically, stating that “many large AI models have been competing in a race to the top, and breakthroughs have been achieved in the research and development of our own chips.” This acknowledgment underscores China’s strategic focus on achieving semiconductor independence amid ongoing US export restrictions on advanced AI chips.
Xi’s remarks come after a landmark year for Chinese AI development. The year began with DeepSeek AI, a Chinese startup, releasing its R1 AI model in January, which directly competed with OpenAI’s o1 model and caused significant disruption in US tech markets. The release sent shockwaves through Wall Street, with Nvidia’s stock plummeting more than 17% on January 27, erasing billions in market value and demonstrating China’s growing competitive threat in AI technology.
The US government’s ban on exporting advanced AI chips to China has paradoxically strengthened China’s domestic chip industry, creating new billionaires among homegrown chip producers. Founders like Chen Weiliang of MetaX Integrated Circuits Shanghai have risen to billionaire status as China invests heavily in semiconductor self-sufficiency.
However, the AI landscape remains complex. In December, President Donald Trump granted Nvidia permission to sell its H200 chips to “approved customers” in China, representing a strategic shift in US-China tech relations. Additionally, Meta announced a major acquisition on Wednesday, purchasing China-founded AI startup Manus for more than $2 billion, marking one of the largest US tech acquisitions of an Asian AI company.
Investment experts are taking notice of China’s AI momentum. Jason Draho, a UBS wealth management executive, advised investors in November to consider Chinese AI stocks as a counterbalance to US tech holdings, signaling growing confidence in China’s AI sector among global investors.
Key Quotes
Many large AI models have been competing in a race to the top, and breakthroughs have been achieved in the research and development of our own chips.
Xi Jinping made this statement in his New Year’s address, emphasizing China’s progress in both AI model development and semiconductor manufacturing—two critical areas where the country has faced US restrictions. This quote highlights China’s strategic focus on achieving technological self-sufficiency.
All this has turned China into one of the economies with the fastest-growing innovation capabilities.
Xi Jinping used this statement to position China as a global innovation leader, specifically in the context of AI and technology advancements. This declaration signals China’s ambition to compete directly with the United States for technological supremacy.
Investors should consider AI stocks in China as a way to counterbalance US tech stocks.
Jason Draho, a UBS wealth management executive, made this recommendation in November, reflecting growing investor confidence in China’s AI sector. This advice from a major financial institution indicates that Chinese AI companies are increasingly viewed as viable alternatives to US tech giants.
Our Take
Xi Jinping’s explicit celebration of China’s AI achievements represents a significant escalation in the global AI arms race. The fact that DeepSeek’s R1 model could rival OpenAI while causing billions in US market losses demonstrates that innovation can flourish even under restrictive conditions—perhaps even because of them. US chip export bans may have inadvertently accelerated China’s domestic semiconductor industry rather than hindering it.
The $2 billion Meta-Manus acquisition is particularly telling, suggesting that even amid geopolitical tensions, American tech giants recognize they cannot afford to ignore Chinese AI talent and innovation. This creates a paradox: while governments compete, corporations collaborate. The bifurcation of the AI ecosystem into Chinese and Western spheres seems inevitable, with profound implications for global technology standards, data governance, and the future of international cooperation in AI development. Businesses must prepare for a world where AI capabilities are no longer concentrated in Silicon Valley.
Why This Matters
Xi Jinping’s New Year address signals China’s determination to achieve AI supremacy and technological independence, marking a pivotal moment in the global AI competition. The speech demonstrates that AI development has become a matter of national priority for China, with implications extending far beyond technology into geopolitics and economic power.
The success of companies like DeepSeek proves that China can develop competitive AI models despite US chip export restrictions, challenging assumptions about American technological dominance. This has profound implications for global AI leadership, potentially creating a bifurcated AI ecosystem with distinct Chinese and Western technology stacks.
For businesses worldwide, China’s AI advances mean increased competition and innovation, potentially driving down costs while raising questions about data governance, security, and ethical standards. The willingness of companies like Meta to invest billions in Chinese AI startups suggests that despite geopolitical tensions, the AI talent and innovation emerging from China cannot be ignored. Investors and tech companies must now navigate a more complex landscape where Chinese AI capabilities represent both competitive threats and investment opportunities.
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Source: https://www.businessinsider.com/xi-jinping-china-ai-wins-new-year-address-2026-1