It was a controversy laced with pride for He Xiaopeng. In November, He, the founder and CEO of Chinese physical AI firm XPeng, had just debuted his new humanoid robot, IRON, whose balance, posture shifts, and coquettish swagger mirrored human motion with such eerie precision that a slew of netizens accused him of faking the demonstration by putting a human in a bodysuit.
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To silence the naysayers, He boldly cut open the robot’s leg live on stage to reveal the intricate mechanical systems that allow it to adapt to uneven surfaces and maintain stability just like the human body. “At first, it made me sad,” He tells TIME in his Guangzhou headquarters. “The robot is like our classmate, our child. But later, I was proud.”
There’s plenty to be proud about across China’s burgeoning AI industry these days. Despite significant headwinds, such as restrictions on Nvidia’s most advanced GPUs, China’s core AI industry was estimated at $160–$170 billion last year. China has more than 5,300 AI enterprises and leads the world in GenAI patenting, with six times as many registered as the U.S.
It’s been quite a turnaround. When ChatGPT exploded onto the scene in late 2022, policymakers in Beijing were aghast. But then last January, an obscure AI startup named DeepSeek released a generative AI platform, R1, which was comparable to ChatGPT but purporting to use just a fraction of Nvidia’s bleeding-edge chips. Although those claims are hotly contested, R1’s debut sent markets reeling and frissons through Silicon Valley.
DeepSeek also sparked a rush of AI investment in China, spotlighted by the rise of six AI unicorns—StepFun, Zhipu AI, Moonshot, Minimax, 01.AI, and Baichuan—which became known as China’s “AI Tigers” as the nation’s cities and regions clamored to seed a local champion. “I don’t know where the ‘tiger’ thing came from,” MiniMax CEO Yan Junjie tells TIME with a chuckle. “We just continue to advance our model to increase…
