China’s goal is now to build a “token economy,” backed by a proliferation of efficient, open-source models and a push into real-world AI applications. Yet like their U.S. peers, Chinese firms are grappling with expensive research costs and heavy capital expenditure pledges, while also fending off Washington’s export controls, designed to keep them one step behind in the chip race.
The AI boom rescued China’s big tech companies from years of regulatory purgatory.
A new generation of Chinese AI startups are also winning converts in Silicon Valley.
Two other startups—Knowledge Atlas, better known as Z.ai, and MiniMax—have already listed in Hong Kong, giving some rare visibility into the economics of a frontier AI lab.
MiniMax reported $79 million in 2025 revenue, a 159% year-on-year jump, with 70% coming from overseas markets in an early signal of global appetite for Chinese foundation models. Yet it also posted an adjusted net loss of $250 million. Zhipu AI generated 724 million yuan ($104.8 million) in revenue, 132% higher than the year before, but its total losses ballooned to 4.7 billion yuan ($680 million), driven by R&D spending that jumped 45%.
Investors don’t seem to mind the massive losses. Zhipu’s shares are up more than 570% from its IPO price; MiniMax has risen more than 470%, at one point briefly exceeding the market cap of Baidu. Still, both stocks have swung wildly, rising and falling by double-digit percentages in single sessions.
One startup that’s been notably quiet this year is DeepSeek, the Hangzhou-based lab that reset the whole AI conversation last year with its V3 and R1 models. Developers are eagerly awaiting the public release of V4, the latest version of its model.
China is also surging ahead in physical AI, backed by supply chains that can cheaply manufacture advanced technology.
Still, Chinese AI companies face numerous headwinds that constrain what they can do, particularly compared to the leading U.S. AI developers.
That funding pressure forced some founders to take radical action, with some going as far as skipping the Chinese market entirely. Manus AI, which launched a buzzy AI agent last year, reincorporated as a Singapore entity; Meta later acquired the agentic AI startup for roughly $2 billion in late 2025.
Yet the biggest unresolved question in Chinese AI is much the same as in the U.S.: How to turn tokens into profits.
“ATH is built around a single organising mission: create tokens, deliver tokens and apply tokens,” Wu said in a letter announcing the reorganization.
