The coders’ ‘village’ at the heart of China’s AI frenzy

HANGZHOU – It was a sunny Saturday afternoon, and dozens of people sat on the grass around a backyard stage where aspiring founders of tech start-ups talked about their ideas.

People in the crowd were slouched over laptops, vaping and drinking strawberry frappuccinos. A drone buzzed overhead. Inside the house, investors took pitches in the kitchen.

It looked like Silicon Valley, but it was Liangzhu, a quiet suburb in the southern Chinese city of Hangzhou, which is a hot spot for entrepreneurs and tech talent lured by low rents and proximity to tech companies such as Alibaba and DeepSeek.

“People come here to explore their own possibilities,” said Mr Felix Tao, 36, a former Facebook and Alibaba employee who hosted the event.

Virtually all of those possibilities involve artificial intelligence (AI). As China faces off with the US over tech primacy, Hangzhou has become the centre of China’s AI frenzy.

A decade ago, the provincial and local governments started offering subsidies and tax breaks to new companies in Hangzhou, a policy that has helped incubate hundreds of start-ups. On weekends, people fly in from Beijing, Shanghai and Shenzhen to hire programmers.

Lately, many of them have ended up in Mr Tao’s backyard. He helped found an AI research lab at Alibaba before leaving to start his own company, Mindverse, in 2022.

Now Mr Tao’s home is a hub for coders who have settled in Liangzhu, many in their 20s and 30s. They call themselves “villagers”, writing code in coffee shops during the day and gaming together at night, hoping to harness AI to create their own companies.

Hangzhou has already birthed tech powerhouses, not only Alibaba and DeepSeek, but also NetEase and Hikvision.

In January,

DeepSeek shook the tech world

when it released an AI system that it said it had made for a small fraction of the cost that Silicon Valley companies had spent on their own.

Since then, systems made by DeepSeek and Alibaba have ranked among the top-performing open-source AI models in the world, meaning they are available for anyone to build on. Graduates from Hangzhou’s Zhejiang University, where DeepSeek’s founder studied, have become sought-after employees at Chinese tech companies.

Chinese media closely followed the poaching of a core member of DeepSeek’s team by electronics company Xiaomi. In Liangzhu, many engineers said they were killing time until they could create their own start-ups, waiting out non-compete agreements they had signed at bigger companies like ByteDance.

DeepSeek is one of six AI and robotics start-ups from the city that Chinese media calls the “six tigers of Hangzhou”.

In 2024, one of the six, Game Science, released China’s first big-budget video game to become a global hit, Black Myth: Wukong. Another firm, Unitree, grabbed public attention in January when its robots danced onstage during the Chinese state broadcaster’s televised annual spring gala.

This spring, Mr Zhu Mingming, the founder of Rokid, a Hangzhou start-up that makes AI-enabled eyeglasses, invited the six founders to his home for dinner.

It was the first time they had all met in person, Mr Zhu said. Like him, most of the six had studied at Zhejiang University or worked at Alibaba.

“When we started, we were small fish,” Mr Zhu said. “But even then, the government helped out.” He said government officials helped him connect with Rokid’s earliest investors, including Alibaba founder Jack Ma.

But some said government support for Hangzhou’s tech scene had scared off some investors. Several company founders, who asked not to be named so they could discuss sensitive topics, said it was difficult for them to attract funds from foreign venture capital firms, frustrating their ambitions to grow outside of China.

The nightmare situation, they said, would be to end up like ByteDance, the Chinese parent of TikTok, whose executives have been

questioned before the US Congress

about the company’s ties to the Chinese government.

Founders described choosing between two paths for their companies’ growth: Take government funding and tailor their product to the Chinese market, or raise enough money on their own to set up offices in a country like Singapore to pitch to foreign investors. For most, the first was the only feasible option.

Another uncertainty is access to the advanced computer chips that power AI systems. Washington has spent years trying to prevent Chinese companies from buying these chips, and Chinese companies such as Huawei and Semiconductor Manufacturing International Corp are racing to produce their own.

So far, the Chinese-made chips work well enough to help companies like ByteDance provide some of their AI services in China. Many Chinese companies have created stockpiles of Nvidia chips despite Washington’s controls. But it is not clear how long that supply will last, or how quickly China’s chipmakers can catch up to their American counterparts.

A seemingly inescapable concept in Hangzhou is “agentic AI”, the idea that an AI system could be directed to act on its own.

Mr Roy Qian, another Hangzhou entrepreneur, has developed an AI-enabled digital companion for young people that responds to their moods based on information from the Myers-Briggs personality test, which is popular among young people in China.

His team programmed his app, All Time, using publicly available AI systems, including those made by DeepSeek, Alibaba and Anthropic, an American start-up.

Mindverse, the company co-founded by Mr Tao, who hosted the backyard event, is working on a product that would use AI to help people manage their lives. It can send supportive daily e-mails to colleagues, for example, or regular text messages to parents reminiscing about family vacations.

Mr Tao said: “I don’t want the AI to just handle tasks, but to actually give you more mental space so you can unplug.”

Many in the crowd in his backyard said the atmosphere in Hangzhou – set on the banks of a lake that was a muse to generations of Chinese poets and painters – fuelled their creativity.

Mr Lin Yuanlin started his company Zeabur while studying at Zhejiang University. The firm provides back-end systems to people who are making apps and websites by “vibecoding”, or using AI tools to programme without deep software knowledge.

Liangzhu is the perfect testing ground for his product, Mr Lin said. He can lean over to someone in a coffee shop or wander into a neighbour’s living room and learn what kind of support they need for their start-ups. Mr Lin found himself going to Liangzhu so often that he moved there.

Liangzhu villagers have been hosting film nights, and they recently gathered to watch The Matrix.

Afterwards, they decided that the movie should be required viewing, Mr Lin said. Its theme – people finding their way out of a vast system-controlling society – provided spot-on inspiration.

Aspiring founders in Liangzhu, even those who did not go to top universities, believe they could start the next world-changing tech company, Mr Tao said.

“Many of them are super brave to make a choice to explore their own way, because in China, that is not the common way to live your life.” NYTIMES