China

During the Lunar New Year, China’s AI giants are locked in a fierce marketing battle, the “Lunar New Year AI War.” Companies like ByteDance, Baidu, Tencent, and Alibaba are investing heavily in giveaways and promotions to attract users and market share. This competition extends to technological advancements, with new models and capabilities being unveiled. Analysts see this as a crucial time to build user bases before rivals dominate, though profitability remains a concern. The government also signals strong support for AI development and commercialization.

Chinese AI stocks surged on Thursday as companies launched advanced AI models and policymakers emphasized accelerating adoption. Zhipu AI and MiniMax saw significant gains after releasing new large language models and AI agent tools. This innovation push, aimed at narrowing the gap with U.S. competitors, also boosted infrastructure providers like UCloud Tech. The enthusiasm for pure-play AI firms contrasts with mixed performance from larger tech giants, but government support and a capital-efficient approach suggest China’s growing presence in the AI sector.

Hong Kong’s central bank is accelerating stablecoin licensing, aiming for initial approvals by March. This move proceeds despite Beijing’s long-held crypto restrictions. Experts view Hong Kong’s initiative as a strategic hedge, allowing exploration of stablecoin benefits like streamlined payments. Mainland China, however, remains cautious due to concerns over illicit activities, monetary control, and potential U.S. dollar dominance, recently reaffirming its ban on crypto activities. Hong Kong’s cautious approach seeks to leverage its autonomy for regulatory clarity and Web3 aspirations, while Beijing maintains oversight.

China’s AI chip sector is rapidly advancing, with startups and tech giants like Huawei striving to challenge Nvidia. Fueled by substantial government investment and a robust energy infrastructure, Chinese companies are accelerating domestic chip development. While still trailing U.S. counterparts, the performance gap is narrowing significantly, positioning China to become a major force in AI hardware.

Meta’s $2 billion acquisition of AI startup Manus is under review by Chinese authorities, raising concerns about technology control. This coincides with Meta’s planned subscription models for Instagram, Facebook, and WhatsApp, which will offer enhanced AI features and tools, potentially recouping investments and creating new revenue streams. These AI-centric subscriptions are separate from Meta Verified and aim to provide advanced capabilities to a broader user base.

Nvidia CEO Jensen Huang is visiting China before the Lunar New Year amidst U.S. export restrictions impacting the company’s significant Chinese market. Historically a major revenue source, Nvidia’s advanced AI chip sales are now restricted. Huang will attend an event in Beijing and meet clients, addressing supply challenges. While China might approve H200 chips for limited research, the broader impact on Nvidia’s market share is uncertain. This visit highlights Nvidia’s commitment to China and its strategy to navigate complex geopolitical and technological shifts in the AI industry.

Washington is divided over Nvidia’s AI chip sales to China. The proposed “AI Overwatch Act” seeks to give Congress oversight on advanced AI chip exports, requiring joint committee approval for licenses. Proponents argue these chips pose a national security risk, potentially aiding China’s military. Critics, however, believe such sales maintain U.S. technological dominance and spur domestic innovation. The debate highlights a clash between national security concerns and economic strategy in the AI race.

The US and Denmark remain in disagreement over Washington’s interest in Greenland, with no agreement reached. Geopolitical tensions could have significant consequences. Separately, the US indicated a potential de-escalation with Iran, impacting oil prices. Domestic markets saw a dip in chip stocks, though AI demand remains strong. Key developments include US visa policy changes, a surge in Toyota Industries’ shares, a Chinese probe into Trip.com, mixed market performances, and a continued rally in gold and silver. China’s AI chip sector is seeing IPOs, with Huawei’s HiSilicon noted for its potential.

China’s AI chip self-sufficiency drive sees investor interest in newly public firms like Biren and Moore Threads. However, tech giant Huawei and its HiSilicon division are considered the true leaders, offering a comprehensive ecosystem rather than just individual chips. Analysts predict Huawei could dominate China’s market, especially if Nvidia faces export restrictions. Production constraints at SMIC, with Huawei receiving priority, pose challenges for smaller rivals. Huawei’s private status is expected to continue, supported by its strong existing businesses and government backing.