‘Chinese companies are born to make money’: AI pioneer Kai-Fu Lee on the 3 biggest myths about China’s AI race efforts

Detailed summary

Former Google China president Kai-Fu Lee says the U.S. misunderstands what drives China's AI companies, from profits to open-source models.

Despite years of U.S. efforts to gain an edge over China in the AI race by restricting its access to the most advanced chips, one AI pioneer says America’s efforts have instead helped create a new generation of Chinese AI models that are quickly catching up to their American counterparts.

Kai-Fu Lee, an AI entrepreneur and former president of Google China, said in a Fortune Daily interview that U.S. export restrictions on the most powerful American chips have shaped Chinese companies’ strategy of building competitive AI models with fewer resources.

In response to these limits, which American companies don’t face, Chinese AI developers have built open-weight models that Lee estimates are now just six to 12 months behind those created by some of the biggest American AI companies, including OpenAI as well as Anthropic—which is reportedly preparing to go public as early as next week.

Yet when Americans think about China and the motivations of Chinese companies, they’re often getting some key things wrong, Lee said. In an interview with Fortune Daily published this week, he detailed three of the biggest misconceptions about China’s AI industry that he says have taken hold in America.

One of the biggest misconceptions about Chinese companies is that they are more focused on winning the AI race and becoming the first to develop artificial general intelligence (AGI)—widely considered the ultimate goal of AI development—than on building profitable businesses. That assumption is incorrect, Lee said.

“Chinese companies are born to make money. That’s the primary purpose,” Lee said. “It’s not so much to win AGI or win the race.”

He compared questions about the profitability of the current wave of Chinese AI developers like DeepSeek with those surrounding other Chinese tech companies like Pinduoduo, Meituan, and ByteDance. These tech giants’ business models were also initially questioned before they became some of China’s biggest companies.

“You may reasonably doubt China’s ability to…

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