The shadow of U.S. trade tensions loomed large over China’s annual parliamentary meetings this week, with a significant focus on how Chinese technology, particularly artificial intelligence, is offsetting those pressures. Premier Li Qiang, in his annual report on government work, acknowledged the increasingly complex international environment, stating that it “may exert a greater impact on China in areas such as trade, science and technology.” A key priority for the year, according to Li, is supporting “the extensive application of large-scale AI models.”
The largely ceremonial gathering of delegates in Beijing coincided with escalating trade disputes, including new tariffs imposed by the U.S. on Chinese goods. These developments have presented challenges for Chinese exports while also making it more difficult for Chinese companies to obtain high-end semiconductors and other advanced technologies.
Premier Li Qiang delivered his annual report at the opening ceremony of the National People’s Congress, offering a notably somber assessment. “Internationally … an increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science and technology,” he said, according to an official English translation. Despite the grim tone, there was also a palpable willingness to support the private sector, especially in the realm of technological innovation.
“We will promote the healthy and well-regulated development of the platform economy and give better play to its role in inspiring innovation, expanding consumption and stabilizing employment,” Li stated in his work report. This marked a shift in approach from previous years, after the government had imposed significant fines on tech giants such as Alibaba and Tencent.
DeepSeek’s recent achievements have demonstrated to international investors, who were becoming cautious due to the slowing economy, how a Chinese company could compete with the U.S. in the AI sphere despite sanctions. The government was quick to acknowledge DeepSeek’s success, with Liang Wenfeng attending meetings with Premier Li and President Xi Jinping.
While DeepSeek wasn’t explicitly mentioned in the government’s work report, Chen Changsheng, a member of the report’s drafting team, highlighted the company’s progress and applications such as Kuaishou’s Kling AI for video generation. “Historically, technological progress is often an important force for breaking through barriers and protectionism,” Chen stated, emphasizing AI’s potential to foster cooperation and multilateralism.
According to the Chinese-language versions of the report, “tech” received one more mention this year than last, and the word “reform” appeared ten more times. Tech self-reliance also received its own sub-section in the latest annual work report, a notable change from the passing mentions of 2024.
China’s legislature has been discussing a new law designed to support greater private sector involvement, with plans for its enactment as soon as possible. Ding Wenjie, an investment strategist at China Asset Management Co., believes that policy this year will likely be driven more from the bottom up. She anticipates that growth in AI and other leading technologies will stimulate development in other industries, though she cautioned it would take companies more than a few quarters to see significant results.
Premier Li reiterated the importance of supporting “the extensive application of large-scale AI models.” The government intends to increase funding for biomanufacturing, quantum technology, AI-linked robotics, and 6G technology.
China’s goals are to enhance consumer spending, alleviate the drag from real estate, and navigate trade tensions with the U.S. Morgan Stanley analysts noted that the country’s policy focus is on accelerating AI adoption and autonomous driving while slowly reforming the housing market and local government debt.
During the meetings, officials hinted at a preference for open-source models, with Chen warning against excessive reliance on private AI projects that could fragment the market. The National Development and Reform Commission, China’s economic planning agency, announced plans to increase computing capacity and develop “a system of open-source models.”
