China is losing the LLM race but it can still win in AI, ex-Tencent AI lead says

But in late 2024, Liu’s departure from Tencent after more than eight years sparked immediate speculation as to why he left. Hunyuan was introduced only a year earlier – so why did Liu suddenly quit one of China’s most deep-pocketed tech companies so early into the AI boom?

Speaking to the South China Morning Post, the term Liu repeatedly used was fanshi, or “paradigm”. Commonly used among AI researchers, the term refers to a technical breakthrough that defines a new era of AI innovations, notable examples being OpenAI’s ChatGPT and Anthropic’s Claude Code.

For Liu, the lack of fanshi innovations is the biggest Achilles’ heel of China’s AI industry. “Chinese companies are either copying DeepSeek or US companies at the core technical level,” he said, referring specifically to the development of large language models (LLM), the centrepiece of the global AI race.

Since DeepSeek’s breakout moment early last year, there has been recurring speculation about whether Chinese LLMs have caught up with their US counterparts. However, narrowing public benchmark scores do not accurately reflect a gap in real-world usefulness, said Liu.

While US industry leaders have continued to push the technical frontier, notably with the launch of Anthropic’s Mythos model in April, domestic Chinese leader DeepSeek failed to reach the same heights it previously did with its latest V4 model.