The stewardess walks through the aisles and presents the most cutting-edge products from the company iFlytek, one of the darling jewels of Chinese artificial intelligence (AI). There is a small robot dog that walks between exhibitors, a smart board called to transform education, networks for urban traffic management displayed on an LED wall and an automated arm that never loses Go, the ancient Chinese strategy board game. . The company, founded in 1999, has built its success on a simultaneous interpretation system, widely used in China, which generates a translation almost instantly into more than 80 languages; The application almost allows you to go through life with subtitles. Last year, iFlytek launched Spark Desk, an AI designed to compete with ChatGPT. At this point, the flight attendant dives into demonstrations: through a spoken command, she asks the machine to generate a children's story about a rabbit that travels to space (the animal is “very brave,” encounters aliens); she orders him to recommend where to travel (Paris, “the city of love”); disembodied intelligence changes voice and language, solves mathematical problems, manages emails, creates drawings, summarizes news, generates statements, speeches and poems, translates orders into source code. The company has assured that it already surpasses the GPT model in several fields in Chinese; in English, he manages to match it in dozens of tasks. And this, under the weight of US sanctions and restrictions on cutting-edge technology linked to the semiconductor sector, is perceived as a triumph in Beijing and at the company's headquarters.
iFlytek has its headquarters in Hefei, the capital of Anhui province, which few outside of China will have heard of. But the Government of the Asian giant has rushed to organize a trip to this city of 12.5 million inhabitants, located in eastern China, because it considers it a model to follow in the advancement of the “new productive forces”, the Beijing fashion concept. Launched in 2023 by President Xi Jinping, under his name there are Marxist echoes, but it is projected towards a high-tech future. “The new productive forces mean advanced productivity freed from traditional models of economic growth,” defined the top leader. Although it is still somewhat ethereal, the proposal has set the political guidelines of the recent plenary meeting of the National People's Congress (the Chinese Legislature). Prime Minister Li Qiang has decreed its development and modernization as the priority for 2024. The propaganda machine has started to spin. And, as a consequence, the trip to Hefei has been organized, which is a city in the process of transformation.
As you read in the little booklet that is handed out to the journalist upon arrival, “investment in science and technology represents 17.4% of the city's general public budget expenditure, with an intensity of investment in research and development of 3 .91%”. “According to NatureHefei ranks 13th among global research cities, rising seven places in the last three years [justo detrás de Seúl, y por encima de Los Ángeles]”, the print continues. “The new energy vehicle industry has experienced explosive growth, with production of 746,000 vehicles in 2023, ranking among the top three cities in the country.”
For three days, the normally closed doors of companies linked to new technologies are opened, Beijing's bet for an economy affected by the real estate crisis and in a deceleration phase. A bus transports reporters from one place to another, from morning to night; An assembly line for batteries for electric cars is shown; another, of new energy vehicles; an unmanned flying taxi being tested (it looks like a large drone; they do not allow passengers to board at the moment); a green energy project that heats, among other things, through geothermal energy; a machine vending with wheels that moves by itself on the road… In addition, the regional cadres of the Communist Party sit before the press and receive questions at their discretion without being agreed upon in advance. And, in company headquarters, also a rare thing, Chinese managers expose themselves to microphones without a filter.
—How have United States sanctions affected your business in recent years?
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Dawei Dan, vice president and chief financial officer of iFlytek, remains unfazed by the cloud of recorders and cameras. He answers, first of all, that sales have increased every year. And he exposes one of the reflections that he conveyed to one of his American lawyers shortly after being included in 2019 on the “list of entities” that Washington draws up to sanction companies that may pose a threat to national security: “So, to For ordinary Chinese, the list of entities was like a standard,” he says. “If a Chinese company was included in it, people perceived it as a genuinely high-tech company.”
A few years ago, when the world was different and the commercial and technological war between the two planetary superpowers was barely visible on the horizon, iFlytek came to be considered by the Massachusetts Institute of Technology (MIT) as one of the most promising companies in the world. AI. The American institution announced in 2018 a collaboration with it on several advanced AI projects. But it would be forced to cancel them when iFlytek was blacklisted, due to suspicions of the company's collaboration with the Chinese security apparatus in alleged abuses against the Uyghur minority in Xinjiang. Later, iFlytek would suffer the blow of US restrictions on the use of more advanced chips, key to the development of AI. In recent times it has partnered for its development with Huawei, another company sanctioned by Washington.
The Hefei model
The “Hefei model” is known in China. Here, the local government has invested since 2008 in LCD display, chip and electric vehicle companies almost like a financial fund would. It has a university renowned for scientific careers, they have trained clusters (sectors) linked to emerging industries. It is also a microcosm where the great geopolitical struggle of the 21st century can be observed at the factory. And it allows us to take the pulse of Beijing's vision in that battle. “The US government's containment of our technology and research definitely plays a negative role,” responds Zhang Yun, vice director of the provincial Development and Reform Commission, to a question from US National Public Radio, during an appearance in Hefei. “But we will follow the Government guidelines […] to address the problems of international trade.
Many of the issues raised unfold along similar paths: they touch on risk reduction policy (the de-risking) of the European Commission; the investigation launched by Brussels into the Chinese electric car sector; the overcapacity of the technological industries linked to the energy transition, which could flood – as Washington and European capitals fear – Western markets with Chinese products, aggravating the already battered trade balance.
Janet Yellen, the US Treasury Secretary, who met this Sunday with the Chinese Prime Minister, Li Qiang, in Beijing, has turned the threat of excess Chinese production of electric vehicles, solar panels and other clean energy products into one of the central themes of his second visit to China in nine months.
“There is a global energy transformation underway, and each country has its own policies to support the necessary industries,” replies Wang Qisui, senior vice president of the battery manufacturer Gotion High Tech. He assures that Spain is no exception to this aid. “I want to emphasize that China has already moved beyond the policy-supporting phase and has fully moved into a market-driven phase.” In the opinion of this company's executives, there should be no “panic” about overcapacity. “There is still a shortage of high-quality products on the market.”
Gotion is one of the Chinese giants in battery production. The Hefei plant has been built in coordination with Volkswagen (an investor in the company) for the German brand's electric models. Taking photographs is not allowed inside the ship. The robotization of the process reaches 95%. They are still on a slow burn, in the growth phase. They are expected to produce up to 80,000 cells per day, which are the plates the size of a chocolate bar that make up the batteries (about 200 cells per car), according to Konstantin Castan, the person in charge of the plant. He has worked for years at Volkswagen, dedicated to combustion engines. Now, from Gotion, he has a vision of what is happening here and in the rest of the world. The Asian giant, he concedes, has become the place to be to produce batteries. They lead the sector. “Everybody knows”.
—Do you understand the fear of the European Union?
—I think the Europeans need to accelerate. Also the United States. Now it is a competitive market.
Volkswagen landed in the city in 2017, through a joint venture with a Chinese company. It has opened one of its factories and a research center, and has different suppliers in the vicinity. The cars produced in Hefei will be aimed at the Chinese market, and also at Europe. One of them is the Cupra Tavascan, an SUV designed and developed at the Seat plant in Martorell (Barcelona). The visit, perfectly choreographed by the Government, also takes us to foreign companies established in Hefei, like this one. It is a way of reaffirming another of Beijing's strong ideas this year: its commitment to opening up to international investment, in the face of those who denounce an increasingly complicated business environment, due to the People's Republic's emphasis on national security, its pursuit of technological self-sufficiency and mass production.
The EU and its businessmen in the Asian giant have been critical of the current situation. “It's like watching a traffic accident unfold in slow motion,” said Jens Esklund, president of the EU Chamber of Commerce in China, a few weeks ago during the presentation of the report. Riskful Thinking: Navigating the politics of Economic Security Risk Thinking: Navigating the Policy of Economic Security. The coup has not yet occurred, he added, but action is urgently needed. “We need to find a balance”.
The Volkswagen factory is an open and aseptic space with hardly any trace of human life. Robotization reaches 96%. They have 1,129 Kuka robots, mechanical arms of enormous strength and millimeter precision that were German property in another era. In 2016, this company was acquired by Midea, a Chinese appliance giant, for 4.4 billion euros. It was one of the leading companies in Europe, and one of the main manufacturers of industrial robots in the world. Its acquisition triggered alarms in the EU about the degree of China's penetration in strategic sectors. Watching them work, like titanic spiders, raising sparks on the sheet metal of a future electric car from a German company that will be sent to Europe, is hypnotic. Behind each movement of this technological dance one senses the very complex skein of digitalization, globalization and geopolitics.
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