China Intensifies Focus on AI and Technology Amid Escalating Trade Pressures from Trump

BEIJING — This week’s annual parliamentary meetings in China are underscored by U.S. trade tensions and the countermeasures being implemented through technology.

This year’s gathering of delegates in Beijing coincided with U.S. President Donald Trump addressing Congress and announcing new tariffs on Chinese imports, placing pressure on exports while Chinese firms are increasingly facing stringent restrictions concerning advanced technologies like semiconductors.

“Internationally … an increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science and technology,” stated Chinese Premier Li Qiang in his annual governmental report at the National People’s Congress opening, as per an official English translation.

This was a notably somber evaluation compared to previous years. However, there was a perceived shift towards stronger support for the private sector, particularly in tech innovation, exemplified by the company DeepSeek.

“We will promote the healthy and well-regulated development of the platform economy and better leverage its role in fostering innovation, boosting consumption, and stabilizing employment,” Li remarked in the work report.

This signals a new direction where Beijing aims to back the private sector, deviating from its prior restrictive approach which included hefty fines on tech titans like Alibaba and Tencent, entities often referred to as “platform” companies in China. Historically, many sectors in China have been state-dominated.

The ascent of DeepSeek has demonstrated to wary international investors how a Chinese enterprise can compete with the U.S. in AI, even in the face of sanctions from the White House.

Beijing was quick to recognize the startup’s achievements. DeepSeek’s Liang Wenfeng had attended a meeting with Premier Li in January and participated in a symposium with President Xi Jinping in February.

Although DeepSeek was not explicitly mentioned in the government work report, a member of the drafting team highlighted it along with other applications such as Kuaishou’s Kling AI for producing videos, while addressing the media about China’s rapid advancements in AI on Wednesday.

“Historically, technological advancements have often served as a crucial force in overcoming obstacles and protectionism,” remarked Chen Changsheng, deputy director of the State Council Research Office, as translated by CNBC.

“We are eager to see how AI can foster cooperation and multilateralism under the current international circumstances,” he added.

This year’s report referenced “tech” one additional time compared to last year, while “reform” appeared ten more times, based on the Chinese-language versions. The theme of tech self-reliance was given a distinct subsection in this year’s work report, contrasting with a mere mention in 2024.

China’s legislature is currently deliberating on a new law aimed at bolstering the private sector. Authorities have indicated that it will be enacted promptly following further revisions and discussions.

This year, policy may be shaped increasingly from the ground up, rather than dictated from the top, according to Ding Wenjie, investment strategist for global capital investment at China Asset Management Co., as translated by CNBC from her Mandarin comments.

She anticipates growth in AI and leading-edge technologies will catalyze advancements in other sectors, although she cautioned that firms may require more than a couple of quarters to observe tangible outcomes.

The parliamentary sessions are set to conclude early next week, with expectations for additional official commentary regarding technology and the private sector law to emerge in the following days.

Among the key priorities outlined by Premier Li for the upcoming year is fostering “the extensive application of large-scale AI models.” Beijing plans to augment funding for biomanufacturing, quantum technology, AI-driven robotics, and 6G technologies.

The industry-specific objectives are being set as China aims to boost consumer spending, alleviate challenges posed by real estate, and manage trade strains with the U.S.

According to a note released Wednesday by Morgan Stanley’s chief China economist Robin Xing and his team, China’s “policy focus is to accelerate the adoption of AI and autonomous driving while gradually the restructuring of housing and local government financing vehicle debt.” They noted the expected fiscal package—a 2 trillion yuan ($280 billion) expansion with moderate support for consumption.

Chinese official statements during this week’s meetings indicate a preference for open-source models.

Chen, from the work report drafting team, cautioned against the “excessive” reliance on private AI initiatives that could lead to market fragmentation, instead advocating for “large-scale applications.”

China will also aim to enhance computing power and develop “a system of open-source models,” as outlined by the National Development and Reform Commission in its strategic plan for the forthcoming year.