BEIJING — For Chinese companies wary of U.S. tariffs, the big difference between President Donald Trump’s first and second terms is the emergence of generative artificial intelligence.
Chinese companies are hard at work. Nearly every day in the last two weeks, a Chinese firm has announced a new AI product — or how they’re making money with the tech.
To name a few:
Short-video company Kuaishou said Tuesday its AI tool for generating videos, Kling, has raked in more than 100 million yuan ($13.78 million) since its launch last summer.
Tencent last week updated its AI model for generating 3D visuals — which can be used in games or for 3D printing — and released the full version of its Hunyuan T1 reasoning model. A few weeks earlier, Tencent had integrated T1 with its Yuanbao chatbot app that also lets users tap DeepSeek’s R1.
Daily active Yuanbao users surged by 20 times in just a month, Tencent said last week. The company also shared how some farmers have used the AI app to analyze soil conditions for planting.
Baidu on Monday launched tools for people to build websites and simple games with conversational prompts instead of having to write code. Kunlun Tech, parent of browser Opera, on Wednesday upgraded its Mureka app for using AI to generate music.
As a manufacturing hub, China has “great advantages in terms of ‘physical’ AI” since the country has lots of machines that can collect valuable data for training industry-specific models, Maxwell Zhou, CEO of autonomous-driving software company DeepRoute.ai, told CNBC on Friday in Mandarin, translated by CNBC.
DeepRoute.ai, launched in 2019, announced last week it was building a system for autonomous-delivery vehicles to send parcels with simple voice commands such as “pick up coffee from this store and send it to the apartment.”
Zhou said he hopes the system to be operational in China by early next year.
While it’s unclear which AI companies will ultimately succeed, analysts expect Chinese businesses stand a better chance at excelling with the help of AI applications. AI tools could cut costs for companies and offset some of the impact of an economic slowdown.
The combined impact of the tech is lifting expectations for Chinese corporate earnings growth in the year ahead, said Ding Wenjie, investment strategist for global capital investment at China Asset Management.
Earnings will signal whether the economy is really turning around, especially under the pressure of tariffs and other trade restrictions.
Goldman Sachs in early February estimated a 20% increase in U.S. tariffs on Chinese goods could shave off 5% in Chinese corporate earnings, in Hong Kong dollar terms.
The greater question for the U.S. and China, however, stretches beyond tariffs.
After a visit to China this week for a conference, New York Times columnist Thomas Friedman concluded that it was not tariffs or Taiwan that the U.S. and Chinese presidents needed to discuss immediately — but rather AI that’s as smart as humans and pervades the world.
The author of “The World is Flat” likened a possible U.S.-China collaboration on AI to the Soviet-U.S. nuclear arms control deal.
“The Board evaluated the application under the statutory factors it is required to consider, including the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal,” the Fed said in a release.
Capital One first announced it had entered into a definitive agreement to acquire Discover in February 2024. It will also indirectly acquire Discover Bank through the transaction.
Under the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share or about a 26% premium from Discover’s closing price of $110.49 at the time, Capital One said in a release.
Capital One and Discover are among the largest credit card issuers in the U.S., and the merger will expand Capital One’s deposit base and its credit card offerings.
After the deal closes, Capital One shareholders will hold 60% of the combined company, while Discover shareholders own 40%, according to the February 2024 release.
In a joint statement, Capital One and Discover said they expect to close the deal on May 18.
Smart robotic arms work on the production line at the production workshop of Changqing Auto Parts Co., LTD., located in Anqing Economic Development Zone, Anhui Province, China, on March 13, 2025. (Photo by Costfoto/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
BEIJING — China missed several key targets from its 10-year plan to become self-sufficient in technology, while fostering unhealthy industrial competition which worsened global trade tensions, the European Chamber of Commerce in China said in a report this week.
When Beijing released its “Made in China 2025” plan in 2015, it was met with significant international criticism for promoting Chinese business at the expense of their foreign counterparts. The country subsequently downplayed the initiative, but has doubled-down on domestic tech development given U.S. restrictionsin the last several years.
Since releasing the plan,China has exceeded its targets on achieving domestic dominance in autos, but the country has not yet reached its targets in aerospace, high-end robots and the growth rate of manufacturing value-added, the business chamber said, citing its research and discussions with members. Out of ten strategic sectors identified in the report, China only attained technological dominance in shipbuilding, high-speed rail and electric cars.
China’s targets are generally seen as a direction rather than an actual figure to be achieved by a specific date. The Made In China 2025 plan outlines the first ten years of what the country called a ‘multi-decade strategy’ to become a global manufacturing powerhouse.
The chamber pointed out that China’s self-developed airplane, the C919, still relies heavily on U.S. and European parts and though industrial automation levels have “increased substantially,” it is primarily due to foreign technology. In addition, the growth rate of manufacturing value add reached 6.1% in 2024, falling from the 7% rate in 2015 and just over halfway toward reaching the target of 11%.
“Everyone should consider themselves lucky that China missed its manufacturing growth target,” Jens Eskelund, president of the European Union Chamber of Commerce in China, told reporters Tuesday, since the reverse would have exacerbated pressure on global competitors. “They didn’t fulfill their own target, but I actually think they did astoundingly well.”
Even at that slower pace, China has transformed itself over the last decade to drive 29% of global manufacturing value add — almost the same as the U.S. and Europe combined, Eskelund said. “Before 2015, in many, many categoriesChina was not a direct competitor of Europe and the United States.”
The U.S. in recent years has sought to restrict China’s access to high-end tech, and encourage advanced manufacturing companies to build factories in America.
The U.S. restrictions have “pushed us to make things that previously we would not have thought we had to buy,” said Lionel M. Ni, founding president of the Guangzhou campus of the Hong Kong University of Science and Technology. That’s according to a CNBC translation of his Mandarin-language remarks to reporters on Wednesday.
Ni said the products requiring home-grown development efforts included chips and equipment, and if substitutes for restricted items weren’t immediately available, the university would buy the second-best version available.
In addition to thematic plans, China issues national development priorities every five years. The current 14th five-year plan emphasizes support for the digital economy and wraps up in December. The subsequent 15th five-year plan is scheduled to be released next year.
China catching up
It remains unclear to what extent China can become completely self-sufficient in key technological systems in the near term. But local companies have made rapid strides.
“Western chip export controls have had some success in that they briefly set back China’s developmental efforts in semiconductors, albeit at some cost to the United States and allied firms,” analysts at the Washington, D.C.,-based think tank Center for Strategic and International Studies, said in a report this week. However, they noted that China has only doubled down, “potentially destabilizing the U.S. semiconductor ecosystem.”
For example, the thinktank pointed out, Huawei’s current generation smartphone, the Pura 70 series, incorporates 33 China-sourced components and only 5 sourced from outside of China.
Huawei reported a 22% surge in revenue in 2024 — the fastest growth since 2016 — buoyed by a recovery in its consumer products business.The company spent 20.8% of its revenue on research and development last year, well above its annual goal of more than 10%.
Overall, China manufacturers reached the nationwide 1.68% target for spending on research and development as a percentage of operating revenue, the EU Chamber report said.
“‘Europe needs to take a hard look at itself,” Eskelund said, referring to Huawei’s high R&D spend. “Are European companies doing what is needed to remain at the cutting edge of technology?”
However, high spending doesn’t necessarily mean efficiency.
The electric car race in particular has prompted a price war, with most automakers running losses in their attempt to undercut competitors. The phenomenon is often called “neijuan” or “involution” in China.
“We also need to realize [China’s] success has not come without problems,” Eskelund said. “We are seeing across a great many industries it has not translated into healthy business.”
He added that the attempt to fulfill “Made in China 2025” targets contributed to involution, and pointed out that China’s efforts to move up the manufacturing value chain from Christmas ornaments to high-end equipment have also increased global worries about security risks.
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Such fierce competition compounds the impact of already slowing economic growth. Out of 2,825 mainland China-listed companies, 20% reported a loss for the first time in 2024, according to a CNBC analysis of Wind Information data as of Thursday. Including companies that reported yet another year of losses, the share of companies that lost money last year rose to nearly 48%, the analysis showed.
China in March emphasized that boosting consumption is its priority for the year, after previously focusing on manufacturing. Retail sales growth have lagged behind industrial production on a year-to-date basis since the beginning of 2024, according to official data accessed via Wind Information.
Policymakers are also looking for ways to ensure “a better match between manufacturing output and what the domestic market can absorb,” Eskelund said, adding that efforts to boost consumption don’t matter much if manufacturing output grows even faster.
But when asked about policies that could address manufacturing overcapacity, he said, “We are also eagerly waiting in anticipation.”
Check out the companies making headlines before the bell: Hertz — Shares of the rental car company soared nearly 16%, extending the gains seen in the previous session. On Wednesday, the stock skyrocketed more than 56% after Bill Ackman’s Pershing Square disclosed that it had taken a sizable stake in the name. UnitedHealth — The stock plunged more than 19% after the insurer’s first-quarter results missed analysts’ estimates. UnitedHealth reported adjusted earnings of $7.20 per share on revenue of $109.58 billion, below the $7.29 in earnings per share and $111.60 billion that analysts surveyed by LSEG were looking for. The company also slashed its full-year guidance . Eli Lilly — The pharmaceutical stock surged 11% after phase-three trial results for a pill to treat weight loss and diabetes showed positive results. Taiwan Semiconductor — U.S. shares jumped more than 3% after the chipmaker’s results for the first quarter topped Wall Street’s expectations. The company also maintained its 2025 revenue forecast, noting that it has not yet seen any changes in customer behavior despite there being “uncertainties and risks from the potential impact of tariff policies.” D.R. Horton — The homebuilding stock fell more than 3% on the heels of the company posting weaker-than-expected second-quarter results. D.R. Horton earned $2.58 per share, while analysts had expected earnings of $2.63 per share, according to LSEG. Revenue of $7.73 billion also missed the consensus estimate of $8.03 billion. Alcoa — Shares dropped more than 2% after the company’s revenue of $3.37 billion for the first quarter missed expectations, with analysts calling for $3.53 billion, per LSEG. Earnings, however, came in better than expected. — CNBC’s Jesse Pound contributed reporting.