Welcome back to China Insights Weekly. Here are some of this week's highlights:
- China offers up to 50% energy subsidies for companies that use home AI chips, to reduce dependence on Nvidia
- Company Clariant Expands Daya Bay plant and increases production of pharmaceutical and specialty chemicals in China
- China dominates 68 % Global electrolyser capacities and powers the green hydrogen supply chain
- Simandou Mine in Guinea worth $23 billion will give China new leverage in the global iron ore prices
Latest version of open source Kimi AI model developed in Beijing outperforms GPT-5 and Sonnet 4.5
Moonshot, a Beijing-based artificial intelligence lab, has released Kimi K2 Thinking, an open source AI model that outperforms OpenAI's GPT-5 and Anthropic's Sonnet 4.5 in several benchmarks, including Humanity's Last Exam, BrowseComp and Seal-0. Trained with approximately 1 trillion parameters, Kimi K2 Thinking integrates long-term planning, adaptive reasoning, and the use of online tools. Training the model, which is available on Hugging Face, cost only $4.6 million, a fraction of the billions of dollars spent by leading U.S. AI labs. This development poses a challenge to proprietary subscription-based AI models and raises questions about the value of expensive AI tools. Some US companies, such as Airbnb, already favour Chinese AI tools for their performance and cost-effectiveness. The launch of Kimi K2 Thinking underscores the growing competitiveness of Chinese AI and its potential to disrupt the global AI market.
Porsche opens strategic R&D center in Shanghai, Volkswagen invests $200 million in in-house development of systems-on-a-chip
Porsche has officially opened its Chinese R&D centre in Shanghai, its first strategic R&D centre outside Germany. Located in Shanghai's Jiading district, the center covers 10,000 square meters and includes specialized workshops and laboratories for human-machine interaction. The center integrates R&D, purchasing and quality control functions with independent decision-making authority to significantly shorten development cycles. Its first product, a China-specific infotainment system, is expected to appear in production models in 2026.
Volkswagen to invest more than $200 million in China into the independent design and development of System-on-Chip (SoC) technology. The move is part of Volkswagen's „In China, for China“ strategy. The chip development will be led by Carizon, a joint venture between software company Volkswagen Cariad and Chinese firm Horizon Robotics. The first SoC is expected to be mass-produced within three to five years and have a computing power of 500 to 700 TOPS per chip. Initially, these chips will be integrated into Chinese Volkswagen models equipped with autonomous driving functions L3 and above. This investment follows Volkswagen's previous commitment to invest more than 100 billion yuan (US$14 billion) in China's intelligent electric vehicle industry ecosystem to strengthen its local research and development capabilities in intelligent driving and accelerate mass production and commercialization.
Swiss company Clariant celebrates expansion of Care Chemicals plant in Daya Bay, strengthening its position in China
Clariant has unveiled its newly expanded facilities in Daya Bay, Guangdong Province, China, marking a significant milestone in its growth strategy in Asia. The CHF 80 million investment has significantly strengthened Clariant's production capacity, particularly in the areas of pharmaceutical excipients and specialty chemicals for personal and home care. The expansion includes a second spray tower for API and pharmaceutical excipients, making Clariant a key supplier in China. In addition, Clariant expanded its polyglycol capacity and added a reactor to its multipurpose plant (MPP) for specialty chemicals. The Daya Bay plant now offers a broader portfolio of chemical products, including high-performance surfactants and sustainable chemical solutions. Separately, Clariant has also formed a joint venture with FUHUA for new flame retardants with a new plant in Leshan, Sichuan province. These strategic moves strengthen Clariant's ability to work closely with local customers and support China's evolving industrial needs.
Starbucks sells majority stake in Chinese business and forms joint venture with China's Boyu Capital
Starbucks has entered into a joint venture agreement with Boyu Capital, a major Chinese investment group, to operate its retail business in China. Under the agreement, Boyu will own a 60% stake in the joint venture, while Starbucks will retain a 40% stake and continue to own and license its brand and intellectual property. The value of Starbucks' retail business in China is estimated to be approximately US$4 billion under the deal, with the total value expected to exceed US$13 billion over the next decade through sales revenue, retained interests and royalties. The partnership aims to accelerate growth in China, one of Starbucks' fastest growing markets, by leveraging Boy's local knowledge and the global Starbucks brand. The joint venture will oversee the current 8,000 Starbucks stores in China, with a shared vision to gradually expand to 20,000 stores.
China offers subsidies of up to 50 % of electricity costs to support local AI chips, and invests in local quartz production
China is offering electricity subsidies of up to 50 % to big tech companies such as ByteDance, Alibaba and Tencent to encourage the use of home AI chips. Local governments in Gansu, Guizhou and Inner Mongolia are targeting data centres that use processors from companies such as Huawei and Cambricon. Chips from foreign suppliers such as Nvidia are excluded because of US export restrictions. Some subsidies are high enough to cover a full year's operating costs, which helps reduce the financial burden of using less energy-efficient local chips. This policy is part of a broader national effort to strengthen China's semiconductor ecosystem and reduce dependence on foreign technology.
In parallel with this China invests 100 million yuan (US$14 million) in Nantong Crystal, which produces synthetic high-purity quartz for semiconductor manufacturing. The investment, led by SDIC Jixin under the Big Fund III, gives the fund a 25% stake and aims to reduce dependence on US imports. The US currently dominates the global supply of high-purity natural quartz through a mine in North Carolina. Quartz is essential for the production of crucibles and photomasks used in chip manufacturing. Although China produces some synthetic quartz, it is still heavily dependent on imports. The move is another step towards securing critical materials for domestic chip production.
Hongqi HS6 sets Guinness World Record for longest distance travelled by a plug-in hybrid SUV
FAW's Hongqi HS6 PHEV has set a Guinness World Record for the longest distance travelled by a plug-in hybrid SUV without refuelling. He achieved this feat by driving a considerable distance on a full charge and a full tank of gas. The car set off from Shangri-La on October 30, drove through cities such as Kunming and finally arrived in Guangzhou on November 3, where it covered 2,327.343 km. The Hongqi HS6 PHEV is equipped with a 1.5T engine with a maximum power output of 110 kW (148 hp) and a maximum torque of 225 Nm. It offers the option of two or four-wheel drive and a top speed of 205 km/h. The car is equipped with lithium-iron-phosphate batteries with capacities of 23.9 kWh and 39.5 kWh, which provide a pure electric range of 152 km, 250 km and 235 km according to CLTC, and a total range of 1,580 km, 1,650 km and 1,460 km, respectively.
China dominates the global supply chain for electrolyzers, a key ingredient for hydrogen production
China now dominates the global electrolyzer market, accounting for 68 percent of installed production capacity, up from just 5 percent six years ago. Thanks to government support and rapid innovation, Chinese firms now produce nearly half of the world's green hydrogen, with an annual electrolyzer production capacity of 20 gigawatts. This far exceeds current demand, sparking price competition and concerns about efficiency and scalability. Still, China's national hydrogen strategy, supported by state-owned enterprises, aims for 50,000 fuel cell vehicles and 100,000 to 200,000 tonnes of low-carbon hydrogen per year by 2025. The expanding market also opens up space for new technologies, such as solid oxide electrolyzers, to meet industry needs and support a more diversified and resilient supply chain.
China's huge African iron ore mine will change the power relations in the sector and transform Guinea's economy
China's growing control over the Simandou iron ore mine in Guinea will change the global iron ore market. Simandou has the world's largest untapped iron ore reserves of at least 3 billion tonnes with an average iron content of over 65 per cent. The $23 billion project, the largest mining project in Africa, is expected to make Guinea the continent's second largest exporter of minerals and metals. Chinese firms now own the majority of the project, with Chinalco also the largest shareholder in Rio Tinto. First delivery is expected by the end of 2025 and could account for 5 percent of global supply. This will strengthen China's influence on iron ore prices, reduce its reliance on foreign mining giants and strengthen its grip on African mining, posing a direct challenge to industry leaders such as BHP and Vale.
China encourages marriages with new policy, couples can now get married in a Shanghai nightclub
China has introduced a nationwide policy that allows couples to marry anywhere in the country, which has led to a significant increase in the number of marriages. This initiative, which aims to boost marriages and birth rates, has led local governments to create unique marriage registration experiences. For example, Nanjing offers ceremonies in a Confucian temple in the spirit of the Ming Dynasty, while Chengdu has a registry office on snowy Mount Xiling. As a result, the number of marriages rose 22.5 % year-on-year to 1.61 million in the third quarter of 2025, which could halt a decade-long decline.
The Civil Affairs Bureau of Shanghai's Huangpu District has partnered with seven-storey music and entertainment complex INS Land to offer a unique marriage certificate experience. Every Friday and Saturday from November 14 to 22, INS Land's nightclub The Oasis will be transformed into a ceremony hall for couples registering to marry in Huangpu District. The initiative aims to boost local nightlife and attract young couples with high purchasing power. The newlyweds will receive exclusive tickets to Shanghai's first-ever indoor show, Tomorrowland, on November 22. The collaboration has garnered considerable attention, with the hashtag „Couples can get married in a Shanghai nightclub“ garnering over 27 million views on Weibo. The partnership challenges traditional preconceptions and positions INS Land as a place to experience both everyday fun and major life events, while highlighting a new trend in marketing through collaboration with public services.
Tomáš Kučera & Yereth Jansen
China-insights.com / gnews.cz - GH
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