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DeepSeek AI revolution 🔥 Robots vs humans race 🏃♂️ BYD’s massive car ship 🚢
China Insights Weekly for January 27, 2024. Unpacking China’s Economic and Technological Advances.
Tomas Kucera & Yereth Jansen
January 27, 2025
Welcome back to this week’s edition of the China Insights Weekly Newsletter!
Key highlights shaping the week:
DeepSeek AI disrupts the market, outperforms OpenAI at 95% lower cost
EHang eVTOL brings air taxis to Shanghai
BYD debuts world’s largest 9,200-car carrier
1.15M-ton rare earth discovery boosts Yunnan’s global edge
Dive deeper into these stories and more by clicking the headlines below. We value your feedback. Let us know your thoughts or suggestions on LinkedIn, X or Facebook.
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🚀 Headlines
Chinese AI startup DeepSeek has released an open-source reasoning LLM, DeepSeek-R1, which matches the performance of closed-source OpenAI's o1 model across math, coding, and reasoning tasks, but at significantly lower cost, delivering at 90-95% more affordable rates. DeepSeek-R1 is based on the DeepSeek V3 mixture-of-experts model and uses a combination of reinforcement learning (RL) and supervised fine-tuning. In testing, DeepSeek-R1 scored 79.8% on AIME 2024 mathematics tests and 97.3% on MATH-500, outperforming o1-1217's scores of 79.2% and 96.4% respectively. It also achieved a 2,029 rating on Codeforces, surpassing 96.3% of human programmers. The model is available on Hugging Face under an MIT license, along with six distilled models, which have also shown improved performance. DeepSeek-R1's cost is USD 0.55 per million input tokens and USD 2.19 per million output tokens, compared to OpenAI o1's USD 15 and USD 60.
EHang, a leading Urban Air Mobility (UAM) technology company completed its inaugural demo flight of its flagship pilotless passenger-carrying aerial vehicle, EH216-S, in downtown Shanghai. EHang has also launched regular trial operations of eVTOL sightseeing routes by the Huangpu River at Longhua Airport in Shanghai, in preparation for commercial operations. The successful debut flight of EH216-S signifies that large central cities in China are on the verge of entering the era of urban air taxi flight scenarios. EHang plans to develop a variety of low-altitude economy eVTOL operational scenarios such as passenger transportation and urban sightseeing in the entire area of Shanghai and further covering cities and regions along the Yangtze River Delta G60 Science and Innovation Corridor.
EHang eVTOL test flight by the West Bund AI CBD in Shanghai
In 2024, the global electric vehicle (EV) market achieved a record year with 17.1 million units sold, marking a 25% increase from 2023. China led the growth with 11 million EVs sold, a 40% year-over-year increase, and made up 64.3% of the global total. This was driven by strong demand for plug-in hybrid electric vehicles (PHEVs) +81% (Battery electric vehicles, BEVs) +19%) and government incentives like the car trade-in scheme. In contrast, the European market saw a 3% decline to 3 million EVs. The US and Canada markets grew by 9% to 1.3 million. Chinese brands continued to grow domestically and internationally with Xiaomi SU7 outselling Tesla Model 3 in December and BYD becoming #1 car brand in Singapore in 2024.
In 2024, large Western pharma companies in-licensed nearly a third of their external molecules from Chinese biotechs, up from 10%-12% in 2020-2022. Chinese companies represent at least a fifth of R&D programs in the industry's total clinical pipeline. Merck's acquisition of rights to LaNova Medicines' cancer candidate LM-299 for up to USD 3.3 Billion exemplifies Big Pharma's appetite for Chinese assets. Furthermore, U.S.-China pharma deals have increased in size, with the average out-licensing deal costing USD 389 million in 2024 compared to USD 101 million in 2021. In the first 11 months of 2024, major pharma companies spent at least USD 3.15 Billion in upfront cash and equity to license or acquire molecules originating from China. Obesity is a popular area for dealmaking, with AstraZeneca and Merck signing significant licensing agreements with Chinese companies for obesity candidates.
BYD has launched the world's largest vehicle RoRo (roll-on/roll-off) vessel, the BYD Shenzhen, capable of accommodating up to 9,200 cars. This 219-meter long, 37.7-meter wide vessel with a draft of 9 meters and a maximum speed of 18.5 knots (34.3 km/h) is undocked in Yangzhou port, Jiangsu Province. It is BYD's fourth car carrier, with plans for a total of eight by early 2026 to support global expansion. The BYD Shenzhen is touted as the world's most environmentally friendly car carrier, featuring LNG dual-fuel technology and BYD box stationary storage batteries for reduced fuel consumption. In 2024, BYD exported 417,204 EVs, a 71.9% increase from 2023, accounting for about 10% of its global sales of 4.25 million passenger vehicles.
Leading Chinese semiconductor equipment manufacturers AMEC, Naura Technologies, and ACM Research have reported significant sales growth in 2024. AMEC's revenue is estimated to reach ¥9.065 billion (USD 1.244 Billion), marking a 44.73% increase from 2023, with etching equipment sales up 54.71% year-over-year. Despite increased R&D spending, AMEC expects a net profit between ¥1.5 billion and ¥1.7 billion. ACM Research, a U.S.-based company with operations in China, anticipates 2024 revenue between ¥5.6 billion and ¥5.88 billion, reflecting a 44.02% to 51.22% growth, driven by a recovering global market and strong domestic demand. Naura Technology Group forecasts 2024 revenue between ¥27.6 billion and ¥31.78 billion, with a net profit of ¥5.17 billion to ¥5.95 billion, up 32.6% to 52.6% YoY. These figures highlight the growing domestic demand for chipmaking tools and the companies' advancements in production capabilities as Western governments increasingly prevent access.
Invitation to Participate: Tourism Survey Among Expats in China
We invite you to take part in the “Tourism Survey Among Expats Living in China,” in collaboration with UN Tourism. The survey is brief, anonymous, and open to all, aiming to gather insights into travel habits and preferences within China.
Thank you for your time!
China has discovered a significant rare earth mineral deposit in Honghe, Yunnan province, potentially yielding over 1.15 million metric tons of resources. The China Geological Survey (CGS) reports that the deposit could contain over 470,000 tons of sought-after minerals like praseodymium, neodymium, dysprosium, and terbium. This super-large ion-adsorption type deposit marks a major breakthrough in resource exploration, following the first such discovery in Jiangxi province in 1969. The find is expected to strengthen China's strategic dominance in medium and heavy rare earth resources, crucial for industries ranging from electronics to electric vehicles. This discovery comes after a fruitful 2024 for China in mineral exploration, including the uncovering of two new mineral deposits in Inner Mongolia and a massive gold deposit in Hunan Province.
Xinjiang Rare Metals National Mine Park in China
China begins building first GW-scale residential Virtual Power Plant (VPP) in Jiangsu Province (link)
China has initiated the construction of its first gigawatt-scale residential virtual power plant (VPP) in Jiangsu province. This project, led by Jiangsu Electric Power under the State Grid Corp. of China, aims to connect millions of high-power household appliances such as air conditioners and electric water heaters to a cloud-based energy pool. Utilizing advanced technologies like big data, the Internet of Things, and AI, the VPP will enhance load management, particularly during peak demand seasons. Homeowners can participate in demand-response programs and receive financial incentives to adjust their energy consumption. When electricity demand is tight, grid operators will send invitations to residents via mobile devices, encouraging them to adjust appliance settings to reduce consumption and earn rewards on their electricity bills.
📸 China Snapshot
Located in Lijiang, Yunnan, under the majestic Jade Dragon Snow Mountain, the Land of Wilderness is a surreal attraction inspired by Howl’s Moving Castle. Created by artist Qiao Xiaodao over a decade, it features over 100 unique sculptures and structures, crafted from repurposed materials in a steampunk aesthetic. With giant mechanical installations and whimsical designs, this destination has become a must-see for travelers seeking a creative and fantastical experience.
🎁 Bonus Stories
In 2024, Shanghai welcomed over 6.7 million inbound tourists, marking an 84% increase from the previous year and reaching 75% of the 2019 level. This significant growth is partly due to China's relaxed visa policies. Overnight stays in the city surpassed 6 million, with a year-on-year increase of over 80%, and international tourist numbers more than doubled to nearly 4.8 million. The top source countries were the Republic of Korea, the United States, and Japan, each contributing over 400,000 tourists. Notably, Thailand, Malaysia, and Indonesia saw the fastest growth in tourist numbers, with Thailand alone accounting for over 300,000 trips, a staggering year-on-year increase of over 300%. Shanghai plans to enhance its tourism services further and appeal to attract more international visitors.
China is set to host the world's first half-marathon where humans will compete against humanoid robots in Beijing's Daxing district in April. This event, featuring 12,000 human runners and robots developed by global companies, reflects China's push to lead in AI and robotics. The robots must have a human-like appearance, be between 0.5 and 2 meters tall, and be capable of bipedal movement. They can be remotely controlled or fully autonomous, and battery replacements are allowed during the race. This initiative highlights China's strategic focus on robotics to address an aging population and declining workforce, with the robotics industry expected to reach a market value of 400 billion yuan (USD 54.6 billion) by 2030.
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👥 About us
China Insights is brought to you by Tomas Kucera, China General Manager at Gemini Personnel in Shanghai, and Yereth Jansen, China CEO at Darling Advertising + Design in Shanghai.
Tomas and Yereth together have almost 30 years of experience working and living in China across different industries, and have a shared mission of bringing you objective insights about the world’s second largest economy.
We hope to see you again next week!
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