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COVID hurt Beijing's economy — but for some, this has been an opportunity

AILSA CHANG, HOST:

China's economy still has not fully recovered since Beijing lifted COVID restrictions a year ago. The harsh regulatory crackdown and rising geopolitical tensions have caused a lot of pessimism in the business community. But some Chinese entrepreneurs see the current moment as a golden opportunity. And NPR's Emily Feng talked to a few of them for this week's China series.

EMILY FENG, BYLINE: The winners of China's economic shift are telling. They identify what the country believes will be the critical technologies of the future - artificial intelligence, semiconductors, electric vehicles. And for the companies in these sectors or those supporting them, there is room for growth. Here's Zhang Lei, a Chinese entrepreneur and the CEO of Cheche Group, an electric vehicle insurer.

ZHANG LEI: (Through interpreter) Electric vehicle exports are growing. This year China will export nearly 400,000 cars, making it the world's biggest EV exporter. So we hope to follow Chinese EV makers and deploy globally.

FENG: And despite U.S.-China tensions, Zhang listed his company in the U.S. earlier this year. And he's not the only optimist. For example, while the global COVID pandemic hurt small and medium businesses, it's given China's biomedical sectors a big boost. That includes XtalPi, a billion-dollar startup in China that uses artificial intelligence and robotics to design therapeutic treatments. They work with Pfizer, the U.S. drug company, to develop Paxlovid. The company sees international collaboration in the life sciences as a promising opportunity. Here's their chairman, Wen Shuhao.

(SOUNDBITE OF ARCHIVED RECORDING)

WEN SHUHAO: (Through interpreter) I'm not very worried about U.S.-China tensions because AI discovering medicine is saving lives. It's good for all of humanity. If the work we do is good, we should not worry.

FENG: But success is not a sure bet. China's introduced a raft of new regulation in line with the country's tightening political control. There are way more internal checks to get through before companies can go public outside the country, plus laws on keeping data and certain information within China. And then there's geopolitics. And so entrepreneurs are much more careful.

AUTOMATED VOICE: (Non-English language spoken).

FENG: That includes Youibot. The company makes robots like this one that automate warehouse management and manufacturing. They are more cautious than before.

AUTOMATED VOICE: (Non-English language spoken).

FENG: When NPR first met the company last year, Youibot was struggling through the pandemic. But this year the business is booming, says Keyman Guan, one of the company's executives. Growing semiconductor factories are buying from Youibot, and Youibot's expanded to Europe and Southeast Asia to sell to Chinese factories and car companies there. Despite their growth, Guan says Youibot is conservative with its business strategy because of global politics. In 2020, a component in their robots was put on a U.S. export control list.

KEYMAN GUAN: There's a small cable in that we are - was on the list to be restricted to sell to China, and - which means that we are going to stop everything.

FENG: Eventually, he says, the cable was removed from the export control list, but now Youibot is trying to find more backup suppliers elsewhere. Like many in China's high tech space, Guan used to work at the Chinese telecom firm Huawei, which has been laid low by U.S. sanctions that prevent it from getting American technology. So he knows things can change in an instant.

GUAN: We believe that we are going to meet some serious actual problem from this, maybe soon. And we have no idea whether maybe someday robots can be another - maybe from security reasons or some other reasons can be focused on or even restrained. We have no idea.

FENG: But if they succeed, the rewards are massive. The big private Chinese companies from the past two decades were internet companies like Tencent and Baidu or in e-commerce like Alibaba, but which companies will dominate in China for the next two decades? Policymakers want them to be in high tech, and the top spots are up for grabs. Emily Feng, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Emily Feng is NPR's Beijing correspondent.