‘Now is our time’: Despite tariffs, China’s Silicon Valley is ready to make its mark on the world
The city of Hangzhou is one of the most historic and beautiful in China.
But this ancient place now has the most modern of reputations, as China’s ‘Silicon Valley’.
A vibrant hub for entrepreneurs and high-tech start-ups, Hangzhou is home to headline-grabbing success stories like Alibaba and breakthrough AI firm, DeepSeek.
In the context of escalating competition with America, the world is increasingly paying attention.
Those who are part of the tech scene here brim with enthusiasm.
Hangzhou, in Zhejiang province, has been labelled ‘China’s Silicon Valley’
Over coffee, in an ultra-modern city complex, they describe how exciting this moment feels, not just for their businesses, but for China too.
“We have the talents, we have the environment, and we have the full supply chain, even though we have a challenging environment,” says Grace Zheng, who has worked at the AI glasses creator Looktech since its inception.
“It’s our time.”
The others laugh and nod. “I agree with it,” says Jia Dou, whose company Wuli Coffee, creates high-tech, automated commercial coffee machines. “And I think it’s our time to show and battle with other foreign countries.”
Grace Zheng is enthusiastic about the future for China
And is that a battle China could now win, I ask? “Of course,” comes the answer.
They tell stories of how estate agents in Hangzhou dedicated hours of their time for free to find the perfect laboratory space, and how the local government showered them in grants and incentives; so hungry is this city for tech success.
These entrepreneurs in Hangzhou say the city supports a vibrant hub of tech start-ups
“Hangzhou says we’ll provide the sunshine and the water, you go ahead and grow,” explains Zhang Jie.
She is the convenor of this group. An entrepreneur herself and the founder of a thriving ‘incubator’ for start-ups, she has invested in and mentored all the others around the table.
She is passionate, energetic and has a second-to-none understanding of what makes Hangzhou and China’s tech scene so successful.
“In China, we have more than 10 million university and college students graduating. Then we’re talking about at least five to six million engineers with college education background,” she says.
“So with such a large group of young and intelligent people with a good environment, a favourable environment for entrepreneurship, I’m sure there will be even greater companies coming in the future.”
Zhang Jie helps start-ups in Hangzhou, where she says entrepreneurship is able to thrive
Indeed, a combination of light-touch local regulation, (unusual in China more broadly), coupled with one of the most business-oriented and free-thinking universities in the country, Zhejiang University, is viewed by many as the secret sauce in Hangzhou.
Zhang says she has had more young people approach her with business ideas in the last quarter than at any other time before, and she is full of optimism about the current wave.
“They are already companies [in China that will] probably be greater than Apple, right?” She laughs.
And she may well be right.
But there is one name in particular, born and bred in Hangzhou, that has captured the world’s attention in recent months.
When DeepSeek unveiled its latest open-source AI model earlier this year, it stunned the world, claiming to be as good as western competitors for a fraction of the price.
The Hangzhou HQ of DeepSeek, which has stunned the world with its recent AI advances
Many are now talking about the ‘DeepSeek moment’, a moment that turbocharged confidence within China and made the rest of the world sit up and take notice.
Indeed, successes like this are being lauded by China’s leaders. In February, tech bosses, including DeepSeek’s founder Liang Wenfeng, were invited to a symposium with Xi Jinping and his top team.
Photo ops and handshakes with the president, an abrupt change from the crackdown they faced just a few years ago. In fact, tech is now being positioned as a key pillar in China’s future economy, repeatedly highlighted in official communications.
But what is seen as inspiring innovation in China is viewed by the United States as a threat.
Donald Trump is moving to ramp up restrictions, including more export controls on chips being sold to China.
Read more from Sky News:
What is DeepSeek?
China raises tariffs on US
Businesses in Hangzhou are of course aware of the trade war unfolding around them, many who export to America will take a significant hit, but most think they can cope.
Dr Song Ning is one of them. He proudly shows us his factory, which is integrated with the lab work and R&D side of his business.
His company, Diagens, uses AI to massively speed up medical diagnostics, cutting the time taken to run a chromosomal screening from 30 days to 4. He is also working on a chatbot called WiseDiag which has more advanced medical understanding and can be used by patients.
This lab at the firm Diagens is using AI to speed up medical diagnostics
While they are actively seeking business in over 35 foreign countries, for now, the pursuit of American customers is on pause.
“Competition is a good thing… it makes us all stronger,” he says.
Dr Song Ning believes Donald Trump’s policies will not be able to impede innovation
“I do not think by limiting the scientific and technological progress of China or other countries, Trump will be able to achieve his goal, I think it is a false premise.
“Information is so developed now, each country has very smart people, it will only force us to have more tech innovation.”
While individuals remain defiant, the trade war will still leave a big hole in China’s economy. Tech firms, however advanced, can’t yet fill that gap.
But the innovation here is rapid, and there is no doubt, it will leave its mark on the world.
Donald Trump has said the US “has to have” Greenland, claiming it needs the territory for national security.
It comes after the US president appointed Louisiana’s governor Jeff Landry as special envoy to Greenland, saying he would “lead the charge” in advocating the semi-autonomous part of Denmark to become part of the United States.
“Jeff understands how essential Greenland is to our national security,” Mr Trump said.
Donald Trump has appointed Jeff Landry as special envoy to Greenland. Pic: Reuters
“We need Greenland for national security, not for minerals… If you take a look at Greenland, you look up and down the coast, you have Russian and Chinese ships all over the place.
“We need it for national security. We have to have it… Greenland is a big deal.”
Why does Trump want Greenland?
Trump said Greenland is a ‘big deal’. Pic: Reuters
Danish Prime Minister Mette Frederiksen and Greenland’s Prime Minister Jens-Frederik Nielsen said in a joint statement that Greenland belongs to Greenlanders, stressing the US will not take it over.
“You cannot annex another country. Not even with an argument about international security,” they said.
The country has already summoned the US ambassador in protest, with its foreign minister saying the move shows the US is still interested in the vast Danish territory.
Mr Trump has repeatedly called for the US to take over the mineral rich and strategically located Arctic island, since winning his second term, and has not ruled out using military force to achieve it.
Denmark’s foreign minister Lars Løkke Rasmussen said everyone – including the US – must show respect for Denmark’s territorial integrity.
NATO allies Denmark, Norway, Sweden, Germany and France took part in military drills in Greenland, where the US has a military base, in September. Pic: Reuters
How did we get here?
In March, US Vice President JD Vance visited a remote American military base in Greenland and accused Denmark – a NATO ally of the US – of underinvesting there.
The issue then gradually drifted out of the headlines but, in August, Danish officials again summoned the US ambassador – following a report that at least three people with connections to Mr Trump had carried out covert influence operations in Greenland.
The territory’s strategic position between Europe and North America makes it a key site for the US ballistic missile defence system, while its mineral wealth has heightened US interest in reducing reliance on Chinese exports.
Earlier this month, the Danish Defence Intelligence Service said in an annual report that the US was using its economic power to “assert its will” and threaten military force against friend and foe alike.
Denmark’s Prime Minister Mette Frederiksen (left) greets Greenland’s Prime Minister, Jens-Frederik Nielsen.
Read more:
Head of US Greenland base sacked after criticising JD Vance
Denmark’s PM says ‘you can’t spy against an ally’
The report also highlighted the rising strategic importance of the Arctic to great power countries as “conflict between Russia and the West intensifies.
It went on to say that the growing security and strategic focus on the Arctic by the US would “further accelerate these developments”.
Russian President Vladimir Putin has said Russia is worried about NATO’s activities in the Arctic and will respond by strengthening its military capability in the polar region.
A Russian general being blown up on his own doorstep isn’t a good look for Moscow, and it seems it’s becoming increasingly common.
The latest high-profile figure to be assassinated since Russia‘s invasion of Ukraine is Lieutenant General Fanil Sarvarov.
He was killed by a car bomb that detonated outside a residential complex, little more than 10 miles from the Kremlin.
Ukraine war latest: Kremlin denies Putin plans to invade European countries
He was a senior figure. Head of the operational training directorate of the general staff, Sarvarov prepared forces for future deployment, having previously served in Chechnya and Syria.
There was no immediate claim of responsibility but Moscow believes Kyiv may have been behind it. No wonder – they’ve carried out similar attacks many times before.
This time last year, Ukraine took credit for the assassination of Lieutenant General Igor Kirillov, who Kyiv alleged had ordered chemical weapons to be used against its troops on the battlefield.
He was killed by a bomb hidden in a scooter outside his apartment block, which Vladimir Putin referred to as a “major blunder” by the security services.
Sarvarov was the least senior commander to be killed on Russia soil. Pic: Reuters
Pics: Reuters
But the attacks didn’t stop there.
In April, Lieutenant General Yaroslav Moskalik was killed after a car exploded in a town just outside Moscow. And two months ago another car bomb in Siberia killed a Russian commander accused of committing war crimes.
It’s unclear why Sarvarov was targeted – perhaps simply because his rank and apparent vulnerability.
The timing appears significant. It follows the latest peace talks between US and Russian officials in Miami over the weekend, where Kremlin envoy Kirill Dmitriev met with Steve Witkoff and Jared Kushner.
In the past, Ukraine has used these kinds of attacks to embarrass Moscow and to bring the war closer to home for Russians.
This time could be Kyiv’s way of undermining Moscow’s narrative in the negotiations.
Read more from Sky News:
Bondi suspect trained with father before attack, police say
Trump’s Greenland envoy intends to make territory ‘a part of US’
The Kremlin has been trying to persuade the White House that a Russian victory is inevitable, and that it’s futile to support Ukraine, in the hope of securing a more preferential settlement.
Ukraine has been trying to convince the Trump administration of the opposite – that it’s still full of fight – and taking out Russian generals in their own backyard is one way of doing that.
It shows Washington that the Kremlin is clearly not in total control.
A new row over the future of Greenland has erupted between Denmark and the US after Donald Trump appointed a special envoy to the territory.
The US President announced that he had appointed Louisiana’s governor Jeff Landry to the position on Sunday, saying “Jeff understands how essential Greenland is to our National Security”.
Mr Landry then wrote on X: “It’s an honor to serve you in this volunteer position to make Greenland a part of the US.”
But Greenland is currently a semi-autonomous part of Denmark, which is unhappy about Trump’s latest move. The country has summoned the US ambassador in protest, with its foreign minister saying the move shows the US is still interested in the vast Danish territory.
Trump has repeatedly called for the US to take over over the mineral rich and strategically located Arctic island, since winning his second term, and has not ruled out using military force to achieve it.
Denmark’s foreign minister Lars Løkke Rasmussen said Landry’s comments were “completely unacceptable” and that everyone – including the US – must show respect for Denmark’s territorial integrity.
NATO allies Denmark, Norway, Sweden, Germany and France took part in military drills in Greenland, where the US has a military base, in September. Pic: Reuters
Greenland back in the headlines
In March, US Vice President JD Vance visited a remote American military base in Greenland and accused Denmark – a NATO ally of the US – of underinvesting there.
The issue then gradually drifted out of the headlines but, in August, Danish officials again summoned the US ambassador – following a report that at least three people with connections to Trump had carried out covert influence operations in Greenland.
On Sunday, Trump said: “Jeff [Louisiana’s governor] understands how essential Greenland is to our national security and will strongly advance our country’s interests for the safety, security, and survival of our allies, and indeed, the world.”
Earlier this month, the Danish Defence Intelligence Service said in an annual report that the US was using its economic power to “assert its will” and threaten military force against friend and foe alike.
Denmark’s Prime Minister Mette Frederiksen (left) greets Greenland’s Prime Minister, Jens-Frederik Nielsen.
Read more:
Head of US Greenland base sacked after criticising JD Vance
Denmark’s PM says “you can’t spy against an ally”
The report also highlighted the rising strategic importance of the Arctic to great power countries as “conflict between Russia and the West intensifies.
It went on to say that the growing security and strategic focus on the Arctic by the US would “further accelerate these developments”.
Russian President Vladimir Putin has said Russia is worried about NATO’s activities in the Arctic and will respond by strengthening its military capability in the polar region.
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