China Decode: The AI Race Just Took a Stunning Turn

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**Alice Han** (1:36)
90 percent of humanoid robots produced by China, 60 percent of robotic installations produced by China. And what I'm most hearing is that it's actually really easy, relatively speaking, for Chinese industrial companies, especially in the automobile and the smartphone space to pivot into robotics. Now, I've heard that BYD has a secret humanoid robot project that it's working on.
Welcome to China Decode. I'm Alice Han.

**James Kynge** (2:06)
And I'm James King.

**Alice Han** (2:07)
In today's episode of China Decode, we're discussing the cutting-edge AI technology taking over robotics, President Xi's trip to North Korea, and the cutthroat world of food delivery apps in China. That's all coming up, but first, let's do a quick check-in with how the Chinese markets are starting the week. On Monday, markets saw a broad rally across all major indices. The CSI index was up 1.45 percent, the SSE composite index was up 0.43 percent, and the Shenzhen component was up 1.63 percent. This comes after a tech-driven sell-off on Friday.
All right, let's get into it. In the latest face-off in the growing global AI race, China might be about to take yet another victory. The news comes out of Robotics, a major frontier in artificial intelligence, and the competition between Chinese and American firms in building the brains for next-generation robots is well front and center. A Chinese robotic startup called Spirit AI claims its foundation model for embodied intelligence called Spirit V16 has become the first Chinese model to top a major global leaderboard, Beading and NVIDIA. That puts it squarely up against similar models being built in the United States. James, we've spent a lot of time talking about LLMs. I've long been of the opinion that just to focus on generative AI and LLMs is way too short-sighted. I think the AI race is multimodal and China is proof of that. In the sense that one starting statistic from my perspective is that while the US spends 12 times more on compute, this from the private sector versus the Chinese private sector, China is spending 42 percent more on the robotic sector than the United States. Apparently, this gap is going to widen.
This is two very different, I would say, modalities. But I think that the robotics race, especially the AI component of it, is a really exciting one, and it's where China actually has distinct advantages, not just in the hardware, but potentially the software too.

**James Kynge** (4:18)
Absolutely, Alice. I think what we're really talking about here is physical AI, and as you've just said, this is a very new area.
Physical AI is using AI to do physical tasks.
But this is very different from, let's say, a machine in a factory that's doing the same thing over and over again. This is a machine that can perceive and understand its environment and interact with the physical world. In other words, these are machines, normally robots, that think before they act. I think that's the key definition. They basically think in the way that robots actually think, and then they act on that thought to fulfill a task. So for instance, it would be something like asking a humanoid robot to do a series of tasks, or getting an autonomous vehicle to drive for you. That would be an example of physical AI, or using a robotic arm to do something, but not the same thing over and over again. Using the robotic arm to do something that you sort of instructed to do and then it immediately thinks how to do it and then executes. I saw this recently at a robot expo in Beijing, and there was a fascinating sort of demonstration there of a humanoid robot that was standing in a pharmacy, and all of the people were coming up to the counter of the pharmacy and saying, I would like this medicine or that medicine, and the robot would be looking straight at them, and it would listen to the command. It would then spin around on its axis and choose from hundreds of different medicines behind it, find the ibuprofen, pick it up, turn around, and give it to the customer. That is, in a nutshell, that is physical AI.