Chinamaxxing.

WRITTEN BY JISOO KIM

The “US versus China AI race” is one of the most repeated headlines going around. But what do we actually know about what's happening on the ground in China – beyond the geopolitics? I sat down with Ray Sun to get past the headlines and understand the landscape from the people and companies actually building in it.

Who's who in China's AI landscape

JK: Not everyone knows the Chinese tech landscape. If readers know nothing beyond TikTok and Huawei, who should they know about?

RS: I'll do the US analogies. Amazon is to Alibaba. Meta is sort of to Tencent – they run WeChat, the main messaging platform. Google is to Baidu, the search engine. Uber is to Didi and Meituan – Didi does the cars, Meituan does the food delivery. Huawei is kind of like Apple, Ericsson and Nokia all combined. They do everything. Xiaomi is basically another Samsung – phones, cars, vacuum cleaners. It's a Dyson and a car company and a phone company combined. China's similar to South Korea with the ‘chaebol’ [rich family conglomerates’] thing. These are conglomerates, not single-product companies.

Then there's what's called the Four Dragons and the Six Tigers. The Four Dragons focused on pre-generative AI. Facial recognition, recommendation algorithms. Those companies are Alibaba, Tencent, Baidu and ByteDance. The Six Tigers are the foundation model labs: MiniMax, Moonshot (which provides Kimi), Baichuan, 01.ai, StepFun and DeepSeek. These are the ones driving post-generative AI. Similar to OpenAI, Anthropic, xAI.

The incumbent Dragons are mostly based in Shenzhen. That’s like the OG Silicon Valley of China. The new Silicon Valley is Hangzhou, close to Shanghai. Hangzhou's got really good weather and, in China, it's actually hard to find that. The local government was probably the first to recognise the importance of AI unicorns. The talent is there because the local university is kind of like the MIT of China. The regulators are considered more chill compared to other cities. And once you have one cool company there – Alibaba has their headquarters in Hangzhou – people go, workers go, startups branch out. DeepSeek is also in Hangzhou. So that's created even more buzz.

JK: I saw in the news last year that Xi Jinping gathered the big tech CEOs in one room. What happened?

RS: Yeah, so Xi gathered all the big tech CEOs. You see the seats arranged in rows, and the front row is normally reserved for Alibaba, Baidu – the Four Dragons. But the DeepSeek CEO was in the front row. This young guy, barely a few years old as a company, in his 30s or 40s, seated above other seniors. In Chinese culture, people take notice of this stuff. It's huge.

What that signals is that software – historically, China's focused on physical manufacturing, anything tangible – is now being treated as equally important. A software-driven company as important as your car manufacturer, as important as your chemicals companies. That's a massive shift in where the government's thinking is heading.

The vibe – how Chinese people actually think about AI

JK: In Australia, AI is largely met with distrust and pessimism. Even the latest survey results out of the Tech Policy Design Institute saw 85% of Australians support AI regulation and just 1% trust AI. What's it like on the ground in China?

RS: So for background, I do a lot of China-based AI work in my day job as a lawyer. I work with local partners in China to advise Chinese AI companies, draft contracts, and have been to China to sit  in boardrooms with legal counsel and directors. So I’m going by my  on-the-ground observations.

The software market is really tough in China and typically not considered as a ‘top’ industry, at least at a B2B level. It is really hard to sell software there. Apart from Microsoft, every other US company that tried to go into China failed. The Chinese consumer mindset is, “Software is just a bunch of files and code. You can copy and paste, it should be free.” Desktop software is a whole different game to mobile apps. It took a while for the market to even understand cloud. If you can't sell local software, how are you going to convince people to outsource to the cloud?

JK: So this explains China’s obsession with open source AI. You've told me before that in China, if it's not open source, it's a scam.

RS: For developers, open source is kind of like a ticket to your credibility. It is ‘proof of work’. There are so many options in the market that Chinese consumers naturally ask, “How do I know you're legit?” Open source libraries help, but also the reputation and profile of the founders. In China, founder integrity – the character, the personality – has a huge impact, and very much intrinsically linked to the company brand.

Any signs of gloating or pride, that gives people the ‘ick’. And the ick actually has a boycotting effect on your services. Open source is part of that. If you're open source, it means you're doing a public service “for the people” [wèi rénmín fúwù “为人民服务”]. It is a sign of transparency as consumers can see how technically sophisticated you are. You're not just someone who forked a GitHub repo. You actually created this from scratch, backed up with hardcore maths - a sign of original homegrown innovation. And people love that, especially since STEM innovation is an increasingly important pillar of national pride.

JK: Is AI just part of the culture at this point?

RS: In China, maths and science is sexy. When I was in a hotel watching TV, every fourth channel was some tech or science documentary. There's a trend where parents used to send kids to Olympiad maths classes. That was the status symbol. Then it shifted to coding classes. Now the new trend is robotics classes. Kids are going to coding and robotics classes after school, and that's as commonplace as Australian parents sending their kids to swimming. A lot of people love maths and science. Their minds are naturally geared towards AI use cases. Innovation just becomes a given.

It comes down to education. Education influences culture, culture reinforces education. That's something we could really think about here in Australia. Make science and maths cool. Children's TV shows. I think that's a way to start.

JK: I’ve heard that in Chinese society there’s a feeling like being an NPC [non-playable character] versus a main protagonist. Can you explain that?

RS: People who leave China and immigrate, that tends to be the main cultural reason. I don’t think it is controversial to say that being in a large population country and highly competitive talent market like China makes you feel like an NPC, rather than a main protagonist. It’s a hypercompetitive culture called ‘nei juan’ [involution 内卷], though South Korea, Japan and Singapore arguably have a roughly similar culture. People who want to be the protagonist, that's when they go to the West, which celebrates – and has room for – individualistic culture. But many people in China value stability. It's such a massive population that's gone through centuries of famine and poverty. To have some stability and wealth being generated, and a happy family, people see that as a blessing and I don’t blame them.

But with Gen Z, there’s that mix of westernised “main-protagonist” thinking coming through. And then there's ‘tang ping’ [“lying flat”] where some young people are just quitting the rat race and staying at home as a personal rebellion against the establishment.

Is there even an AI race with the US?

JK: How much do Chinese people actually think about the AI race in terms of US versus China?

RS: Honestly, the US versus China framing tends to be overplayed in the West. When you visit China, many businesses over there don't really think about the US that much. They only care about their next-door neighbour. Each Chinese business cares more about whether the competitor next door is going to undercut you, poach your top talent or put you out of business with a new superior product. 

The US is seen as an opportunity rather than a competitor. The thinking in Chinese big tech companies is, “I need to survive domestically. I need to beat all my competitors in my city, my province, my country. Once I become number one in my domain in China, I now have credibility to expand overseas.” And the US is the prime, golden, lucrative market. They know American companies can't really come into China to compete with them. So it's not really a race, only the government cares about that from a national security posture and narrative perspective. But the everyday business person doesn't talk about it.

JK: Is that what happened with Temu and TikTok?

RS: Yeah, broadly speaking. For every one app in China, there's 500 copycats and competitors. They basically wiped all of them out through sheer innovation, by just being better. Made enough money to expand overseas. That's the grind. That's the attrition business culture.

The typical roadmap is: First, incorporate in Singapore where there’s favourable tax, mostly an ethnic Chinese population and is the hub of Asia. Plus having a Singapore HQ earns you international credibility from a Westerner’s perspective which is key for selling into the UK and US markets. Second, make enough money, then incorporate in Delaware for US expansion. Third, create a base in Ireland or Hungary for EU expansion (or via a German joint venture) and Dubai for Middle East expansion. That has been the playbook for a while since post-COVID tech boom. 

Hence when China's National Development and Reform Commission blocked Meta's acquisition of Manus, that was quite a big deal because it had put a huge question mark on the typical roadmap. Founders are thinking, “What do we do next?” The alternative path now is IPO in Hong Kong, following the footsteps of ZhuAI and MiniMax. China is also pushing hard for Hainan Free Trade Zone as the new ‘hub of the East’, competitive to HK and Singapore.

JK: So what's the real frontier of competition?

RS: To be really specific, I feel like there's only one real frontier, which is the control and distribution of chips. Apart from that, China already leads in robotics. They've got their own suite of domestic foundation models like DeepSeek and Minimax, so they're not reliant on American LLMs. The application layer is also extremely vibrant. With education, they've already managed it in some cities with world-class STEM graduates coming out of local institutions. Electricity is much cheaper in China. So what's left? Only the chip layer which is still currently Western-dominated under the US Pax Silica initiative.

JK: You make the distinction that China is a market economy but not a capitalist one. What does that mean?

RS: China represents one of the most market-driven economies out there. The competition there is incredibly cutthroat. But it's not a capitalist economy. People tend to conflate the two. The market is very much demand and supply, driven by the price mechanism and private competition, which forces immense innovation. But no matter how well you do in the private sector, you don't get a say in policy. Not even rich billionaires. The government always retains control over policy and  broader economicstrategy.

In other words, capital does not rise above political authority. To many local Chinese, this is seen as a strength and a core pillar of stability and progress (or what they call as “modernisation”).

What's moving in regulation – Australia and China

JK: Bringing it back to your day job, what's changed in the tech law and regulation landscape in Australia?

RS: AI sovereignty is increasingly becoming an express focus in tech policy. It's been a topic since late 2024 and the rest of the world's been quite forward on it, but Australia was watching from the sidelines under a “wait and see” approach. Since the election and the Trump tariffs, everyone had a shock and started to realise that self-sufficiency and a strong domestic industry is critical. AI naturally gets caught in that conversation.

We've had the National AI Plan. We've seen statements from Assistant Digital Minister Andrew Charlton about trying to stop the “uberisation of the Australian economy”, where profits go to Silicon Valley rather than staying here. That's been the consistent narrative. The most recent big milestone was the government signing memorandums of understanding with Anthropic and Microsoft to build data centres and offices here. So we're still relying on foreign companies setting up operations to kickstart an Australian AI economy. The question is whether that actually achieves the goal of keeping the majority of benefits here. That I can't tell. But the government is taking steps.

JK: What do people get wrong about China's approach to AI regulation?

RS: The common misconception is that China already has laws on AI. That's actually not true. They have regulations, but not laws yet. In China, a law is passed by the National People's Congress. Regulations come from the State Council. Then you have provisions and measures from administrative bodies. The body that is currently spearheading lot of the enforcement activities is  the Cyberspace Administration of China (CAC). They've released measures on recommendation algorithms, generative AI, deep synthesis  technology – which is their terminology for  deepfakes and synthetic data – and recently anthropomorphic AI (e.g. AI used for emotional services).

The common theme is that if you built an algorithm with potential societal harms, you've got to get approval from the state before you publish it. It's a pre-approval system, all fed into the same registry. Every quarter the CAC approves batches of apps that can be deployed. On that basis, I’d argue that China’s AI regulatory regime is stricter than the EU AI Act (which operates on a risk self-assessment regime).

The genesis is different too. In the West, AI regulation tends to be an extension of privacy regulation with data, consent, and user control. In China, it's an extension of content moderation and censorship.

JK: There's a new policy question in Australia around AI and jobs too.

RS: Yeah, the our Workplace Relations Minister Amanda Rishworth did a speech saying the government's looking at regulations around AI being used as an excuse to retrench people. It's been driven by the Atlassian layoffs and other big tech job cuts. The government and unions have a lot of say here. The question is how much detail in worker rights you give to unions versus accounting for the legitimate business interests of employers. It's tricky!

But this is quite new, it only started this year. Very keen to see how that lands.