In the escalating competition between the United States and China in the field of Artificial Intelligence (AI), recent developments have shown Chinese AI companies fiercely seeking funding to expand their operations. However, according to Goldman Sachs, the AI industry may struggle to sustain China’s economic growth, as Citigroup also analyzes that around 70 million jobs in China could potentially be replaced by AI.
Public reports indicate that Chinese AI companies are rushing to go public or secure loans for funding, with at least 6 companies preparing for IPOs on the Shanghai or Hong Kong stock exchanges by the end of this year or in 2027.
Based in Beijing, the Chinese AI company Moonshot AI is in the process of completing a private financing round exceeding $30 billion USD and is preparing for an IPO in Hong Kong in early 2027 with a valuation over $30 billion USD.
Another Chinese AI company, DeepSeek, is also striving to keep up the pace. Having raised 50 billion RMB in June, the company has initiated a second round of financing to increase its valuation to over 350 billion RMB and plans to list on the Shanghai Stock Exchange in 2027.
During the first half of this year, Chinese AI supply chain companies raised over $10 billion USD in Hong Kong, with more than 70 companies in line for IPOs.
Simultaneously, the Chinese government has urged state-owned enterprises and other investors to direct long-term funding towards AI and semiconductor technologies.
An article titled “Unveiling the Inner Workings of China’s Full Pursuit of American AI Chips” was published by the Chinese version of The Wall Street Journal on July 24. The article reveals that a committee, led by a close confidant of the Chinese Communist Party leader Xi Jinping, has been established to deploy top teams in key areas to win the AI race. The Chinese authorities recognize the critical importance of dominating various forms of AI fields for the foundation of the Communist Party in power, as reliance on Washington for advancements in medicine, robotics, autonomous driving, and even weaponry and military strategy could be the only option if the United States controls leading technologies.
The article indicates that China’s strategies include deploying top teams in advanced manufacturing and packaging, high-bandwidth memory, chip design software, and removing salary caps for state-owned equipment manufacturer Naura Technology to facilitate recruiting top talent from foreign competitors with substantial financial incentives. Additionally, China has been acquiring Nvidia chips through intermediaries from other countries despite the ban.
However, insiders reveal that there remains a significant technological gap between China and the United States. The computational power of Nvidia’s top AI chips is four times that of Huawei’s strongest product.
Analyst Ray Wang from the research firm SemiAnalysis believes that for China to truly compete without relying on foreign technology, it must develop its own EUV lithography machine. However, it may take China up to 10 years, or even as long as 50 years, to possess this technology.
The Wall Street Journal also noted that the outcome of this AI competition will have far-reaching effects on the global economy.
Goldman Sachs, an international investment bank, stated that the AI industry has a certain stimulating effect on the Chinese economy, but as high-tech industries continue to develop, the growth rate may slow down. Consequently, the contribution of AI industry to the overall GDP could weaken following this trend.
Regarding the current AI investment boom, Goldman Sachs mentioned that over the past 20 years, investment as a percentage of China’s economic GDP has reached 40% or even higher, leading to oversupply in some industries. Therefore, future investment as a percentage of GDP may gradually drop to below 30%, portraying an overall pessimistic trend.
Another impact of AI on the economy is the replacement of a large number of jobs. Citing research from Citigroup, The Straits Times of Singapore reported on July 22 that AI could eventually replace around 70 million jobs in China.
Xiangrong Yu, Chief Economist of Citigroup China, analyzed that about 31% of employment in China is highly exposed to AI, with approximately 9.6% (around 70 million) of the total workforce facing direct risks of replacement. For example, the widespread adoption of Robotaxis could impact the livelihoods of 10 million online car/taxi drivers in China.
A survey by Citigroup and the Innovation Lab revealed that the service industry and young workers in their 20s are facing the most severe impact. While the service industry used to absorb labor transitioning from the manufacturing sector, it is now under immense pressure from AI replacing jobs within the sector.
Citigroup suggested that a prerequisite for widespread deployment of AI should be the establishment of a more robust social safety net, including strengthening occupational protection, unemployment benefits, and retraining programs.