Qwen AI orders KFC 🧠 Quantum Memory Breakthrough ⚛️ China Tourism to Top US ✈️

2026-06-08 | subscribe | homepage

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

• Merck opens Shenzhen hub, as global firms localize innovation in China

• China indices tilt toward AI chips, pushing passive funds into new tech leaders

• EV batteries hit 72.2% share, with seven Chinese firms in the global top 10

• Blue-collar wages keep rising, narrowing the gap with white-collar pay

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🚀 Headlines

Chinese AI Large Language Models seize over 50% market, Qwen becomes AI concierge for China’s brands (link, link)

China’s dominance in global LLMs is increasing. According to OpenRouter’s latest rankings, Chinese providers now command 53.5%, an increase of over 11% in just 2 weeks, driven by DeepSeek's 20.9% share and Tencent's 16.5%. The country’s leadership is vividly illustrated in the leaderboard: 4 of the top 5 models are Chinese. DeepSeek holds the top spot with its V4 Flash (3.69T tokens), followed by Hy3 preview (Tencent) at number two (2.94T), MiniMax (2.5T) and Mimo-V2.5 (Xiaomi) at number four (2.19T). DeepSeek's V4 Pro and V3.2 are also present in the top 10. With Alibaba’s Qwen model not listed in the top usage rankings, the final Chinese model market share is likely even higher.

Alibaba’s Qwen app is opening its platform to third‑party AI agents, turning a general‑purpose assistant into a service hub. Luckin Coffee, KFC, Mixue, and China Eastern Airlines are the first to test the feature. Users can now order a two‑person meal under RMB 60 (USD 8.8) from the nearest KFC for pickup or arrange travel, using natural language. The move builds on six months of integrating Alibaba’s own ecosystem, mapping, ride‑hailing, shopping and instant retail. Future agents will remember user preferences, manage trips, and handle repeat purchases. By courting outside brands, Qwen aims to make a single chat interface the gateway to daily transactions. The question is whether consumers will embrace it and how smoothly these agents perform in the real world.

Merck opens innovation hub in Shenzhen in collaboration with local government, Celanese shifts production to China from Korea (link, link)

Merck, the German science and technology giant, has launched a new innovation and collaboration centre in Shenzhen’s Nanshan district, spanning 2,500 square metres. The facility is a joint effort with the Chinese Academy of Sciences and the Shenzhen government, featuring a 1,900‑square‑metre CAS‑run laboratory open to students and researchers. The centre aims to unite policy support, academic ideas, and industrial scale to drive breakthroughs. With 93 years in China, Merck sees the country’s opening‑up moving from a manufacturing‑led phase (1.0) to an innovation‑led one (2.0), focused on talent and ecosystems. The hub will also help local firms align with global standards. It is Merck’s latest bet on the Greater Bay Area as a springboard to world markets.

Celanese, a Fortune 500 American specialty materials firm, is closing its compounding plant in Ulsan, South Korea, and shifting production to Nanjing, Shenzhen, and Silvassa, India. The move is part of its “Grow & Fortify” strategy to optimise its Asian manufacturing network. Production will focus on specialty materials used in automotive, electronics, and consumer goods. By consolidating into larger, more advanced facilities, Celanese hopes to strengthen supply chains for high‑growth Asian markets. The shift underscores a broader trend: multinationals are concentrating production in China and India, betting on their scale and infrastructure to outcompete smaller regional hubs.

China on track to surpass US as world’s leading travel and tourism economy (link)

China welcomed over 68 million international visitors in 2025, a 15.5% jump from the previous year, with spending up 10.5% to USD 135 billion, already above pre‑pandemic levels. The World Travel & Tourism Council predicts China will overtake the US (68 million international tourists in 2025) as the world’s largest travel and tourism economy. Spending is forecast to surge 22.5% to nearly USD 280 billion in 2026. Business travel ranked second globally, at USD 192 billion. Visa‑free stays of up to 30 days for more than 50 countries, better air and rail links, and biometric entry systems are driving the rebound. New cultural attractions and theme parks are diversifying the offering. By 2036, China is expected to generate one in five new tourism jobs worldwide, with the sector nearly doubling to USD 3.5 trillion.

China exchanges overhaul major indices to favor AI and chip stocks (link)

China’s bourses are tilting their benchmark indices decisively towards artificial intelligence and semiconductors. In a semi-annual rebalancing taking effect on June 15th, exchanges are overhauling more than a dozen key gauges, including the CSI 300, SSE 50, and STAR 50, to phase out traditional consumer electronics in favour of computing and memory chipmakers. The shift is already moving markets: between June 1st and 4th, GigaDevice Semiconductor attracted 4 billion yuan (USD 589m) in net institutional inflows, sending its shares up 13.3%. With STAR 50 tracking products already managing 130 billion yuan, and the CSI 300 and SSE 50 pools vastly larger, passive funds will be forced to funnel billions into the newly minted tech darlings. Meanwhile, offshore, the Hang Seng Tech Index added AI firms MiniMax and Zhipu AI on June 8th, underscoring Beijing’s broader push to channel capital toward technological self-reliance

Seven Chinese companies rank among top 10 in global EV battery market commanding 72.2% market share (link)

In the first four months of 2026, global EV battery usage reached 352.7 GWh, up 13.8% from a year earlier. Seven Chinese firms captured 72.2% of the market, a 2.1-percentage-point gain over 2025. CATL, the behemoth, grew installations 19.8% to 141.4 GWh, raising its share to 40.1% (from 38.1%). BYD, in second place, slipped 2.4% to 50 GWh, its share falling to 14.2% from 16.5%. Still, the two Chinese giants together control 54.3% of the market. South Korea’s LGES ranked third with 9.1%, while Japan’s Panasonic saw its share shrink to 3.4%. China’s CALB, Gotion, Eve, Svolt and Sunwoda all posted double‑digit growth, squeezing rivals. The message is clear: the world’s battery supply chain runs through China, and its dominance is only deepening.