Workers at a coal mine in China’s Shaanxi province sit in an workplace to make use of digital programs for mining work, in accordance with a photograph taken on April 26, 2023, throughout a media tour organized by Chinese language telecoms large Huawei.
Wang Zhao | Afp | Getty Photos
This report is from this week’s CNBC’s The China Connection e-newsletter, which brings you insights and evaluation on what’s driving the world’s second-largest economic system. Every week, we’ll discover the most important enterprise tales in China, give a lowdown on market strikes and aid you arrange for the week forward. Like what you see? You’ll be able to subscribe right here.
The large story
Life in China today is a narrative of stark contrasts.
If in a single dialog, my counterparts are wringing their palms over a sluggish economic system, the following reveals how shortly synthetic intelligence is revamping industries.
Working example: Chinese language smartphone firm Honor instructed CNBC its latest foldable set for launch Wednesday would be the thinnest cellphone in the marketplace thus far at simply 8.8 millimeters when folded — undercutting even the rumored thickness for Samsung’s forthcoming foldable — thanks largely to its AI manufacturing instruments.
Honor mentioned it discovered the optimum mixture of slimness and power through the use of its “1-billion parameter AI industrial mannequin” to simulate greater than 125,000 choices for system meeting. The corporate mentioned AI-powered 3D scanning allowed it to realize precision management of 0.003 millimeters, or about 1/twentieth of a human hair.
In all, that is a 1.1-millimeter slice off its first foldable launched in July 2023, when Honor made waves within the smartphone market with a tool that folded as much as be almost as skinny as an iPhone.
But it surely was additionally two summers in the past after I recall that a lot of the post-Covid financial pleasure was fading in China.
Conversations shifted from celebrating the top of lockdowns to bemoaning lackluster consumption. The pessimism additionally created a home market problem for Honor’s foldables, which generally begin on the equal of over $1,000 every.
A pivotal part
Trying again, Honor isn’t the one main Chinese language firm to have made strides during the last two years. Chinese language smartphone firm Xiaomi has launched two electrical automobiles to immediately compete with Tesla. DeepSeek was formally registered as an organization in July 2023, in accordance with information, earlier than launching its breakthrough AI mannequin in January this 12 months.
AI’s pervasiveness has additionally began to penetrate the “much less flashy” components of China’s economic system.
In July 2023, Huawei launched a devoted AI mannequin for business mining with mining firm Yunding Know-how and state-owned Shandong Vitality Group. The mannequin, based mostly on its foundational “Pangu” mannequin, allowed employees to function mine gear remotely from an workplace and develop different tech options extra shortly.
Quick-forward to 2025, and the AI tech has been built-in in additional than 100 mines, in accordance with Huawei’s annual report launched in March. In Could, the corporate’s shopper in Internal Mongolia launched 100 self-driving electrical vans for a neighborhood coal mine.
Huawei final month revealed a brand new, 5.5 model of its Pangu basis mannequin, and on Monday, launched an open supply model for builders.
International corporations are additionally spurring technological innovation on the mainland, reminiscent of German industrial large Siemens.
Out of 18 AI-integration associated merchandise Siemens simply launched, 16 have been developed in China in simply 9 months, Peter Koerte, the corporate’s chief know-how officer and chief technique officer, mentioned final week through the World Financial Discussion board convention in Tianjin. He described functions reminiscent of AI-powered power financial savings programs for buildings.
These technological breakthroughs are the results of years or months of painstaking improvement, nevertheless it’s solely extra lately that companies are reaping the rewards.
“AI is reworking from remoted technological innovation into one thing that’s core or embedded in the entire enterprise course of,” Janet Tang, Hong Kong-based associate and managing director at AlixPartners, instructed me final week on the sidelines of the convention in Tianjin.
She said that the numerous integration of AI with enterprise operations started roughly 12 months in the past, following in depth trial and error over the previous few years.
Financial impression
Whereas China’s greatest cities are but to see a return to the pre-Covid increase days, there are indicators that the speedy city progress has as an alternative unfold to smaller cities and even rural areas.
Malipo, a Yunnan county as soon as so poor it has acquired focused help from the international ministry, began revamping its “Tianbao” land buying and selling port on the border with Vietnam in 2023. The county even courted Hong Kong’s Sunwah Group to take a position 50 million yuan to open a tea processing plant in the identical 12 months.
The port has since seen a surge in durian commerce, whereas plans are underway to open a vacationer attraction with Sunwah within the county, permitting guests to see tea bushes that county head Xiao Changju claims are a number of hundred years outdated. She was talking to reporters throughout a state-organized journey to the area in Could.
Augmented actuality glasses startup Xreal invested in its personal manufacturing facility within the southeastern “tier 2” metropolis of Wuxi and earlier this 12 months introduced a new glasses product working Google’s XR working system.
The corporate can be transferring its headquarters from Beijing to Shanghai this summer time to be nearer to its specialised factories in Wuxi that make optical components and different elements, CEO and founder Chi Xu instructed me on the sidelines of the World Financial Discussion board’s occasion in Tianjin final week.
Xu hopes that his merchandise can attain shoppers by the top of this 12 months, whereas noting the U.S. stays the highest marketplace for Xreal.
“I am all the time impressed by the extent of power, hardworking and openness of the enterprises right here in China,” AlixPartners’ Tang mentioned. Regardless of protectionism or different challenges, “everybody continues to be so motivated, so wanting to study new issues and to attach with the remainder of the world.”
High TV picks on CNBC
Grant Pan, Group CFO of Noah Holdings, mentioned that traders need to diversify their property away from simply the U.S. and China markets.
Tolga Oncu, COO of Ingka Group, which manages IKEA, mentioned the competitors and alternatives he sees in China, particularly within the ‘silver’ economic system.
Aditi Rasquinha, CEO of DHL World Forwarding Larger China, said that the area’s export progress has remained resilient regardless of a slowdown in U.S.-China commerce.
Have to know
Within the markets
The efficiency of the Shanghai Composite over the previous 12 months.
Mainland China and Hong Kong shares inched increased amid blended buying and selling within the area, as traders digested the most recent feedback from U.S. Federal Reserve Chair Jerome Powell.
Arising
July 2: Honor to launch its subsequent foldable cellphone
July 3: Caixin Companies PMI
July 5: Legoland opens its first China resort in Shanghai
July 9: CPI and PPI for June
