Chinese search giant Baidu's stock rocketed 12% in Hong Kong trading after landing a major AI partnership with China Merchants Group, a state-owned conglomerate. The deal focuses on large language models and AI agents for real-world business applications, signaling Beijing's growing confidence in homegrown AI capabilities amid intensifying competition with US tech giants.
Baidu just proved that China's AI race is heating up faster than anyone expected. The Beijing-based search giant's shares exploded 12% in Hong Kong trading Wednesday after announcing a game-changing partnership with China Merchants Group, one of the country's most powerful state-owned enterprises spanning transportation, finance, and real estate.
The market's reaction wasn't just about one deal - it's recognition that Baidu is positioning itself as China's answer to OpenAI and Google in the global AI arms race. According to Baidu's official statement, both companies plan to focus on 'applications of large language models, AI agents and digital employees, vowing to make scalable and sustainable progress in industrial intelligence based on real-life business scenarios.'
This isn't just corporate speak. China Merchants Group operates everything from shipping ports to banks to shopping malls across China, making it the perfect testing ground for Baidu's AI ambitions. If Baidu can crack enterprise AI deployment at this scale, it sends a clear message to international competitors that Chinese AI isn't just catching up - it's ready to compete head-to-head.
The timing couldn't be more strategic. Baidu's Ernie Bot, its flagship large language model, has been gaining traction since receiving public approval from Chinese regulators. But landing a partnership with a state-owned giant like China Merchants Group represents validation at the highest levels of government - crucial for any Chinese tech company with global ambitions.
Investors clearly got the message. Baidu shares had already jumped 9% in overnight US trading before the Hong Kong surge, suggesting institutional money was already positioning for this breakthrough. The company's dominant position in China's search market - think Google's role in the West - gives it unique advantages in training AI models on Chinese language and business practices.
But Baidu isn't just talking big - it's putting serious money behind its AI push. The company just disclosed a 4.4 billion yuan ($56.2 million) offshore bond offering due 2029, specifically earmarked to build its AI war chest. That's real capital for a real fight against both domestic rivals like and international players.
