China's AI shift: from the factory floor to human-level machines

Yao Shunyu is 28. A year ago, he was a researcher at OpenAI in San Francisco. Today, he heads AI research at Tencent, and last week in Beijing, he stated his goal openly: a machine that thinks like a human, made in China.

In December, Tencent shut down its old AI Lab and handed Yao the entire division. He reports directly to President Martin Lau and leads three new units for AI infrastructure and data that were built specifically around him.

The budget matches the announcement. Tencent is doubling its AI spending from 18 billion yuan last year to over 36 billion this year, around $5 billion.

His logic is simple: The grand prize is still up for grabs. The next dominant AI app hasn't been built yet, he says, and there's a value in the trillions behind it.

Yao is not an isolated case

The same movement is underway at China's other big names.

• Alibaba: Hao Zhou, co-developer of Google's Gemini 3, has been leading the post-training of Qwen models since March.

• ByteDance: Wu Yonghui, former research vice president at Google DeepMind, heads the AI lab Seed.

• Moonshot: Yang Zhilin, head behind the Kimi model, comes from Meta AI and Google Brain.

The push comes from Washington. Since September, the US government charges $100,000 for a new H-1B work visa, plus cut research funds and 17 percent fewer new foreign students in the fall.

Beijing counters with a new K-visa that doesn't require an employer as sponsor.

Despite all this, the Americans still lead. In the global model ranking, Anthropic's Claude is in first place, followed by xAI, Google, and OpenAI, only then come Alibaba and DeepSeek.

But the gap has become small. The best Chinese model is only 2.7 percent behind the best American one, three years ago it was over 17.

And the US maintains this lead with 23 times the AI investments. China is catching up with less money, and is now buying the top talent as well.

While Yao is pushing for speed in Beijing, Anthropic in San Francisco is urging caution. On Thursday, the lab warned that the best models are approaching the point where they can improve themselves without human intervention, and called on the industry to pause.

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ASIABITS SHENZHEN INNOVATION NIGHT

100 founders, one room, plenty of WeChat adds

A couple of weeks ago, we received an email from CDTM.

In case the name doesn't ring a bell: That's the joint elite program for technology and management from TU Munich and LMU, 25 students per semester from over 300 applicants, with alumni who later built Personio, Trade Republic, Freeletics, and around 230 other companies.

They wanted to come to China and meet Chinese founders. And that's exactly why Asiabits exists: to bring the best people from both sides into one room and let the rest happen.

At our Shenzhen Innovation Night last week, 100 founders stood under one roof, Germans and Chinese, side by side.

We had panel discussions on AI between Shenzhen and San Francisco, and China innovation versus Europe innovation.

And of course, robots on site couldn't be missing: a Franka robot arm was one of the highlights of the event.

What an evening! Or, as we put it on LinkedIn: an exchange of ideas, an exchange of WeChat, an exchange of looks.

And the next one is coming. We're already planning the follow-up event in Shanghai for the end of July.

CHART OF THE WEEK 

$471 billion, more than the rest of the world combined: The US is in a league of its own when it comes to AI money.

Only the lead is hardly paying off anymore. China is putting in a fraction and is only 2.7 percent behind with the best model.

5 STORIES YOU MISSED LAST WEEK 

🇰🇷 Jensen Huang's Memory-Throne Asia Tour: Nvidia's Jensen Huang was Asia's most-watched man last week. At Computex in Taipei he wined the bosses of SK Hynix, Samsung and LG, called Korea "critical to our ecosystem," and scrawled "Please make more" on an SK Hynix wafer. SK Hynix, now past $1 trillion and with 58 percent of the HBM market, supplies Nvidia's new Vera Rubin platform and will double capacity by 2030. Samsung, knocked off top, answered with an HBM5 mockup. Huang then flew to Seoul, called robotics Korea's "next major sector," and teased AI-center plans with Hyundai.

🇨🇳 China's AI Boom Slams Into a Power Wall: China is building AI compute faster than the clean power to run it, and the two are dangerously out of sync. Data centers already use about 415 terawatt-hours worldwide, 1.5 percent of all power, and the IEA sees that doubling to 945 TWh by 2030, four times faster than overall demand. China alone burns a quarter today, headed for 500 to 700 TWh by decade's end. Beijing's new five-year plan makes pairing green power with computing a national priority, but the grid is the bottleneck. The race for AI supremacy is quietly becoming a race for electrons.

🇰🇷 Korea's 100 Percent Rally Hits Its First Cracks: The Kospi has doubled in 2026, the best run of any major market, carried by Samsung and SK Hynix. On June 1 it hit a record 8,788, and Goldman lifted its target to 12,000. Then came the wobble. On June 5 it fell as much as 6.4 percent intraday, both chip giants off over 7 percent. The swings are the wildest since the 2008 crash, exposing how much of the index now rides on borrowed money and on just two stocks. Foreigners sold a record 44.7 trillion won ($30 billion) in May, and with a rate hike looming, the world's hottest rally faces its first real test.

🇨🇳 BYD Stalls at Home, Surges Abroad, Steps Into Robots: BYD sold 383,453 vehicles in May, up a hair on the year but enough to end an eight-month slide. The engine was exports: a record 160,644 cars overseas, up 80 percent and now 42 percent of sales. Rival Chery shipped 181,571 abroad on the same playbook. At home it is uglier, volume down 20 percent for the year under a brutal price war, so BYD is courting Stellantis for European plants and chasing 1.3 million overseas sales. It also confirmed a push into home humanoid robots, sold through its dealerships. CATL, meanwhile, took 40.1 percent of the global battery market. The growth has moved offshore.

🇨🇳 Foreign Brands Retreat From China as Locals Pounce: General Mills is selling its Häagen-Dazs ice-cream shops in mainland China to a group led by Ningji, a 3,000-store local lemon-tea chain backed by ByteDance. The Americans keep the supermarket business; the locals get the parlors. It fits a clear pattern. In April Starbucks sold 60 percent of its China arm to Boyu Capital for $4 billion, and this month Singapore's Food Republic shut its last Beijing food court after two decades, joining Ikea, Guess and Galeries Lafayette at the exit. The lesson is brutal: legacy multinationals can no longer keep up with how fast China's consumers move. Foreign logos out, home-grown chains in.

ALSO LAST WEEK 

Blackstone raised $13.1 billion for its largest-ever Asia private equity fund, beating its $10 billion target and more than doubling its last one. Coming weeks after EQT's $15.6 billion Asia fund, it signals global capital rotating into the region.

Xi Jinping visits North Korea next week to meet Kim Jong Un, his first Pyongyang trip since 2019 and first overseas all year. It follows back-to-back Beijing visits by Trump and Putin, with Washington hoping Xi nudges Kim back to nuclear talks.

The US Trade Representative proposed tariffs of 10 percent or more on 60 trading partners over weak forced-labor enforcement, hitting China, Japan and South Korea with 12.5 percent and the UK, EU and Taiwan with 10 percent. Beef, tomatoes and coffee are exempt.

TSMC chief C.C. Wei warned that global chip supply will not meet AI demand "for years," even with its new US plants, and held to guidance for over 30 percent sales growth in 2026. Hyperscalers will spend some $725 billion on AI this year.

SoftBank shares slid about 11 percent in a broad tech sell-off that also hit TSMC, Foxconn, Samsung and SK Hynix. Now Japan's most valuable company after passing Toyota, it is drawing fresh scrutiny over Masayoshi Son's huge, largely unhedged AI bet.

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