China Launches US$8.2 Billion AI Fund Amid US Trade Controls

China has recently established a new artificial intelligence (AI) investment fund with an initial capital of 60 billion yuan (US$8.2 billion). This move comes shortly after the United States tightened export controls for advanced semiconductors and added more Chinese companies to its trade blacklist. The National AI Industry Investment Fund, a joint venture of state-backed Guozhi Investment (Shanghai) Private Equity Fund Management and the China Integrated Circuit Industry Investment Fund (CICF) Phase III, was incorporated in Shanghai last Friday, as reported by local business registry service Qcc.com.

The fund's scope of business includes general equity investment and asset management, reflecting Beijing's commitment to advancing the nation's AI capabilities despite increased tech restrictions imposed by Washington. China has prioritised AI as a national focus amid the escalating tech war between the world's two largest economies. With the Chinese government's strong support through favourable policies and mandates, the country's AI market is projected to reach 5.6 trillion yuan by 2030, according to China International Capital Corp, a state-backed investment vehicle.

In response to the US Department of Commerce adding over two dozen Chinese entities to its Entity List for allegedly supporting Beijing's military advancements, Chinese companies like Zhipu AI and Sophgo have been affected. Zhipu AI expressed strong disagreement with the US sanctions, citing a lack of factual basis, while Sophgo denied any wrongdoing. The outgoing Biden administration also introduced new restrictions limiting AI chip and technology exports to most countries and completely blocking such exports to China, Russia, Iran, and North Korea.

California-based Nvidia, a prominent player in advanced graphics processing units for AI model training, criticised the broad rules as a "sweeping overreach" that would restrict technology already widely available in mainstream gaming PCs and consumer hardware. The China Integrated Circuit Industry Investment Fund (CICF) Phase III, also known as the "Big Fund," was launched in May last year, marking the country's largest-ever chip investment fund. The fund's 19 equity investors were led by China's Ministry of Finance, state-owned China Development Bank Capital, and state-asset manager Shanghai Guosheng Group.

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• China establishes $8.2 billion AI investment fund amidst US trade controls.

• The fund aims to boost China's AI capabilities despite increased tech restrictions from the US.

• Chinese companies like Zhipu AI and Sophgo face challenges after being added to the US Entity List.

Source: SCMP