China's AI chip push amid slowing growth

China's National Bureau of Statistics reported that the country's economy grew by 4.3% in the second quarter of 2026, the weakest expansion in more than three decades and below the official target of 4.5‑5%. Officials cited external instability and a widening gap between supply and domestic demand as key factors.

At the same time, Chinese firms are intensifying efforts to develop artificial‑intelligence processors and advance chip‑packaging technology to reduce reliance on U.S. semiconductor supplies. Companies such as Huawei, Alibaba, Baidu, CXMT and DeepSeek are investing billions of dollars in design, production and data‑center infrastructure. Analysts note that U.S. export controls have inadvertently accelerated China's domestic chip industry, with Chinese semiconductor stocks surging and the government planning further multi‑hundred‑billion‑dollar investments.

The combined economic slowdown and the strategic push for AI‑chip self‑sufficiency highlight the growing geopolitical and commercial stakes of the technology race between China and the United States.