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Chinese artificial intelligence models had already been outpacing expectations — but they have now pushed the bar even higher. Two local tech groups have recently dropped significant updates. DeepSeek released a dramatically improved V3 model last week, while Alibaba launched a new model in its Qwen series, efficient enough to run on mobile phones.
DeepSeek’s upgrade intensifies competition with US rivals such as OpenAI. Alibaba’s latest Qwen model, meanwhile, can process images, audio and video on laptops and mobile phones. The company envisions the model powering AI agents that, for example, provide real-time audio descriptions to help visually impaired users navigate the world. That is something earlier systems could handle only in limited, predefined scenarios.
DeepSeek’s upgraded model also shows significant improvements in reasoning and coding compared with its predecessor. These results were published on Hugging Face, a global platform for sharing and evaluating AI models. By making the model publicly available on such platforms, DeepSeek is enabling developers around the world to build and test AI agents more easily.
Yet this AI arms race is also creating growing tension at home. Not every local tech group is keeping pace, and the market has started to notice.
Shares of Baidu, once the face of Chinese AI, have significantly underperformed, as the internet search group’s models fall short of peers in both capability and adoption. In contrast, Tencent and Alibaba have seen stronger investor confidence, with the latter nearly doubling over the past year, thanks to visible momentum in AI deployment and enterprise integration. This divergence in share price is more than a reflection of current results. It signals a broader bet on who will lead in the next phase of AI.
Until now, China’s AI boom has been viewed as a collective win, a show of strength that gives the country an edge over global competitors. A stronger domestic AI ecosystem helps China compete more effectively with US tech groups.
But for Chinese tech groups this moment is not just about national advancement. It is also about their future growth engines. The AI model that wins the most users today will probably dominate tomorrow’s cloud platforms, enterprise services, smart infrastructure and, critically, government contracts. In China’s AI-driven governance model, securing public sector deals across healthcare, education and national security can mean stable, long-term revenue streams. And that makes this a defining, high stakes moment for China’s tech sector.
june.yoon@ft.com