Xi Jinping Praises China's AI and Chip Breakthroughs

In his annual New Year's address, Chinese leader Xi Jinping lauded the country's technological progress in 2025. He specifically highlighted the rapid development of artificial intelligence and domestic semiconductor capabilities as key drivers of economic growth. Xi noted that China has 'integrated science and technology deeply with industries,' resulting in a stream of new innovations.

The leader's comments reflect a year of intense competition with the United States. Significant milestones included the release of the Deepseek R1 model, which rivaled US counterparts, and a surge in the valuation of domestic chip manufacturers. Beyond AI, the address covered major strides in aerospace, naval technology, and infrastructure, including the construction of the world's largest dam.

Chinese leader Xi Jinping delivered a strong message regarding the nation's technological trajectory during his 2025 New Year's address from Beijing. The speech focused heavily on the success of the country's push for self-reliance in critical sectors. Xi emphasized that the integration of science and technology into various industries has yielded substantial results.

Specifically, the leader pointed to the competitive nature of the current landscape. He stated, "Many large AI models have been competing in a race to the top, and breakthroughs have been achieved in the research and development of our own chips." He further added that these developments have transformed the nation's economic profile, noting, "All this has turned China into one of the economies with the fastest-growing innovation capabilities."

The address also served as a recap of the year's broader technological achievements. Xi highlighted the Tianwen-2 asteroid sampling mission and the commissioning of a new aircraft carrier equipped with an electromagnetic catapult system. These projects, alongside progress in humanoid robotics and drone technology, were presented as evidence of the country's expanding industrial and scientific reach.

The leader's optimistic assessment follows a year defined by fierce rivalry with the United States in the AI sector. The year began with a significant disruption caused by the release of the Deepseek R1 model in January. This model was noted for rivaling OpenAI's o1 capabilities, triggering a volatile reaction in global markets.

The impact on US technology stocks was immediate and severe. Nvidia, a central player in AI hardware, experienced a stock decline of more than 17% on January 27. This single-day drop erased billions of dollars from the company's market value, signaling investor anxiety regarding the shifting balance of technological power.

Market dynamics continued to evolve throughout the year. While the US maintained a ban on exporting advanced AI chips, which inadvertently fueled the growth of China's domestic chip producers, there were signs of shifting policy. In December, President Donald Trump granted Nvidia permission to sell its H200 chips to "approved customers" in China, marking a strategic adjustment in trade relations.

The shifting landscape of semiconductor trade has had profound effects on the domestic market within China. The US export restrictions served as a catalyst for local manufacturers, driving rapid growth and valuation increases. Founders of these homegrown chip companies, such as Chen Weiliang of MetaX Integrated Circuits Shanghai, saw their personal wealth surge into the billionaire ranks as demand for local alternatives skyrocketed.

Conversely, US tech giants continued to engage with the Chinese innovation ecosystem. Meta announced the acquisition of the China-founded AI startup Manus. The deal, reported to be worth more than $2 billion, represents one of the largest acquisitions of an Asian AI company by US tech interests to date.

Financial analysts are increasingly taking note of these trends. Investment strategies are beginning to reflect the reality of a multipolar tech landscape. Jason Draho, a wealth management executive at UBS, suggested in November that investors should consider Chinese AI stocks as a viable method to counterbalance exposure to US technology holdings.

While artificial intelligence and chips took center stage, the address covered a wide array of national projects. Xi Jinping drew attention to the groundbreaking of the world's largest dam. This massive infrastructure project is located in Tibetan territory, highlighting the scale of the government's domestic development initiatives.

Progress in defense and aerospace technology was also a key theme. The mention of the latest electromagnetic catapult system-equipped aircraft carrier underscores the modernization of the People's Liberation Army Navy. Similarly, the Tianwen-2 mission represents a significant step forward in the country's space exploration capabilities, specifically regarding asteroid sampling.

The inclusion of these diverse topics in the New Year's address illustrates a comprehensive approach to national development. By linking high-tech innovation with heavy industry and military modernization, the leadership presented a unified narrative of a nation rapidly advancing on multiple fronts simultaneously.