China is likely to overtake the United States in artificial intelligence (AI) within a decade because of its faster buildout of the electric power and data-center infrastructure that AI relies on, according to Chinese investor Allen Zhu, Managing Director at GSR Ventures, “It’s much easier for China to catch up on algorithms and AI models than for the U.S. to build up the data centers and power plants that run AI,” he said in a recent podcast. “AI competition is really a competition in data centers and electricity supply and China has a significant edge there,” said Zhu, a well-known “unicorn hunter” whose investments span Chinese start-ups valued at more than USD1 billion, from ride-hailing firm Didi Chuxing to lifestyle social network RedNote.
His view echoes growing concern in the U.S. over an approaching power shortfall for AI data centers. A report published in June by the U.S. think tank Rand said the surge in computing demand was creating “exceptional” pressure on America’s power grid, making it hard to secure reliable electricity supplies for new AI facilities. Zhu said China had made the right decision by accelerating the construction of nuclear power plants and photovoltaic projects to provide cleaner energy for its digital economy. He also praised Chinese AI start-up DeepSeek, saying it had helped narrow the gap with the U.S. and made a major contribution to global AI progress. “In 10 years’ time, people will look back and see DeepSeek as a turning point in AI development,” he said. “Everyone still underestimates how much it has changed humanity or even history.” Without DeepSeek’s decision to release its top models and research for free, Zhu argued, cutting-edge AI would be controlled by a handful of large private companies – a scenario he warned would be harmful to humanity.
At the same time, Zhu acknowledged that Chinese AI start-ups – from DeepSeek to Beijing-based Moonshot AI and Z.ai, as well as Shanghai-based MiniMax – faced an uphill battle against tech giants such as Alibaba Group Holding and ByteDance. Large internet platforms could afford to offer their own AI models at very low prices, or even for free, making it harder for start-ups to earn money from selling model services, Zhu said. Zhu has long been skeptical about investing in start-ups focused purely on foundational models and prefers backing companies that build AI applications. Rather than putting money into foundational model developers, Zhu said his venture fund had invested in about a dozen AI application developers this year. Competition among China’s big tech firms has intensified in recent months. Alibaba has doubled down on its Qwen chatbot app, hoping it will become a gateway for everyday AI use and ignite a race to dominate the mass consumer market. ByteDance’s ChatGPT-style Doubao is currently leading China’s AI chatbot market, the South China Morning Post reports.
