China’s AI sector made a splash this month as a cluster of domestic AI firms raised more than $1 billion through IPOs in Hong Kong. While these listings were undoubtedly meant to signal confidence, they triggered an unusually candid round of warnings from inside China’s own AI industry that the gap with the U.S. is widening in ways that fresh capital cannot easily fix.
According to reporting by Bloomberg, Justin Lin, head of Alibaba Group’s Qwen open-source models, said that Chinese companies have a “less than 20%” chance of “leapfrogging the likes of OpenAI and Anthropic with fundamental breakthroughs" in the near term.
His comments were echoed by peers at both Tencent and Zhipu AI, the latter of which is among the first Chinese foundation model companies to go public. Its IPO, along with that of Minimax, comes as Beijing is actively steering tech companies toward domestic listings, both to reduce reliance on U.S. capital markets and to funnel national savings into priority sectors like semiconductors and AI.
Companies get more runway
Getting more than $1 billion in IPOs raised in a single week is impressive for Chinese AI start-ups, a feat that would have been unthinkable even two years ago. The listings also reflect the policy shift being pushed by Chinese regulators, who are prioritizing domestic financing for AI, advanced chips, and data infrastructure. Hong Kong appears to be the preferred “offshore” venue that still offers global capital access.
For OpenAI competitor Zhipu AI, training and deploying LLMs is capital-intensive before hardware constraints even come into consideration. IPOs, therefore, offer longer funding runways than traditional venture rounds and simultaneously reduce exposure to a venture market that has cooled down massively since 2021. They also protect geopolitical swings, aligning the private sector with Beijing’s national technology priorities.
What these IPOs do not provide is leverage over the most expensive part of the AI stack. Capital might help pay for engineers and rent data centers, but it does not create advanced GPUs or high-bandwidth memory (HBM). Following the IPOs and easing of funding pressure, several executives now fear that China's biggest bottleneck is now decisively on compute availability and power.
(Image credit: Huawei)
“A massive amount of OpenAI’s compute is dedicated to next-generation research, whereas we are stretched thin — just meeting delivery demands consumes most of our resources,” Lin said at the AGI-Next summit in Beijing on Saturday, January 10.
That’s an interestingly frank admission, as it reframes how you might read into Chinese AI funding. The goal for Chinese firms isn’t to outspend U.S. hyperscalers in absolute terms, but to sustain domestic AI development under constrained conditions for as long as possible. IPOs are an endurance tool for that, rather than a shortcut to dominance, which can’t be easily bought.
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