DeepSeek Opens AI Engine 🧠 Citi Wins China Licence 🏦 74,000-Ton Research Island Planned 🌊

October 26, 2026 | subscribe | homepage

Welcome back to China Insights Weekly. Here are some of the key highlights for this week’s edition:

• Pharma licensing hits 58% of global deal value in the first three quarters
• Battery makers announce USD 12 billion in overseas deals as factory investment spreads beyond China
• Memory-chip rivals upgrade, with Samsung and SK hynix responding to YMTC competition
• Specialty chemicals gain ground, with China forecast to hold nearly a third of global total by 2030

Last week’s Visa poll drew two votes: one for a challenge within five years, one for niche markets.

Remember to follow us on LinkedIn, X or Facebook.

🚀 Headlines

Citi wins securities license, Daiwa and Mizuho to launch fully owned securities operations (link, link)

China is accelerating its financial opening, granting Citi approval on October 23 to establish a wholly owned securities unit in Shanghai with registered capital of 1.2 billion yuan (USD 178.6 million), making it the seventh foreign-owned brokerage alongside J.P. Morgan, Goldman Sachs, and UBS. Days earlier, Daiwa Securities and Mizuho Financial Group cleared final regulatory hurdles to launch fully owned securities operations, with Daiwa buying out its local joint-venture partners for USD 100 million. More major global firms like Citadel Securities from the US are awaiting approval.

DeepSeek dials up pressure on OpenAI and Anthropic with open-source inference tool (link)

DeepSeek open-sourced its proprietary inference framework, DeepInfer, on October 20, intensifying pressure on Western rivals. Built initially for its V4.1 Flash model, the tool leverages speculative decoding to slash compute costs. The economics are stark: DeepSeek’s official V4.1 Flash API rates are USD 0.30 per million uncached input tokens and USD 1.20 per million output tokens at peak times, with off-peak rates of USD 0.15 and USD 0.60, versus OpenAI’s standard GPT-6 Astra rates of USD 10 and USD 50. As enterprises tighten budgets, Accenture recently capped employee Claude spending at USD 29 monthly; DeepSeek’s move offers a potent alternative. With McKinsey forecasting inference will dominate data-center compute by 2030, open-sourcing the inference engine directly challenges the premium pricing of closed models, even as the Trump administration bans DeepSeek for federal civilian agencies.

China’s share of global pharma licensing deal value surged to 58% in the first three quarters of 2026 (link)

China's drugmakers are rapidly shifting from generic manufacturing to global innovation. Foreign pharma giants are now paying premium prices to access Chinese R&D, highlighted by Roche's deal potentially worth over USD 15 billion with Hansoh Pharma for antibody-drug conjugates. According to Locust Walk, China's share of global pharma licensing deal value by sellers' location surged from roughly 13% in 2023 to 58% in the first three quarters of 2026. This licensing model allows firms like Hengrui Pharma to fund future research without bearing the full risks of global development. While complex biologics manufacturing and geopolitical sensitivities pose challenges, Chinese pharma is successfully capturing more of the global value generated by its discoveries.

By 2030, China is expected to capture almost one-third of the global specialty chemicals market (link)

China is consolidating its lead in global chemicals. According to Bain, the country now accounts for more than 45% of global output and roughly two-thirds of recent ethylene additions. Its carbon fibre imports have fallen from about 87% of supply in 2015 to under 40% last year, as domestic producers scale up mid-range grades. Chinese firms now outspend US and European peers on chemicals R&D, and are expected to hold almost a third of the global specialty chemicals market by 2030. This shift is part of a broader structural reset: Bain estimates 7.5% of global olefin capacity, or 35 million tonnes, must close by 2030, with Europe and Northeast Asia most exposed.

China’s battery makers race to invest abroad to avoid Western barriers (link)

Chinese battery leaders are strategically expanding their global footprint, announcing $12bn in overseas deals this year and nearly $90bn since 2023. Capitalizing on unmatched manufacturing efficiency, building gigafactories at a third of European costs and three times faster, firms like CATL and Sungrow are establishing robust local supply chains across Europe (USD 31.6 billion) and Southeast Asia (USD 35.2 billion) to seamlessly meet new localization rules and capture surging AI data center demand. Despite rising Western protectionism, Chinese manufacturers are cementing their technological and market leadership. Wood Mackenzie forecasts that Chinese groups will continue to command over 80% of global component production capacity through 2034, underscoring their indispensable role in the global energy transition.