China tech outlook 2025: AI, EVs, and mounting trade risks

China’s technological achievements are disrupting domestic industries and setting the stage for global advancements in artificial intelligence (AI), robotics, new energy vehicles (NEVs), and beyond. Following the recently released China Mega Report 2025 by digital consultancy ChoZan, this article explores the key sectors where China is leading, the transformative innovations emerging from the nation, and actionable insights for businesses working in or with China. AI: From cost-efficient models to global influence Artificial intelligence is at the forefront of China’s innovation agenda, and 2025 is a pivotal year for its global AI ambitions. Fueled by substantial state support and private-sector ingenuity, Chinese companies are leading in the development of large language models (LLMs), AI-powered applications, and cost-efficient AI systems. One standout example is DeepSeek’s V3 model, which was launched in late 2024. This open-source AI model outperformed industry leaders like Meta’s Llama 3.1 and matched the capabilities of OpenAI’s ChatGPT-4o. What sets DeepSeek apart is its cost-efficient development process: the model was trained at just $5.5 million, a fraction of the expense incurred by American counterparts. But China is not simply aiming to replicate models like OpenAI’s ChatGPT; instead, it’s charting a distinct path by tailoring its AI advancements to practical, cost-effective applications that meet the needs of diverse markets. For example, Manus, a rising Chinese agentic AI startup, has focused on developing lightweight AI systems optimized for deployment for task completion. Intensifying tech rivalry between China and the West has added friction to AI partnerships. With recent U.S. export controls tightening access to advanced semiconductors and cloud services, Chinese AI firms face increasing barriers in accessing the global AI stack. At the same time, these constraints are accelerating domestic innovation and localization efforts. The implications of these advancements are profound. Chinese AI models, which are expected to continue to be significantly cheaper than Western alternatives, are well-positioned to influence global markets, particularly in countries and organizations operating under budget constraints. Companies must assess the risks of over-reliance on Chinese AI vendors in light of shifting policy environments. Yet, for emerging markets and budget-sensitive enterprises, the appeal of cost-effective Chinese AI remains strong — especially as global regulatory fragmentation deepens. Robotics and automation: From factories to everyday life Advancements in robotics are redefining the boundaries of human-machine interaction and industrial productivity. In 2024, companies like Unitree showcased their prowess by mass-producing humanoid robots and robo-dogs at dramatically lower prices. For example, Chinese robo-dogs are priced at $3,000 compared to Boston Dynamics’ $75,000. At the World Robot Conference in Beijing, the spotlight was on humanoid robots equipped with generative AI capabilities, enabling them to think, learn, and converse like humans. These robots are already finding applications in factories, logistics, and customer service. China’s leadership in robotics is supported by its robust manufacturing ecosystem. Shenzhen, referred to as the "Silicon Valley of hardware," continues to be a nerve center for robotics innovation, producing scalable solutions that are quickly adopted across industries. Quantum computing: China’s edge in the next frontier The latest breakthrough, the Zuchongzhi 3.0 quantum processor, developed by the University of Science and Technology of China (USTC), has achieved quantum supremacy by completing tasks in seconds that would take the world’s fastest supercomputers billions of years. With 105 superconducting qubits, Zuchongzhi 3.0 rivals Google’s Willow QPU in performance, boasting gate fidelities of 99.90% for single-qubit and 99.62% for two-qubit operations. This progress is driven by China’s state-led innovation model, with over $15 billion invested in quantum R&D. Beyond computing, China leads in quantum communication, operating the world’s largest quantum network and deploying satellites like Micius. New energy vehicles: Driving the future of mobility The NEV market is another segment where the nation is outpacing global competitors. In 2024, BYD surpassed Tesla in global car sales. With a 67% share of the global NEV market, China is setting new benchmarks in EV technology, production efficiency, and affordability. However, China’s dominance has triggered protectionist responses in key markets. In 2025, the European Union initiated an anti-subsidy investigation into Chinese EVs, and the U.S. imposed higher tariffs on Chinese-made electric vehicles and related components. These trade measures may limit the global expansion of Chinese NEV brands, creating new headwinds for international growth. The NEV ecosystem is supported by significant government investments in infrastructure, including EV charging networks and battery recycling facilities. Innovations in autonomous driving technology are also propelling the sector forward. Robotaxis with Level 4 capabilities are expected to operate in 65 Chinese cities by the end of 2025. For businesses, this evolving landscape presents both opportunity and risk. Collaborating with Chinese NEV manufacturers or investing in the country’s EV supply chain remains attractive for accessing innovation and scale — but companies must now factor in geopolitical tensions, supply chain resilience, and trade policy in their strategy. eVTOL’s rise and the low-altitude economy One of the most futuristic developments is the emergence of the eVTOL (Electric Vertical Take-Off and Landing) segment. Known as the “low-altitude economy,” this industry is set to revolutionize urban mobility. Companies like eHang and Xpeng are leading the charge, with eHang receiving its first flying taxi manufacturing licenses in 2024. China’s commitment is evident in the establishment of a dedicated government department to accelerate eVTOL development. The country’s ability to mass-produce flying cars at competitive prices positions it as a leader in this nascent industry. Innovation ecosystem: Zhongguancun and beyond China’s innovation ecosystem is anchored by hubs like Zhongguancun (ZGC). In 2024, the nation’s R&D expenditure reached $502 billion, propelling breakthroughs in quantum computing, life sciences, and space exploration. ZGC is home to leading AI companies like Zhipu AI and Kimi. The hub also serves as a platform for international collaboration, attracting investments from global giants like AstraZeneca and Medtronic. Advice for businesses As China cements its position as a global tech leader, businesses working in or with the nation must adopt a proactive approach. Here are key strategies: Embrace collaboration: Partner with Chinese tech companies to access cost-efficient solutions. Collaborations can also facilitate entry into China’s domestic market. Leverage local expertise: Engage with innovation hubs like Zhongguancun to tap into cutting-edge R&D. Prepare for competition: Western companies must be ready to compete with Chinese firms expanding into global markets. Differentiation through innovation will be crucial. Mitigate geopolitical risks: In light of rising tariffs and export controls, businesses should diversify supply chains and assess the long-term viability of tech partnerships involving strategic sectors such as EVs, semiconductors, and AI. Risk mapping and compliance planning are now essential. Focus on sustainability: With China’s emphasis on green technologies, sustainability will offer greater alignment with the nation’s long-term goals. What lies ahead? From AI and robotics to NEVs, quantum computing and eVTOL, the country is setting the pace for global advancements. These developments reflect a broader vision to transition from being the “Factory of the World” to the “R&D Center of the World.” For businesses, the opportunities are vast, but so are the challenges. Success will depend on the ability to adapt, forge meaningful collaborations, and stay ahead in a rapidly evolving market. As China continues to shape the future of technology, the question is not whether to engage, but how to do so effectively and safely. Click here to access the China Mega Report 2025.

China tech outlook 2025: AI, EVs, and mounting trade risks

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Published April 10, 2025

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China tech outlook 2025: AI, EVs, and mounting trade risks