Following DeepSeek and Manus, Chinese e-commerce giant Alibaba launched its new AI model QwQ-32B on March 6.
By Ada Jain
Just a little over two months into 2025, China has seen multiple AI advancements including the launch of DeepSeek in January — compared to the “Sputnik moment” of the United States’ AI development — highlighting China’s ability to create functional Large Language Models (LLMs) at a lower cost than leading American companies. Following DeepSeek, Manus AI showed that such advancement can be replicated.
Alibaba’s new AI model QwQ-32B
In the same week of Manus’ release, Alibaba is back in the AI race with QwQ-32B, short for Qwen-with-Questions, claiming it is comparable to DeepSeek’s R1. The initial version of QwQ was released back in November 2024.
The latest iteration, QwQ-32B has only 32 billion parameters and yet its performance is claimed to be on par with DeepSeek-R1, which has 671 billion parameters. Alibaba claims the model has achieved a qualitative leap in mathematics, coding, and general capabilities, boosting its Hong Kong shares by 8% and positively impacted the Hang Seng’s China Enterprises Index.
READ: China disrupts AI market with DeepSeek: A better, cheaper version of ChatGPT? (January 27, 2025)
Alibaba, the owner of Chinese e-commerce platforms Taobao and Tmall, first launched its ChatGPT-equivalent service Tongyi Qianwen in 2023. The growing competition between the U.S. and China in AI is not just reshaping bilateral relations but also redefining the global balance of power.
According to Reuters, Manus is also the creation of a Chinese company called Monica. Manus achieved SOTA (State-of-the-Art) results in the GAIA benchmark test, demonstrating performance that surpasses OpenAI’s models of the same level. One key feature of Manus is its asynchronous cloud-based operation, allowing users to close their devices while the AI continues working, providing results upon completion.
The US-China AI race
In 2017, through its Next Generation AI Development Plan, the Chinese Communist Party (CCP) declared AI a cornerstone of its economic transformation strategy, aiming to position AI as a fundamental catalyst for economic change by 2025 and establish China as the global leader in AI by 2030 to challenge and surpass the U.S.
In response, the U.S. imposed a range of trade restrictions, export controls and tariffs on Beijing in an effort to impede China’s AI marathon and protect its economic and defense concerns. With such measures, the U.S. aims to limit China’s access to critical AI-related technologies, particularly advanced semiconductors essential for AI development.
Microsoft, in a January blog, stated: “Given the nature of technology markets and their potential network effects, this race between the U.S. and China for international influence likely will be won by the fastest first mover… This fundamental lesson emerges from the past 20 years of telecommunications equipment exports.
Initially, American and European companies such as Lucent, Alcatel, Ericsson, and Nokia built innovative products that defined international standards. But as Huawei invested in innovation and China’s government subsidized sales of its products, especially across the developing world, adoption of these Chinese products outpaced the competition and became the backbone of numerous countries’ telecommunications networks. This created the technology foundation for what later became an important issue for the Trump Administration in 2020, as it grappled with the presence of Huawei’s 5G products and their implications for national and cybersecurity”
Beijing’s 2015 Made in China strategy had already defined a goal of increasing chip self-reliance from 10% to 70% by 2025 (though that has already proven unrealistic). Later, the target was adjusted to 75% by 2030.
Not long ago, it was thought that China’s Semiconductor Manufacturing International Corporation (SMIC) would need seven years to catch up with today’s western technology leaders. But SMIC and Huawei Technologies Co. have progressed quickly, using American technology to make advanced 7-nanometer chips in 2023.
Foreign players in the AI race pose a threat to the U.S. chip market including chipmaking leaders like Nvidia. The nearly $600 billion loss in Nvidia’s market value in one single day over DeepSeek’s launch is a reflection of those sentiments.
Despite operating with seemingly fewer and less advanced chips, DeepSeek has managed to produce models that rival America’s best, challenging Nvidia chip company’s dominance in AI infrastructure. If DeepSeek’s claims prove true, Nvidia’s stranglehold on the AI hardware market could weaken, forcing a rethink in how AI scaling is approached.
The CHIPS and Science Act 2022, signed under the former Biden Administration is also facing criticism by Trump. According to a report by Council on Foreign Relations, a US-based think tank noted, “Although the country [United States] produced close to 40 percent of the world’s semiconductor supply in 1990, that statistic has slipped to just 12 percent.”
READ: Apple eager to defend Google during antitrust trial (December 26, 2024)
However, three days ago, Trump announced a $100 billion investment from Taiwan Semiconductor Manufacturing Company (TMSC) while China is also dependent on TMSC.
As Japan’s most important ally, the U.S. also figures as a natural partner for the country in revitalizing its semiconductor industry which is booming now. This could benefit other countries like India and South Korea to reduce their dependence on the Chinese market for chips. Like other industries, the pandemic has shown how important it is to have a resilient semiconductor supply chain.
While there is a fork in the road for both nations, if the U.S., the EU, Japan and other western countries want to avoid a complete decoupling, they might have to balance their economic security interests against overly protectionist policies or face higher costs and throttled innovation.