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Weekly Dose of China Tech 9.21.2026

Dear Reader,

This week we dive into China’s tech acceleration for self-reliance, trading near-term profit margins and market stability for total control over its technological stack. From frontier AI labs and million-processor architectures to foldable supply chains and commercial EV exports, domestic giants are moving aggressively to bypass Western constraints.

Let’s take a look.

Weekly News...

(I) Z.ai’s ZCode Security Risks and Backlash

Z.ai is facing a privacy backlash over its AI coding tool ZCode.

On September 18, a developer discovered a 313MB encrypted snapshot on his computer while investigating ZCode’s unusually large local storage usage. Records suggested that the tool had packaged around 345MB of a commercial project and repeatedly tried to upload it after the upload failed.

Other developers then found that ZCode could upload workspace data to Alibaba Cloud when users were logged in. The snapshots could include code, project history, logs, caches and other files. Some users also said uploads continued even after they disabled privacy and model-optimization settings.

Z.ai apologized and said the uploads were triggered by ZCode’s codebase indexing feature, which supports functions such as session recovery and Repo Wiki. The company said the feature was initially enabled by default and that the issue has now been fixed.

Z.ai also said it will open-source ZCode, invite third-party audits and compensate users with a weekly quota reset.

The incident highlights a growing problem for AI coding tools: when they can access an entire codebase, users need to know exactly what leaves their machines and why.

(II) Huawei Will Launch Ascend 960DT and 960PR Next Year

Huawei says Ascend 960DT will launch in Q1 2027, three quarters early; 960PR follows in Q3, one quarter early. Ascend 970 and 980 are planned for 2028 and 2029.

Over 1,000 Ascend supernodes are deployed, with 950 systems entering commercial use at scale.

Atlas 960 SuperPoD will support up to 15,488 Ascend cards across 220 racks. Huawei projects 3× the training and 4× the inference performance of Atlas 950 SuperPoD.

(III) ByteDance’s First-half Net Profit Fell Due to More AI Expenditure

ByteDance’s first-half net profit fell by a single-digit percentage to $20B as AI spending increased, The Information reports. Revenue rose about 30% to $120B, helped by TikTok’s international advertising and e-commerce growth.

The company is expanding AI cloud services and developing inference chips. It also reportedly secured a record $30B loan that could support AI investment, while looking to Seedance to drive more AI and cloud revenue.

(IV) BYD Plans to Sell Truck to Europe

BYD plans to launch its first heavy-duty truck in Europe next year and eventually manufacture locally, executive vice president Stella Li said at IAA in Hanover.

“For the long term, we will produce everything we sell in Europe here locally,” she said.

BYD also plans financing, solar-powered charging and maintenance support for fleets. The move comes as European truckmakers push for tariffs on Chinese electric trucks.

(V) Z.ai User Growth and Model Recursive Self-improvement

Z.ai claimed its coding users grew by over 1M in two weeks, while Coding Plan sales...

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