China's AI boom is reaching astonishing proportions

What might derail it?

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Just hours after the launch on March 6 of Manus, a Chinese artificial-intelligence (AI) bot, a flood of visitors caused its registration site to crash. Butterfly Effect, the company behind the bot, claims its technology outperforms that of OpenAI, the maker of ChatGPT. It is now granting previews by invitation only as it struggles to handle the traffic. Scalpers are said to be selling registration codes.

Manus is but the latest example of the mania that has swept over China since January, when DeepSeek, the country's hottest AI start-up, shook the world with a whizzy model that cost a fraction of similarly powerful Western ones to train. The effect on Chinese markets has been staggering. Stocks are experiencing their best start to the year on record. The Hang Seng Tech Index, which tracks the biggest Chinese tech companies listed in Hong Kong, is up by more than 40 per cent since mid-January.

Many in China are betting that cheaper AI will unlock the door for innovators to design new applications for the technology. Purveyors of cloud computing are ramping up investment in data centres, triggering a surge of capital spending through the supply chain. What might derail the boom?

In recent weeks, hundreds of large Chinese enterprises, from carmakers and state-owned energy companies to banks and food-and-beverage pedlars, have said they plan to use DeepSeek's technology. Some of the country's tech giants, such as Tencent, are also embedding it into their products, despite having models of their own. City governments are now integrating DeepSeek's models into mobile applications that residents use for basic services, while government departments, hospitals and universities across the country are discussing how to employ it for "party building", as activities that strengthen the Communist Party are known.