China’s National People’s Congress (NPC) isn’t Congress in the American sense; it’s a highly scripted, once-a-year policy showcase where nearly 3,000 delegates rubber-stamp decisions already made by Communist Party leadership. It meets every March in Beijing, and while it rarely makes headlines, this year was different—AI stole the show.

DeepSeek, the Chinese startup that claims to have built a cutting-edge AI model at a fraction of the usual cost, had the NPC’s attention. Investors took notice, too. The MSCI China Index jumped 4.3% during the NPC, its best showing since 2018. According to Bloomberg, local officials scrambled to position their cities as AI hubs. Lawmakers proposed AI-friendly policies, from boosting research and education to refining regulations. Some even pushed for better funding access for smaller tech firms.

In addition to DeepSeek, this weekend’s superstar startup, Manus AI, made waves. Apparently, the Chinese government is all in. The National Development and Reform Commission announced a 1 trillion yuan ($138 billion) AI and quantum tech fund; Beijing, Shenzhen, and Guangdong all rolled out their own AI investment plans.

The question isn’t whether China can build world-class AI; they have the talent. (There are nearly as many honors students in China as there are students in America.) The real question: Is this just the next chapter in our enduring AI arms race, or is it the start of something even bigger?

More By This Author: