The report comes from CNBC's China Connect Newsletter this week, which brings you insights and analysis on promoting the world's second largest economy. Every week, we explore China’s biggest business story, reduce the shift to the market and help you set it up in the coming week. Like what you saw? You can subscribe here.

Tariffs remind American companies how much they still rely on Chinese factories.

Now, resisting buying from China will become more difficult as more factories in these plants, such as artificial intelligence and robotics, cut costs and quality control. In her first extensive technology trend report since 2019, venture capitalist Mary Meeker highlighted the potential of AI to transform into manufacturing in her first report on the weekend.

CEO Oshri Cohen said Chinese companies were eager to adopt new technologies, while startup Cybord believes its AI-powered quality control tools will find big buyers in China this year.

Instead of using generative AI, Cybord applies supervised machine learning to identify flaws based on patterns in its manufacturing component database, Cohen said. These defects include fake, defective and tampered components. Last month, the startup announced it would integrate into the industrial giant's factory management system Siemens.

Cohen, formerly vice president of supply chains at NVIDIA, expects geopolitical pressure to diversify supply chains and make Chinese factories more competitive. "The factory will return to China, but compared to the past decade, China will "become a high-quality statement."

Stanford University said that China installed robots seven times that of robots in 2023, accounting for more than half of the world's industrial robots installed.

Nevertheless, the level of automation is unbalanced, with some industries (such as cars) requiring fewer labor workers, and production lines such as clothing still rely heavily on manually operated machines.

Over the next five years, Beijing has ambitious plans to further digitize the country's factories.

China released a "action plan" for digital supply chain development in 2030 last month. It calls for the use of AI, blockchain and other technologies in manufacturing and agriculture, including plans to cultivate 100 digital supply chain leaders.

The country already has a camp.

"Chinese companies are the real power in the world when you consider digital transformation and the use of automated digital analytics," said Karel Eloot, senior partner at McKinsey in Shenzhen.

He noted that since the World Economic Forum and McKinsey began tracking factory digitization in 2018, the number of sample use cases has climbed to 189, with 41% of them located in China and spread across multiple industries. They include Chinese electrical manufacturer MIDEA and China operations of GE Healthcare, Astrazeneca and Schneider Electric.

The report notes that some companies, such as the Hisense-Hitachi joint venture in Qingdao, China, are using Generative AI to reduce the time spent on inefficient meetings and instead turn the next worker into an immediate problem.

Eloot said the company is looking for ways to improve productivity, from supply chains to consumers, noting that “the gap between wealthy people and North is increasingly different” in terms of AI manufacturing integration.

"China has a very strong competitive power," he said. "I would say companies compete with each other in a very cruel way."

The cruel nature of the competition has been fully demonstrated in recent weeks Bitwhich has dominated the market and has been actively expanding around the world.

In its 2024 annual report, Bider noted that it has begun deploying automated mobile logistics robots for manufacturing. Automakers also invest in robotics companies.

“From a cost perspective, supply chains have become so efficient and competitive…if you want to compete, you have to be in China,” Jens Eskelund, president of the European Chamber of Commerce in Beijing last week told reporters.

He said he was concerned that China's plans to reduce self-sufficiency could trigger a reaction from its major trading partners. “If you still want to have a viable relationship with your major trading partners, you also need to commit to the actual transaction,” he said.

Other car companies, such as Nio and Geely, have also made them Their main focus of development.

Zhou Zipeng, executive general manager of the CICC Institute, said AI applications could even prompt the automotive industry to reorganize. Zhou said that while challenges remain in data collection and storage, AI has been used in China's lithium battery material development and chip manufacturing.

In terms of software, Chinese technology giant Alibaba announced last week that it had established a strategic partnership with business management systems giant SAP. The extensive protocols initially focused on China include Alibaba Cloud support for SAP's supply chain management system, and plans to test the combination of Alibaba's QWEN AI model with SAP's applications in China.

Glenn Hou, founding partner of Insights Consultancy in China, said that while it was still early, the generated AI could quickly create a large number of design solutions, reducing product release time. He added that the generated AI can increase the efficiency of device maintenance and help companies absorb technical expertise faster.

“Looking ahead next year, the integration of AI and manufacturing is expected to accelerate,” Hou said in Chinese, translated by CNBC. He pointed out how the combination of data, algorithms and use cases is a new competitive barrier to business entry.

HKEX CEO Bonnie Chan talks about how the Hong Kong market navigates volatility in the global market and the factors in the listing of Chinese mainland companies and global companies in the city.

Han Wang, chief financial officer of China’s social and online content community Zhihu, discussed the company’s profitability, growth strategy, and the driving force behind AI integration.

Eswar Prasad of Cornell University said global trade will not fall, but will become more fragmented, especially when the United States and China fail to find common ground.

Trade talks between the United States and China are in trouble. Washington said U.S. President Donald Trump and Chinese President Xi Jinping may make speeches this week, but the Chinese Foreign Ministry did not provide any information. This comes after both countries openly blame another for violating a trade truce in mid-May.

Chinese Defense Minister Dong Jun Jun skipped Singapore's Shangri-La dialogue. This is the first absence since 2019, although Chinese officials participated in the lower officials. U.S. Defense Secretary Pete Hegseth summoned China's absence while urging summit participants to force Beijing's military pressure on the region.

LeapMotor and Huawei-Atimate Aito delivered the record in May. Although the industry price war brought about by market giant Byd has exacerbated the industry's price war, new energy vehicle brands last month offered more than 40,000 vehicles last month. During the long weekend Dragon Boat Festival, official data showed that travel travel increased by 5.7%, and related spending increased by 5.9% from a year ago.

As Asia-Pacific market tracks a technology rally led by chip manufacturers Nvidia.

The CSI 300 in mainland China increased by 0.5%, while Hong Kong's Hang Seng index (including major Chinese companies) rose by 0.56% as of 2.15 pm local time.

The benchmark 10-year yield on Chinese government bonds was 1.704%.

Among the green guards vs. green backpacks at 7.190, the sea RMB both fell by 0.04% in the green guard rate.

- Amala Balakrishner

June 9: Trade data, CPI and PPI May