From electric cars to artificial intelligence, Chinese companies continue to innovate and scale at a rapid pace despite trade restrictions.

Out of nowhere in January, little-known Chinese startup DeepSeek stunned global markets with the release of its open source AI training model, shifting the narrative from the US as the leader in the AI race. Within days, DeepSeek overtook ChatGPT in downloads in Apple’s app store. It marked a pivotal moment.

Since DeepSeek’s emergence, there is a renewed sense of confidence among government officials and companies, giving hope to what China can accomplish to differentiate itself as an industrial complex. Many are now more willing to embrace AI and explore its use cases.

This is important because over the past 15 years, China leapfrogged in many ways. A prominent example would be mobile internet services, as smartphones, not personal computers, were the first computing device for millions of people. Companies like Tencent and Alibaba built the world’s leading super apps — digital platforms that offer a range of everyday services, such as financial payments and e-commerce, within a single application.

Having closely followed companies in China for 26 years, equity investment analyst Johnny Chan has learned not to underestimate what businesses can achieve when it comes to making technological leaps.

With AI marking the next competitive frontier, especially between the US and China, this paper outlines a few of his observations on innovation in China.