From chatbots to intelligent toys: How AI is booming in China

Eight-year-old Timmy was deep in thought, trying to defeat an AI-powered robot in a game of chess. He muttered to himself, hoping to find a winning strategy. This wasn't an AI showroom or laboratory; the robot sat on a coffee table in a Beijing apartment, living with Timmy.

On the robot's first night home, Timmy hugged his little robotic friend before going to bed. He hadn't named it yet. Showing his mother the next move he was considering, Timmy said, "It's like a little teacher or a little friend."

Moments later, the robot spoke, "Congratulations! You won." The round eyes on the screen blinked, and it began rearranging the pieces to start a new game, saying in Mandarin, "I've seen your abilities, I'll do better next time." China is vigorously developing artificial intelligence, striving to become a technological powerhouse by 2030.

In January, China's groundbreaking chatbot DeepSeek garnered worldwide attention, just a preliminary glimpse of China's ambitions. Large amounts of capital are pouring into AI companies seeking more capital, intensifying domestic competition. Currently, over 4,500 companies are developing and selling AI products, and Beijing schools will introduce AI courses for primary and secondary school students later this year, while universities are increasing enrollment in AI majors.

"It's an inevitable trend. We will coexist with AI," said Timmy's mother, Yan Xue. "Children should understand it as early as possible. We shouldn't reject it." She is keen for her son to learn chess and Go, both of which the robot is proficient in, convincing her that the $800 purchase was worthwhile. Its creators are already planning to add a language tutoring program. This is perhaps what the Chinese Communist Party hoped for when it declared in 2017 that AI would be a "major driver" of national progress.

Faced with China's slowing economic growth and the impact of tariffs from its largest trading partner, the United States, Chinese President Xi Jinping is heavily investing in artificial intelligence. Beijing plans to invest 10 trillion yuan (approximately $1.4 trillion) over the next 15 years, competing with Washington to gain an advantage in advanced technology. Following the establishment of a 60 billion yuan AI investment fund in January, AI funding was further reinforced at the government's annual political meetings. Just days ago, the United States further tightened export controls on advanced chips and added more Chinese companies to its trade blacklist.

But the emergence of DeepSeek shows that Chinese companies can overcome these obstacles. This shocked Silicon Valley and industry experts, who did not expect China to catch up so quickly. After promoting his company's chess robot at various competitions for six months, Tommy Tang has become accustomed to this reaction. The robot Timmy uses comes from the same company, SenseRobot, which offers robots with various functions. Chinese state media praised an advanced version in 2022, which defeated a grandmaster in a chess match.

Mr. Tang said with a smile, "Parents will ask about the price first, and then they'll ask me where I'm from. They expect me to be from the United States or Europe. When I say I'm from China, they seem surprised. There's always a second or two of silence when I say I'm from China." His company has already sold over 100,000 robots and has now signed a contract with Costco, a major US supermarket chain. One of the secrets to China's engineering success is its young people. In 2020, China had over 3.5 million students graduating in science, technology, engineering, and mathematics, commonly known as STEM fields.

This is more than any other country in the world, and Beijing is keen to capitalize on it. "Strengthening education, science, and talent development is a shared responsibility," Xi Jinping told party leaders last week. Albert Lu, vice president of Shanghai Whalesbot, said that since China opened its economy to the world in the late 1970s, it has "gone through a process of accumulating talent and technology." Whalesbot is a company that produces AI toys. "In this AI era, we have very, very many engineers, and they are very diligent."

Behind him, a dinosaur made of various colored building blocks came to life. It was being controlled by code assembled on a smartphone by a seven-year-old child. The company is developing toys to help three-year-olds learn to code. Each pack of building blocks comes with a coding manual. Children can choose what they want to build and learn how to build it. The cheapest toys sell for around $40. "Other countries also have AI education robots, but China does better in terms of competitiveness and smart hardware," Lu insisted.

DeepSeek's success has made its CEO, Liang Wenfeng, a national hero and "equivalent to doing 10 billion yuan worth of advertising for the (Chinese) AI industry," he added. "It lets the public know that AI is not just a concept, it can really change people's lives. It stimulates public curiosity." Six local AI companies, including DeepSeek, are now nicknamed China's Little Six Dragons on the internet; the others are Unitree Robotics, DeepBlue Technology, BrainCo, Game Science, and Moore Threads.

Some of these companies participated in a recent AI expo in Shanghai, where China's largest companies showcased their latest advances, from search and rescue robots to dog-like robots that can do backflips, roaming among visitors. In a bustling exhibition hall, two teams of humanoid robots wearing red and blue jerseys were playing a soccer game. The robots fell over when they collided, and one was even carried off the field on a stretcher by their human handlers, who were keen to keep the joke going.

In the wake of DeepSeek, developers are struggling to contain their excitement. "Deepseek means the world knows we are here," said Yu Jingji, a 26-year-old engineer. But as the world learns about China's AI potential, concerns are also growing about what information AI will allow the Chinese government to learn about users. AI is hungry for data, and the more data it gets, the smarter it becomes. With approximately 1 billion mobile phone users compared to just over 400 million in the United States, China has a real advantage.

Western countries and their allies, as well as many experts in those countries, believe that data collected by Chinese applications such as DeepSeek, Xiaohongshu, or TikTok can be accessed by the Chinese Communist Party. Some point to China's National Intelligence Law as evidence. But Chinese companies, including TikTok's owner ByteDance, say the law allows for the protection of private companies and personal data. Nevertheless, concerns among US users that data on TikTok could end up in the hands of the Chinese government have prompted Washington to ban the hugely popular app.

The same concerns—where privacy issues meet national security challenges—are impacting DeepSeek. South Korea has banned new downloads of DeepSeek, while Taiwan and Australia have banned the app on government-issued devices. Chinese companies are aware of these sensitivities, and Mr. Tang was quick to tell the BBC that privacy is his company's "red line." Beijing also realizes that this will be a challenge for its ambitions to become a global AI leader.

A commentary in the official media outlet Beijing Daily noted that "DeepSeek's rapid rise has triggered hostile reactions from some Western countries," adding that "the development environment for Chinese AI models remains highly uncertain." But China's AI companies are not discouraged by this. Instead, they believe that frugal innovation will win them an undeniable advantage, as DeepSeek claims it can match ChatGPT at a much lower cost, which has shocked the AI industry. Therefore, the engineering challenge is how to make more products at a lower cost. "This is our mission impossible," said Mr. Tang.

His company found that the robotic arm used to move the chess pieces was very expensive to produce, pushing the price up to around $40,000. Therefore, they tried using AI to help engineers with their work and to strengthen the manufacturing process. Mr. Tang claims that this has reduced the cost to $1,000. "This is innovation," he said. "AI engineering is now integrated into the manufacturing process."

As China massively adopts AI, this could have a huge impact. Official media has shown factories full of humanoid robots. In January, the government said it would promote the development of AI-powered humanoid robots to help care for its rapidly aging population. Xi Jinping has repeatedly declared "technological self-reliance" a key goal, meaning China wants to create its own advanced chips to offset US export restrictions that could hinder its plans.

The Chinese leader knows he faces a long game, with the Beijing Daily recently warning that the DeepSeek moment was not a moment of "AI triumph," as China remains in "catch-up mode." President Xi Jinping is heavily investing in artificial intelligence, robotics, and advanced technologies, preparing for a marathon he hopes China will eventually win.