AI and the quiet rise of China as a global innovator

Grace Shao explains how the world’s second-largest economy is building AI differently – and what it means for the future of tech

Global Business Journalism, Tsinghua — While much of the spotlight shines on U.S. tech giants, China’s role in AI’s rise has been foundational and often overlooked. (Photo from Wix Media)

By ALEXANDRE GUERY

Global Business Journalism reporter

While Silicon Valley races to develop ever-larger AI models, China is taking a different path, one that could reshape global tech competition, technology reporter and consultant Grace Shao told students at Tsinghua University on March 25.

Shao – who has spent a decade covering the intersection of AI, business, and geopolitics in China –

said Western observers often miss China’s real strengths in artificial intelligence.

"There is a huge information gap toward China," said Shao, a Hong Kong-based journalist and consultant whose columns appears regularly in publications including Fortune, the Diplomat and the Financial Times.

Shao, a former tech beat reporter at CNBC and CGTN in Singapore, Shanghai and Beijing, pointed out China's current edge in three areas:

Implementation Over Hype

China has overcome early American advantages in microchips and U.S. government bans on technology transfer to Chinese companies. “The U.S. leads in chip design, but China has an underrated advantage in actually putting AI to work,” explained Shao, the founder of AI Proem and Proem Communication. While American firms focus on chatbots, Chinese companies are deploying AI in factories, hospitals, and supply chains.

The Physical AI Frontier

China’s tech firms are pouring resources into robotics, industrial automation, and smart city systems — areas where AI meets the physical world. "It's going to shape the culture" of the future, said Shao, who previously worked with Alibaba’s international corporate affairs team and has advised numerous tech firms on global strategy.

Homegrown Innovators

Beyond giants like Hangzhou's Alibaba, a new generation of Chinese AI companies, including rising stars like DeepSeek, are developing specialized systems tailored to local needs. Chinese companies lead the world in becoming the providers of the AI-powered products of the future, Shao said.

The Hidden Backbone of AI

While much of the spotlight shines on U.S. tech giants, China’s role in AI’s rise has been foundational and often overlooked. Consider this:

Manufacturing Muscle: Nearly all of NVIDIA’s advanced GPUs, which power cutting-edge AI systems worldwide, are produced in Taiwan, a stone’s throw from China’s coast. This proximity has long tied China to AI’s hardware ecosystem, even as the U.S. dominated design.
Supply Chain Leverage: China’s dominance in electronics manufacturing means it has quietly been part of the AI revolution from the start, assembling the physical components that make AI possible.

This historical context underscores Shao’s point: China’s AI ambitions are not new. They are evolving.

Why It Matters

This divergence in AI development has real-world consequences:

For Business: Companies operating globally now face two competing AI ecosystems.
For Policymakers: The U.S.-China tech rivalry is entering a new, more complex phase.
For Consumers: Different approaches could lead to divergent technological futures.

“We’re seeing the emergence of parallel AI universes,” Shao noted. “The question isn’t just who will lead in AI, but what kind of AI will lead.”