Podcast: How China is riding the open source wave
Tracing Chinese open source from its grassroots beginnings to its emergence as a key strategy for Chinese AI companies and China's broader tech strategy.
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In this episode, I speak with Kevin Xu, investor and author of the Interconnected newsletter. We talk about his latest piece where he traces the history of open source in China from its grassroots beginnings to the current OpenClaw craze.
Links:
Kevin Xu’s Interconnected newsletter
Kevin Xu on Twitter / X
Transcript
Kyle Chan (00:00)
Welcome to the High Capacity Podcast. I’m your host, Kyle Chan, a fellow at Brookings. I’m thrilled to be joined today by my guest, Kevin Xu, founder of Interconnected Capital, a global tech hedge fund, and the author of the Interconnected Newsletter.
Long one of my very favorite Substacks on the U.S. and Chinese tech landscapes. He previously worked at GitHub, leading their global expansion strategy, and in the White House. Welcome, Kevin, and thanks for coming on the show.
Kevin Xu (00:30)
Thank you for having me, and right back at you, Kyle. Your Substack is one of my favorites as well. So great to be on your show.
Kyle Chan (00:36)
Thanks. So you recently wrote a really fascinating piece about China’s open source ecosystem, kind of tracing its evolution over the years, going back to, I think, the ‘90s, the earlier years of global open source, and all the way up until now when we see a lot of Chinese AI companies like DeepSeek really making open source a central part of their strategies.
And I think there’s an interesting contrast we can get into later between China’s push for open source and AI releasing all these sort of cutting-edge open source models, in contrast to a lot of the American AI labs that are going more of the closed-source, proprietary, pay-to-use route. So, with that all being said, I just wanted to start by asking, what motivated you to write this piece? And also, how did your background at GitHub and your previous experience kind of play into all this?
Kevin Xu (01:36)
So the motivation for this piece, which is a fairly long essay, is about 6,800 words long, give or take, on what I think is a relatively niche topic. So I’m really surprised by the amount of attention and response I’ve been getting, is that Chinese open source has become a topic du jour because of what happened last year in 2025 specifically. We started with DeepSeek’s Reasoner 1, R1 launch.
And then every single month since January 2025, we just have releases from different Chinese AI labs, all open source or open-weight models, kind of building on top of each other, outcompeting each other, and in some metrics here and there being comparable to the closed-source state-of-the-art labs that are coming out of the American AI shops. And that’s becoming a huge story. And I myself, as you mentioned, I used to work at GitHub.
And GitHub, for those of you who don’t know, is the home of open source code. It’s the web platform, if you can think about it, that hosts 90% of all the open source packages and code prior to AI. It’s also a high-flying Silicon Valley startup back in the day that got bought by Microsoft for $7.5 billion in 2018. And I’ve always had an inside track, if you will,
in observing how open source works globally, not just in China. But China has been a huge force in open source in recent years. And everything with China, you know, Kyle, kind of has this shock response to them, say, where did these two come from? Where did this all come from? And at least for the Chinese open source history, I have a good sense of where it came from, which is not an overnight phenomenon. It traced back to the mid-’90s.
That was when we believe the first line of open source code entered China. And then what happened since there are all kinds of very interesting stories, really interesting characters, that actually makes for a fascinating sort of an oral or written history to put together that really explains why DeepSeek became DeepSeek, why Kimi or MiniMax or Qwen is doing what they’re doing. None of these things are ahistorical. They all have their roots.
So I want to put something together that at least explains the origin of what we’re seeing today before we think about what to do with what we’re seeing today. Because there are lots of conversations in different Western capitals and Beijing as well, as far as what is the place of open source in the future of technology, especially in the future of AI. So I think having some history before you make a decision is usually a good idea.
Kyle Chan (04:21)
Yeah, yeah, it’s super interesting. I think one of the most fascinating parts, I mean, we’ll get into a lot of different strands here, but I want to start with one of the most fascinating aspects of this, which is the kind of grassroots community side of Chinese open source. So I think now we associate it maybe more today with these companies or maybe even sort of a broader policy push. But, you know, starting very early on, there was sort of this interesting evolution that you trace, where
Chinese open source community members, maybe they were previously consumers and then they kind of gradually became contributors themselves. And there’s a process of sort of acculturation, learning the norms and the unspoken rules of how to do open source. I was just wondering if you could highlight some of those, like Kaiyuan She or some of these other groups that kind of sprung up in this process and played a pivotal role in this.
Kevin Xu (05:21)
That’s right. I think every time you think about open source, it’s by definition a grassroots movement first before it became maybe co-opted by big tech or co-opted even by government and things like that. And that traces back to its original roots, right? Like not the Chinese roots, but the Western roots, where it’s almost an anti-monopolistic pushback against proprietary software, Windows in particular, actually,
for being this massive monopoly, this profit-generating, rent-seeking machine that everybody just has to pay to use a computer, right? And the free software movement, which predated the term open source, started as a pushback, usually from people in academia who don’t have the money to pay for all this fancy software, but they want to do research. So that’s kind of point number one, right? So how this came about in the Chinese context is,
like you said, the original way that open source was a thing in China was from a taking and a consumer perspective, in the sense that you have all these free open source software programs that are out on the internet, you could just grab them, customize them, make them into whatever you want. You do require quite a level of technical sophistication to make it work. But if you want to spend the time and learn, reverse engineer, and customize,
you can make something that is much cheaper and also much more within your control than the thing that you had to buy off the shelf from Microsoft or IBM. And the first major episode that I highlighted in this taker-consumer era is Alibaba’s so-called DIOE campaign. IOE stood for IBM, Oracle, and EMC storage. And that was the
canonical gold-standard enterprise IT stack that every single tech company in the mid-’90s was built on. So Alibaba was just a tech company. It had to choose that stack just like everybody else in the world. What became unique for Alibaba is because of China’s own hyper-speed internet growth and Alibaba’s own growth within that context, none of these Western software programs could keep up.
Alibaba for a while was the largest consumer or largest customer of Oracle’s best, best, best database. And Oracle’s best, best, best database at the time still could not scale to meet all these shoppers going on Taobao trying to buy stuff. And also it’s costing Alibaba a huge amount of money. So it couldn’t make a profit either if it keeps on paying these Western software companies more money.
So it started this very dramatic multi-year effort to basically get rid of IBM, get rid of Oracle, and get rid of EMC. But how do you do that? You embrace whatever is open source and available at the time, which for the database side included MySQL, which is an open source relational database that actually ended up being owned by Oracle later on, but we don’t have to get into that. But initially, Alibaba used that to customize and make its own Oracle, to make it actually much more scalable.
And the success of this DIOE campaign, which was at the time really a bet-the-company kind of decision and also birthed what is now Alibaba Cloud — there is no Alibaba Cloud without the DIOE campaign actually succeeding — showed kind of the rest of the Chinese ecosystem that open source is, one, really good, but two, actually could help you grow, not just to save money or to kind of wean yourself off of Western technology,
which at the time at least wasn’t as big of a concern because MySQL is still Western, right? The way you get rid of IBM mini-computers was commodity x86 kind of Intel-based servers, which is still Western technology. So that wasn’t a big deal. It’s more about closed versus open. So that was Alibaba’s first era of takers and consumers. There are obviously other examples as well. And then the grassroots community side came a little bit afterwards because
when you’re a taker and a consumer, you don’t really have to interact with a broader community as much. You could just download it as an offering and then you do your thing inside your own company and you never give back. That is a long-term problem with open source even until today, is the sustainability of open source. Then you have these open source, really passionate enthusiasts within China who started organizations like Kaiyuan She,
which is just a pinyin romanized name for Open Source Society, right? Kaiyuan is open source, She is society, Shehui, Kaiyuan She. And the fascinating thing about this organization is that it’s, one, obviously grassroots, two, completely volunteer-driven until today, right? And they want to do that because they don’t want to be controlled by a big company or a government initiative. They just want to be their own open source, almost warm-and-fuzzy world,
but also to teach more and more developers in China how does open source work on a global scale, which is much more beyond just writing code.
Kyle Chan (10:36)
Mm-hmm. Yeah, this is so interesting. Why do people do open source? This is sort of like a more generic question. And why are so many Chinese contributors active in the open source ecosystem? Because I guess you’re not getting paid directly. What’s in it for the people who are being part of this? And how is it different or similar in China as the broader sort of global open source community?
Kevin Xu (11:05)
Yeah, yeah. I’ll answer the first part first, which is on a broader global scale, why do people do open source to begin with, right? One is that almost anybody who went through a program to study computer science in a university, in a real institute, like a sort of official institution, used open source to learn, right? Anybody who was in academia used open source to do your research, to produce your charts and whatnot.
The interaction of anybody who is vaguely technical with open source is very early. If you’re a hacker by night on your own, in your own basement or whatnot, you have to use open source. You don’t have a budget to learn how to program. You find what is on the internet, you find what works, you grab it, you learn it, and then you improve your skill that way. I do think it’s a bit of human nature to want to give back after taking for quite some time,
to help out with a thing that led you to where you are in the first place, right? And there are actually canonical essays within the open source world by people like Eric Raymond, for example, who was one of the founding fathers of the open source or free software movement, about the gifting culture within open source people that actually pushes up your social status within the open source ecosystem,
pushes up your social capital, right? If you’re someone who just takes all the time, doesn’t matter how good of a programmer you are, you are disrespected within that world. So if that is your peer group, you want to give back, you want to help out however you can. And one of the norms is that if you come up with something that improves the software that you were using that was free, you contribute it back, you contribute upstream is sort of the term, right? So the entire ecosystem of that software becomes better because of something you came up with and people thank you for it.
There’s a lot going on there that motivates people to do this, but it’s not sustainable, right? And over time, frankly, as big companies gravitate towards open source, a lot of people do become paid full time. You work at Google, you work at Meta, you work at Alibaba, whose full time is actually to do open source, but you’re on a big-tech paycheck, payroll, salary, right? So in that sense, you are getting paid to do things for free.
Kyle Chan (13:10)
Mm-hmm.
Kevin Xu (13:25)
So that becomes a little bit more sustainable, but also takes away the purity of it because you’re kind of beholden to the person with the company who pays you. But that has been a struggle for a long time. Now, going to the China version of this, if there is a Chinese characteristic to this story, is that because a lot of these Chinese big tech companies in particular have been taking open source to really accelerate their growth for so long,
and there’s always been this stereotype that anything technological that’s created in China — doesn’t have to be software, could be hardware or could be anything — is either IP being stolen, stolen from the West, or they cheated to create all this stuff, right? Which of course, if you’re an engineer, it kind of rubs you the wrong way, right? So a good chunk of the Chinese open source developer ecosystem or folks who work in the big tech companies have this intense
motivation to give back and to make their own project and then contribute back to the ecosystem, if only to prove that they are good enough. They can produce as much as they can consume, and that they want to show off in a sense and really make an impact in the entire world with their software creation, not just with the stuff they’re taking. And I know that sounds like it’s super warm and fuzzy and unlikely.
But that is how a lot of these open source people are. They’re very, almost positive-sum to a fault in a lot of ways, which is a very nice contrast in a world that is dominated by zero-sum thinking and zero-sum negatives. And they’re just like, well, I’ll just give it back, right? Like I don’t need to have the highest salary. I think it gives me a lot of satisfaction for the world to use my open source package. They just put it on GitHub. It got downloaded, let’s say, 2 million times.
That to me is incredible satisfaction. And quite frankly, if you’re someone who has that level of technical caliber to create something that’s that useful, you’re going to get all the pay package you want from any tech company if you want to make money anyways.
Kyle Chan (15:34)
Yeah, yeah, that’s super interesting. I mean, it’s like the cool factor, the wanting to be part of this community and wanting to kind of show off what you can do. And it doesn’t have to be a monetary reward. It can be just recognition or even just like good vibes. And then you feel like it’s worth it to stay up late at night, on the evenings, weekends, to keep contributing.
Kevin Xu (15:53)
Yeah.
Kyle Chan (16:01)
Yeah, yeah. So yeah, it’s interesting. I mean, also then the sustainability side comes into question. And so you have this kind of mixed approach, with some of the companies as well supporting open source. Yeah, I was wondering if you could talk about some of these movements that have kind of sprung up in China related to open source. Because like you talk about in your piece, like the 1024 Programmers’ Day and also sort of the 996 ICU movement.
Kevin Xu (16:09)
Right.
Kyle Chan (16:27)
What were these about and what do they say about China’s open source culture?
Kevin Xu (16:35)
I think that’s one of the more interesting things that I came upon when I was writing this long kind of history of Chinese open source, is the subculture that actually got formed within open source in China, right? If you think of open source globally as the dominant culture of any hacker, then within China, you had these subcultures and their own identity that just formed very much, again, organically on the grassroots. I think this was also during
the mid-2010s or the early 2010s where civil society and kind of self-organizing movement in China was such that you had the room to do this sort of stuff. Right. And the Programmers’ Day, I will highlight, is one of the funniest stories I can think of, is that basically back in 2010, there was an online website that’s focused on developer community who just put up a poll that says, hey, we should have our own Programmers’ Day. Now there are some precedents
in Russia, which is the first country that ever came up with a programmer’s date. You kind of celebrate your geeks, your nerds, your engineers, your hackers in your country. And they picked a day that was, I believe, September 13th, which is the 256th day of the year, which if you’re a binary person is two to the eight, right? Nerdy AF as a way to pick a date. Now the Chinese developer community wants to almost outdo that.
Kyle Chan (17:54)
Yeah.
Kevin Xu (17:59)
by picking their own day. So they came up with October 24th, which is two to the 10th, 1024, two to the 10th. So that is the day that they picked for their Programmers’ Day. Again, completely under the radar, just kind of existed online as a subculture. And then it really blew up over the years as something that people initially celebrated organically to celebrate their own job, but also to advocate for themselves.
As China’s internet sector became more and more dominant and also more and more cutthroat, right, 996 quickly became a thing. A lot of these programmers are overworked, so they will celebrate or kind of push back on things like, can we get less overtime or better pay, which is a bit more serious. Or you celebrate things like, hey, can we wear less plaid shirt and kill our receding hairline,
which is a lot of male programmers, still a very male-dominant industry even today, but certainly back then. So they also have capacity to laugh at themselves, which I find very interesting as a subculture identity point, all happening on this super nerdy day, October 24th, every single year, even until today. Now, the 996 ICU movement is the more
serious advocacy, self-organizing version of the story, right? You have the fun, warm-and-fuzzy Programmers’ Day, and then you have this episode that really came out of nowhere. This is in 2019. This is probably when 996 was at its height as far as its controversy is concerned in the Chinese tech ecosystem, where lots of programmers are overworked. You probably have heard of episodes of people committing suicide from certain companies and then
using GitHub, which is a Western platform. Basically, they tossed out a repo on GitHub that’s called 996.ICU, which is this way of saying if you work 996 for a long time, you’re going to end up in intensive care unit. We don’t want this to happen. It’s this random project on GitHub that became the fastest-growing GitHub project on the whole platform at the time, garnering like 200,000 stars or something within a couple weeks or so. So a lot of people gravitated towards this as a way to really push back and sort of advocate for their own labor rights, essentially, which is super fascinating. And you’ve also got a lot of pushback from the Chinese big tech, including Alibaba’s founder Jack Ma, who actually spoke against the 996 ICU movement at the time.
As, you know, you should feel privileged and happy to have a job in a big tech company like Alibaba. Why are you complaining about working so long? So it became more of a controversy. Other Western media covered it as well. And what was really interesting is that this actually ended up in a particular decision in the People’s Supreme Court, so the Supreme Court of China, I guess, that actually outlawed 996 as an illegal form of labor practice, which originated from this very
organic self-organizing online movement called 996.ICU that took place on a Western website called GitHub. So all these different elements are super fascinating. Of course, 996 still exists today, so it didn’t work in reality, but it kind of worked in a legal sense, which is probably more than you can say for a lot of things when it comes to organizing in China.
Kyle Chan (21:23)
Yeah, yeah. Yeah, what I love about these stories that you kind of tease out here is just like the human side of all this. And it’s like, yeah, there’s all this talk about the AI race and China versus the U.S. and these sort of great geopolitical games. And then there’s maybe a discussion about Beijing or the different Chinese tech companies. But then what about the people who are building all this stuff, who are grinding through the 996 or,
on the other side, who just kind of love doing this kind of stuff for fun and are really into the nerdy subcultures? And there’s tons of nerdy subcultures in China. So it just sort of captures all these extra, I don’t know, sociological dimensions to this that, yeah, that I feel like aren’t as often talked about. So soon we’ll get into the sort of harder-hitting
Kevin Xu (22:15)
No, that’s right.
Kyle Chan (22:27)
Huawei and all this stuff. But right before that, I just want to ask you, kind of before we hit that era, you mentioned that for a while now, a number of Chinese tech companies have embraced open source. And you’ve written about in this piece and elsewhere, like Baidu has a self-driving car platform, Apollo, or Alibaba is doing a really interesting chip
Kevin Xu (22:50)
Mm-hmm.
Kyle Chan (22:54)
effort using RISC-V architecture, which is open source. I was just wondering if you could, yeah, I don’t know, comment on what’s going on with some of those projects.
Kevin Xu (23:06)
Yeah, I think this was the era where, as the Kaiyuan grassroots community builders, what I call them, began to take root in China in sort of the now we’re moving into the more like mid-2010s, late 2010s era, a lot of, first of all, independent open source startups started to pop up in China. This was also a time when venture capital was free-flowing in China. There were a lot of interesting open source startups being built in the Valley.
And Chinese VCs are always super plugged into what is happening in the Valley as a way to do their own investing in China. So a crop of independent open source startups doing databases, big data warehouses, all these sort of big data cloud infrastructure layers, began to pop up, get really well funded, very popular within the open source community because they’re so kind of pure in a way. They’re not attached to any big tech, who always had a
I would say a fuzzy reputation in open source because we all know Alibaba took a lot of stuff. Are they giving back stuff? Not really. The reputation of the Alibabas of the world at the time in open source was that every time they open-sourced something on GitHub, it’s because it’s an internal project that really didn’t work out. It’s actually a piece of crap. They just open sourced it to give it a nice ending, but they don’t do anything to maintain it going forward to make it useful.
using open source as a junkyard, right? Which is not great. And I think over time, all these big tech companies realized that open source is actually a way to build better software for themselves, but also it’s a great recruiting mechanism as well, right? If you have good open source projects being actually put out and maintained and useful, more engineers actually want to work for your company. So there are kind of multiple very practical benefits to that.
So Alibaba started open sourcing better projects and not just in the software space, but also in the chip design space. So the one that you mentioned, Xuantie, right? It’s based on RISC-V, which is an open instruction set architecture, basically the roadmap in which you design a semiconductor chip that came out of UC Berkeley way back when. And then they really gravitated to that ecosystem to start
their own chip-making firm or subsidiary at the time called T-Head, which may actually become public later this year as an independent company. But that was when they started doing that to gravitate to hardware design. Then you have Baidu, for example, who did the same thing but for a self-driving platform called Apollo, which is still powering all of their robotaxi today. That’s another way to
open source more legit internal projects that actually have a real strategic value, not just a failed project from some random team in the past. And the way you think about this — and I will call out a few other companies that actually may be less even thought of — BYD open sourced their own internal platform to allow
developers to kind of tinker with the software side of a BYD car. This is, I think, 2018 or 2019, called B++ is the platform, right? And there’s this kind of Androidified way of thinking about open source, right? So Apollo wanted to be the Android of self-driving with Apollo, right? And BYD wanted to be the Android of EV in a way for their own open source software. And it’s a way to kind of really
grow their market share, to maybe compete against Western peers at the time. So there’s a lot of different dimensions at play where the larger technology companies, even the OEMs like BYD, are gravitating towards open source. It’s now a strategic play, maybe a recruiting play, but certainly a way that kind of portends maybe what we’re seeing today.
Kyle Chan (27:02)
Mm-hmm.
Yeah, yeah. So we kind of see this shift over time, open source being maybe something that is more on the margins, then coming into more of the mainstream, then becoming a really important strategy for some of the Chinese tech companies themselves that are embracing open source, no longer seeing it as sort of just like this extra thing on the side, but maybe a central part of their strategy for building up, especially global expansion, perhaps. But now
we hit the part of the story where open source becomes sort of existential. So on May 15, 2019, that date, the U.S. announces that they’re gonna put Huawei on the Entity List. And that means cutting off Huawei from a whole bunch of U.S. technology: Google’s Android operating system, Qualcomm chips for its smartphones.
Like this is a huge, huge blow to the company and a huge wake-up call for the entire country. So how did Huawei respond to this, and what role did open source play in Huawei’s response?
Kevin Xu (28:15)
I think the moment that Huawei got blacklisted is the moment where open source transitioned from a vector of growth to a vector of survival for companies in China and perhaps to the entire country, which we’ll talk about a little bit later on as far as how it became a strategic plan of the government. Because the government or certain various divisions or ministries of the government are certainly aware of open source as a thing
up until 2019 when Huawei was blacklisted. And I would argue based on my research and also personal experience that their attitude towards open source is very uneasy. I will cite an episode back in 2015 when GitHub was growing like wildfire everywhere because of its ease of use. Everybody who wants to do open source can now do it so much easier on GitHub, collaborating and stuff like that. And that all obviously necessitated
connections between developers in the United States, in Germany, in the UK, at the same time working online with Chinese developers, Russian developers, Indian developers, what have you. And in 2015, I think I mentioned this in my article, GitHub suffered one of the largest DDoS attacks that came from China. So that was one of the largest attempts by the Chinese government or state-affiliated institutions to shut down
or to kick GitHub off of the Chinese internet. And it didn’t work because the entire developer population in China just stopped working. They couldn’t work. They all work on GitHub in one way, shape, or form. They became instantly unproductive. And the government realized that as much as they find the social aspect of open source may be a little bit troublesome from their perspective on how they want to run their internet and their country,
they can’t afford to shut this thing down because perhaps the most innovative part of their population will become instantly unproductive overnight. So they always had to live with the pros and cons of open source as time went on until 2019, where the entire open source ecosystem that has roots in the West got shut off. You can think of it almost like that was a first moment when open source became weaponized in the context of geopolitics.
Kyle Chan (30:37)
Hmm.
Kevin Xu (30:40)
which is quite ironic because most open source exists in the public sphere, it’s public domain, its root of origin is quite irrelevant to how you use it and customize it. But Android or the Google version of Android clearly had more ties to Google than it is an actual open source ecosystem that Huawei could not rely on any longer because of the blacklisting. So that really pushed open sourcing, at least from Huawei,
to a whole new level. Huawei was building alternatives at the time before because it probably always saw the writing on the wall, like at some point we need to have our own version of everything, but it didn’t have to do it, so they didn’t really ship anything that was super useful until that moment. And then it became the only thing that it could do to survive as a company. So Huawei became a relatively late player actually into the open source scene, but obviously a very powerful player
when it had to be that way. So it started open sourcing like everything they had to have: the operating system called HarmonyOS, their databases, their servers. They have their own cloud, so they have their own server architecture called OpenEuler and they open sourced that, a bunch of stuff. They also even seeded an open source foundation called OpenAtom using one of their projects, which is very much a one-for-one
comparison to the Linux Foundation. Linux is seeded by the Linux operating system, and then they seeded their own thing called OpenAtom Foundation as a way to open source not just the technology, but even the community fabric of open source. They wanted to create their own ecosystem
Kyle Chan (32:19)
Hmm.
Kevin Xu (32:25)
of it, which again is, I think the jury is still out as far as how successful that is. I remember the earlier days when HarmonyOS first became open source, but it’s like, okay, so how do you download one and just fool around with it yourself, like a real open source project? And you had to register an account and put your information and give it to Huawei to get the permission to download the source code or something. And people were like, this is not real open source, right? This is not legit.
Kyle Chan (32:52)
Yeah.
Kevin Xu (32:54)
at all. You know, Huawei doesn’t know how to open source for the life of it, right? So it definitely had really rough starts in the beginning. It probably got better over time, so it takes quite a bit of reps to really open source well, even for some big outfit like Huawei.
Kyle Chan (33:10)
Yeah, yeah, it’s like not as simple as building your proprietary software, like pouring a bunch of resources, software engineers, just going all-out sprint. You’re cultivating an ecosystem with open source. And there’s only so many levers you can pull to really sort of get people to contribute and to streamline it and make it more attractive to maybe not just Chinese developers, but global developers. And that takes time too. You have this network effect as well, which
makes it very difficult. And ultimately, I mean, we see this Huawei-led alternative open source stack, as it were, seeming to emerge.
Kevin Xu (33:50)
Yeah. And the other
thing too, which is very not second nature to these large tech companies like Huawei’s of the world, is that the moment you want to really dive into open source, you have to lose some level of control of the project and feel okay with it, right? That’s always been a very difficult line to walk, not just for Chinese companies, for any companies. Google has had problems like this, right? Microsoft has had problems like this, definitely, which is that
Kyle Chan (34:04)
Mm.
Kevin Xu (34:19)
you want the developer ecosystem to build. You want people to contribute. That’s the taking part of open source, which is great if you can get it to work. But you also have to listen to these developers. These developers might want your software that you originally created, but now you’re open sourcing it to go a different route on the roadmap. They want feature XYZ that they really want, but may not help you monetize off of your software later on.
Kyle Chan (34:29)
Mm-hmm.
Kevin Xu (34:47)
but you have to play this balancing act of how do you really keep that community going? Because the moment you dictate — which open source has all these really interesting liberal democratic elements to it as well, that again is super fascinating when you think of it in the context of China — is the moment you dictate a direction, the developer communities are gone, right? They’re just like, there are all kinds of open source databases. Why would I waste my time, waste my weekends and my nighttime,
Kyle Chan (35:07)
Yeah.
Kevin Xu (35:14)
fooling around with your ecosystem where you don’t even listen to me, right? There are all kinds of options out there, so it’s super hard actually to manage open source, which is something that these grassroots organizations like Kaiyuan She, for example, that we talked about a little bit, really did the work, I think, educating the developer community in China how to do this well, because the code is like almost 10, 20% of the work.
Chinese engineers have been really competent at writing good code, I think, for a very long time. But how do you interact with the broader community entirely online? You will probably never meet these people in person. You’re going to interact through your GitHub username and now your Hugging Face username for your entire lifetime. How do you write nice-sounding issues to not piss people off? How do you propose a solution that doesn’t sound super dictatorial?
Kyle Chan (35:43)
Yeah.
Kevin Xu (36:11)
or top-down or offensive or whatever? These are these social cues. Of course, for most Chinese developers, you have to do this in your second language, in English. Might be way easier now because you use Claude and ClaudeX to write these for you so they can all sound really nice. But in the bygone era, they had to use a second language to communicate with the world to really be part of the fabric. Super, super difficult. That’s something that Huawei had to stumble through to really get to where it is today.
Kyle Chan (36:19)
Hmm, right.
Yeah, yeah. Well, it’s interesting because as challenging as it is for a company like Huawei to try to do this, strike this balance between kind of creating this open culture versus kind of getting it to do the things that it wants to do, you have Chinese policymakers trying to do this. And you kind of point out a big shift, maybe 2019, 2020, and especially 2021, where there was a much more wholehearted embrace
of open source as a sort of national policy strategy. So, and I was looking back through the different Five-Year Plans, and I think the 14th Five-Year Plan mentions open source for the first time in 2021. And then you also point out the Ministry of Industry and Information Technology talks a lot about open source. So yeah, I was wondering if you could say more about
what is the shift for Beijing, for Chinese policymakers? How are they trying to foster and embrace open source? What’s the goal here?
Kevin Xu (37:43)
This is probably the most interesting thing, if you think about open source in the macro sense for China, right? And also U.S.-China, which is that typically a lot of things that happen in China kind of have this official recognition from the top first as this is strategic, right? You know, solar, battery, autonomous driving, what have you, robotics, and then the rest of the industries then...
Kyle Chan (38:01)
Mm-hmm.
Kevin Xu (38:10)
gravitate towards that. Their local governments issue their own version of it to compete in this new planning phase and whatever. Open source, however, has more or less existed in the background, kind of underneath, on the DL for pretty much two-plus decades. It’s not to say the government wasn’t aware that open source is happening. Certainly even back in the ‘90s, there were certain ministries who thought this was a good thing to embrace, free software or open source or Linux. So there was some
writing of that even at the official level. But at the time, open source was, one, treated, I would say, skeptically because of the social element of it that I mentioned when it comes to attacking GitHub or shutting GitHub down, but also as more of a defensive measure, as in this will be a good thing for us to try out, figure out as a way to improve our own IT security. Because at the time, any ministry who has a computer is using
Windows, IBM mini-computers, Cisco routers. These are all closed-source Western technologies. And they’ve always been uneasy of that, but they didn’t have their own national champions at the time to really have another option to begin with. Huawei was more or less created to be that option, which Huawei has its own feelings about at the time as well, as far as how conflicted they are. But it’s more defensive. And only up until the 14th
planning, 14th Five-Year Plan planning cycle, did open source become one, existential potentially for the future of the country as a survival mechanism, but also as a way to actually play offense, to innovate, not just to be an alternative to weed things out, but to innovate on top of it. Even the Made in China 2025 plan, which is this famous-infamous plan depending on how you want to think about it as far as decoupling, the origin of decoupling is concerned, that was published in 2015, did not mention open source even once in the document, right? And
Kyle Chan (40:17)
Hmm.
Yeah.
Kevin Xu (40:28)
when it comes to 2021, when MIIT mentioned open source in its own planning document, I think 27 times, was when the first time you really see open source being embraced as official strategic, at the very top strategic level, right? And
Kyle Chan (40:17)
Yeah.
Kevin Xu (40:28)
even before that, we’ve had episodes where the MIIT ministry, which is the regulator for the internet sector, the tech sector mostly — there are others that kind of have that turf now — started to pick winners as well. So Huawei is the obvious winner, obviously, but then you have an outfit like Gitee, for example, G-I-T-E-E, which is the homegrown alternative to GitHub that was founded years ago as a way to
I don’t know, kind of take market share from GitHub, right? It’s been super difficult. And then the ministry kind of designated Gitee as the national champion, the preferred platform that it would like at least the government or regulated industries to use and embrace for their own source code management system, as opposed to use something that is Western like GitHub. So you see all those behaviors really start to pop up
really much later in the history of Chinese open source, right after Huawei basically got blacklisted.
Kyle Chan (41:33)
Yeah, yeah. I guess it’s an open question then whether trying to harness or leverage open source will end up sort of squeezing out the very sort of essence of the culture itself or whether it can be done and steered in a certain direction. I mean, yeah, we’re seeing this experience sort of unfold. I want to jump now to AI.
Kevin Xu (41:58)
That’s right.
Kyle Chan (42:02)
And the DeepSeek moment. So, in January 2025, so a little more than a year ago, DeepSeek released R1 and a lot of people were stunned by the performance, how close they were to sort of the U.S. proprietary models and also by their claims of having such a low-cost baseline. But I think you really focused on their
huge push into open source, like in many different ways. And I was just wondering if you could talk about why DeepSeek’s open source moment was so important and what has sort of happened since with open source and AI in China?
Kevin Xu (42:47)
Yeah, it’s funny that we’re 40-plus minutes into a conversation and we did not mention AI even once, really, right? Until now. And I hope that is the, if there’s one takeaway from either listening to this podcast or to read my essay, is that open source AI in China is the latest of a long series of chapters
Kyle Chan (42:53)
Hahaha!
Kevin Xu (43:11)
of stories and history and activities when it comes to open source in China, right? That’s the current chapter. This is by no means the first chapter of any of that stuff. So what really, DeepSeek R1, when that released, first of all, at the time, everyone was reading the papers. I’m still reading the papers, right? And DeepSeek V3 was the big foundation model that trained R1. That was released actually over Christmas in 2024. But even V2 had a
paper as well, the previous version to V3 that was released like mid-2024. That was when I started paying attention to DeepSeek as an outfit, right? They were practicing kind of your classic open source playbook already at the time, which is every one of their models or their model weights are licensed under what is called a permissive license, right? They use MIT License, which is one of the two very commonly known licenses within the open source world,
where, you know, if you see MIT License, you can do whatever you want effectively. You can download a copy, make derivatives of it. You don’t have to tell DeepSeek. You don’t have to pay them a cent. You don’t have to do anything. That is the ultimate kind of the purest form of open source. And they chose that right off the bat because they know the Llama license that Facebook came up with to initially release Llama, which was the big open source model at the time, had all these weird restrictions
about if you reach a certain number of users, you have to get a commercial license with Meta and other sort of stuff that is not pure open source, which of course helps Llama’s commercial case. But frankly, if you’re an open source user, you don’t want to have to think about the eventual legal consequences if something you do actually comes up, right? Which you never have to think about if you use something that is MIT-licensed. So DeepSeek did that immediately, right?
And then when DeepSeek released R1, a lot of the optimization that got its cost structure to as low as it was — and there are still controversies and debates about how real that number is, we will set that one aside — but I think what is really important is that it shows that DeepSeek’s team’s level of hardware optimization sophistication, which at some point must have learned from open source research,
from having open source hardware access to be able to teach themselves how to do these optimizations, led to that cost structure to begin with. So there is a technical education pipeline that always runs through open source that DeepSeek benefited from. And then right after R1 got released and kind of blew up for the entire world, they also did this thing called Open Source Week that I thought was super fun and very classic open source ethos, community-building thing, which is that they were releasing one
piece of open source library out of their tool chains, and not just the models anymore, but a data pipeline, a tokenizer, some other kind of components, right? There are lots of components that lead to a model being trained successfully. Open source once a day for an entire week to generate more community goodwill, more developer access, ecosystem contribution, what have you. Very well done from an open source go-to-market perspective, right? And that I think,
to me at least as an open source nerd, was the thing that really set DeepSeek apart. And then as we go through 2025, when Kimi and MiniMax and Zhipu, now Z.ai, all started doing their own version of open source, not to mention of course Alibaba’s Qwen, which actually open sourced the earliest of any of these labs, even before DeepSeek. You see that maturity of these
You see like Yang Zhilin, who founded Moonshot, who makes the Kimi models, go on Reddit to interact with the entire community face to face. It’s very Sam Altman-like. You just go on Reddit, you see what the Reddit world throws at you. It’s almost never super friendly, but sometimes it can be, sometimes it can be hostile. And of course he’s doing it in his second language, but he’s not scared of interacting with the community face to face.
Kyle Chan (47:09)
Yeah.
you
Kevin Xu (47:28)
That builds a ton of goodwill and accessibility, which I think definitely contributed to Kimi’s popularity. Zhipu actually does a similar thing as well, so it’s not just Kimi. They’re also on these Western social platforms, right, to interact and build community interaction. And all this is just building up to that level. I remember talking to Chinese open source founders back in 2015, 2016, getting them to go do Reddit stuff to drum up their popularity, and they just couldn’t bring themselves to do it.
Kyle Chan (47:55)
Mm.
Kevin Xu (47:56)
It’s hard, it’s in the second language, you don’t want to say something wrong, and it’s embarrassing if they do something silly, because you have to have a good sense of humor as well on Reddit. But now this new generation of AI founders are much more comfortable in that realm. And DeepSeek is sort of the thing that launched it, but it’s by no means super unique in that way.
Kyle Chan (48:00)
Right, right.
Yeah. So you see DeepSeek as part of this longer lineage of open source, and then kind of contributing back to that. And then now all these other Chinese AI labs, I think even like you mentioned Zhipu, I think they might use now some of the DeepSeek contributions, like some of the sparse attention mechanisms that DeepSeek has sort of contributed. So it kind of feeds onto each other
and builds up this broader ecosystem, and then helps with, like you pointed out, global expansion and popularity abroad combined with this sort of PR push to get out there, try to actually interact with your users wherever they are in the world, basically.
Kevin Xu (49:05)
Yeah, yeah. And one last thing I’ll just mention on that point as well is that at this moment, going overseas, global expansion is probably still super top of mind for every Chinese entrepreneur. Doesn’t matter if you’re in the AI realm or still in the old-school tech realm or even in hardware and what have you. And open source is
unfortunately maybe their only way to get their name out there. They have their work cut out for them, right? They have the geopolitical problem. They have what I believe is kind of the toxicity of the China label, right, that you have to shed in multiple different ways. And you don’t have enough funding compared to your peers, certainly in the AI world, to make a big PR push or something like that, or a marketing push. None of them are going to drop millions of dollars in a Super Bowl ad.
But open source is a way where if their thing, their technology, is good enough, it could be at least evaluated on its own merit for a period of time for anybody who bothers to spend the time to kick the tires a little bit. And certainly, their climbing the benchmark chart, that really helps with getting noticed. You can talk about benchmarking as a way to get around all this sort of stuff that’s maybe not super honest. But at the end of the day,
this is one of the only vectors in which any Chinese tech can really have a presence abroad when frankly the domestic economy or the domestic ecosystem for consuming software technology is still really, really bad and not a great way to make money. So they have to go through this route. So open source has become not just a nice-to-have, I think, but a necessary strategy, which is probably why you see all the Chinese tech gravitate towards open source and really to play it well, to play nice, to build on top of each other.
Their vibe to each other is super friendly. There’s like no obvious hatred or rivalry between any of the AI labs. All that is part of this image that has helped them push themselves abroad in a way that can be recognized despite where they’re coming from.
Kyle Chan (51:15)
Yeah, yeah, yeah. I like that characterization. And now we’re sort of in the stage where earlier open source might have been sort of a newer, nascent, emerging social trend community and then became more central. Now we are in the age of open source frenzy in China, it seems like, like really wholehearted embrace of things like OpenClaw. And I was just wondering, what do you make of all that?
What does that say right now about the state of AI and the state of open source in China?
Kevin Xu (51:48)
Yeah, you know, it’s so, it’s kind of mind-boggling how quickly OpenClaw, which is, for those of you who haven’t heard about it, it’s an open source AI agent platform, right? That was released, I’m going to say a few weeks ago, two to three weeks ago, maybe a month ago, I can’t quite remember, but it’s not a very long time. It climbed the chart on GitHub faster than any project ever. I think it already exceeded a star count
over Linux of all projects within just a few weeks that it has been alive. So it’s almost a new Linux if you want to think about it. And it’s an open source tool. So one thing that’s worth mentioning is that any open source tool, doesn’t matter how popular it is, it’s inherently kind of difficult to set up and use and operate if you’re not somewhat technical or feel comfortable kind of fooling around with some technical details, which is not for everybody.
Kyle Chan (52:19)
Yeah.
Kevin Xu (52:45)
And a very common way to make open source easier to use and to also make money off of it is to offer kind of cloud-hosted solutions, right? Kind of zero setup required. Your granny can do it. Your uncle can do it. And then you just start using it. And the funny thing is that every single AI lab from China and also the hyperscalers up to this point have now offered their own hosted solution of OpenClaw on their own platform
to boost adoption, even to municipal governments. I think Shenzhen and Wuxi have issued directives and policies about how great open source — or not open source, but OpenClaw in particular — is, and we as a city government want to incentivize, subsidize, and help people get on board with this new thing that came out of frankly nowhere on the internet. And the more interesting question to me is that this playbook has been well played
by American hyperscalers too. They really started that, right? AWS was a huge cloud platform of fully hosted open source things, whether it’s database or containers or all this sort of stuff, for a long time and also without giving back for a long time. So AWS’s reputation in open source is very checkered in its past, right? But they kind of played that playbook really, really well. Every single Chinese vendor has internalized that playbook.
And the big question to me right now is why are the American vendors so slow to offering hosted OpenClaw on AWS or Azure or whatever, when all the Chinese vendors have been almost overnight at this point. But yeah, the adoption of OpenClaw is super interesting. Again, it shouldn’t be surprising if you go through the commercialization history, the VC-funded startups that have happened in China,
how they’ve learned to commercialize open source in the cloud era. So now that we are in the AI era, which is still 80% cloud, if you think about it, all the AI stuff that you consume has to ping a cloud server somewhere before you get the response back. So the playbook is actually very, very similar, how they’ve kind of turned on that playbook just much faster than any other country, including the United States.
Kyle Chan (55:02)
Yeah. And it’s interesting because there’s clearly a lot of demand in the U.S. and in China for this. Like you see these crowds of people getting together to all set up their OpenClaw on the used MacBook mini that they got. And so there’s clearly demand, but yeah, somehow you just have this — I mean, I don’t know, maybe this also feeds back into like, if you’re already open-source-forward in China as an AI lab, for example, this kind of fits in better.
And if you’re, I don’t know, like a big public tech company in the U.S., you might be more cautious because, I don’t know, there are sort of various business risks along the way of doing this wrong. I mean, one can speculate.
Kevin Xu (55:47)
Yeah, yeah, I think there’s certainly a little bit of that too, right? Obviously we focus on why China open source is a thing. I think it’s worth a podcast and somebody to talk about why closed source in the U.S. is becoming a thing or why is open source AI in U.S. less of a thing? You know, open source did not start in China. It certainly started in the U.S. on the campus of MIT of all places, right? But yeah, we are shutting ourselves off here in the United States from the goodness of open source.
Kyle Chan (56:04)
Yeah, yeah.
Kevin Xu (56:16)
Is it because of sky-high valuation? Is it just because we have to make more money? I mean, all these AI startups in China also have venture funding, so they have to make money at some point too. So I don’t know if that incentive is necessarily in conflict with each other, but that’s something that’s worth honestly thinking about a little bit harder as far as the overall conversation of where U.S.-China AI is going.
Kyle Chan (56:38)
Yeah, yeah, yeah. Well, on that question, I was wondering what you thought about sort of the future trajectory of open source in China and whether you think that this will continue, especially for the AI labs, or whether you think that they’re going to eventually converge with the U.S. and switch to more proprietary models. I mean, we see like OpenAI, Anthropic, they are spending like ungodly sums on compute.
But they are also making billions of dollars, or maybe even tens of billions of dollars, in revenue from subscriptions, APIs. So yeah, do you think that this is something that Chinese AI labs are going to eventually have to switch to in order to monetize? Or can they, or will they want to keep pursuing open source as sort of their main strategy?
Kevin Xu (57:24)
Yeah, I think that is probably the trillion-dollar question, right, for the entire industry. My current feeling is that because, like we mentioned, the 14th Five-Year Plan really, I think, enshrined open source at the top strategic level. Even the most recent Two Sessions speech by Premier Li Qiang gave open source a shout-out in his work report speech. So it’s very much at the very top level. I can only surmise or assume that
open source will be prominently featured in the 15th Five-Year Planning cycle, which we haven’t seen the official document yet, but that’s my current expectation, which means that a lot of these labs will continue to open source, probably because it aligns with government incentives now, right, or government strategy in ways that the government did not play a huge role five, six years ago at that level. Now it is, and that’s
always a double-edged sword, quite frankly, but it is where it is and they have to do it. But I also think there will be probably three different tiers of open-sourciness that comes out of China. Tier one is DeepSeek, which is going to be an N-of-one example. They will, I believe, always open source to the max because they actually don’t have a
strong incentive to profit-maximize in their own setup. It’s very unique that they get their funding from, whether it’s a hedge fund that’s still making money or just whatever revenue they generate from their API and their chatbot to keep the lights on. And that’s more or less sufficient. They don’t, they’re not accountable to any outside investors or the public market or things like that, right? They will continue to do so. I think a middle tier will be maybe the Alibabas of the world,
where they’ve open-sourced a lot up to this point, but their pressure to monetize is much higher because of the fact that they have a huge cloud business that they have to run, they have to grow. One company that we did not mention up to this point is ByteDance, which is interestingly the least open source of all the AI labs. They have hardly released any open source model that’s worthy of any mention. Their closed-source model, Seed, Seedance,
it’s very, very good, right? And Doubao, their app, is very, very popular, but all that is closed source. So they’re not actually going along with this trend. They’re going against this open source trend to do their own thing. So they’re going to be in that world of closed or half-open-source type situation. And then you’re going to have, I think, some of these independent labs like Zhipu, MiniMax, and Kimi, who again, coming back to what I was talking about, open source as a vector to go overseas.
Kyle Chan (1:00:16)
Yeah.
Kevin Xu (1:00:16)
I
believe they have to continue on this path for maybe much longer than their cap table could even withstand. But it’s very important and it’s also working really, really well. If you look at OpenClaw’s most-used model right now — not OpenClaw in China, OpenClaw period globally —
Kyle Chan (1:00:25)
Yeah, yeah.
Kevin Xu (1:00:39)
I think MiniMax is like number three right now, like Kimi is like number four, like both of them are in the top five as far as if you’re just a random OpenClaw user anywhere in the world, which model do you end up running your OpenClaw on? They’re up there, right? So I think it’s working right now, so they have to keep pushing. But I would say three tiers of open-sourciness along the spectrum of open versus closed is what I’m seeing.
Kyle Chan (1:01:04)
Yeah, yeah, yeah, yeah, especially these smaller startups. I mean, in China, they’re really riding this wave, especially for OpenClaw and really gaining a lot of popularity outside of China because of that. Yeah. Yeah. Is there anything that we missed that you wanted to kind of highlight or any other sort of trends you want to call out? Or if not, worries.
Kevin Xu (1:01:29)
Yeah, no, I think if we were to wrap up, one thing I wanted to just mention for anyone who was listening is that open source is this global movement, right? And it’s probably one of the few things that are actually keeping global collaboration together when everything else in technology is becoming more nationalistic, right? More zero-sum versus positive-sum. And there are even movements and energy in different policymaking chambers to
close off open source, whether it’s from China or from elsewhere in general, to shut off open source, right? Which I think is probably shooting yourself in the foot. It doesn’t matter which country rolls out that strategy. One thing that we haven’t talked about as much, but I think is worth emphasizing here, is just that without open source, there is no technical pipeline for your own country, right? We need to emphasize that open source is at the root of any technical education
Kyle Chan (1:02:19)
Hmm.
Kevin Xu (1:02:27)
initiative. And if we talk about sovereign AI right now, how do you exert sovereignty and control on AI for country X or country Y? If you don’t have enough capable, technically capable people within your own country, there’s no way you can figure it out, right? You can’t have sovereignty and control without having good people to really exert control over technology. And that starts with learning about technology. You cannot learn technology without open source.
So I hope whoever’s listening that’s kind of on that vein, we can have a conversation about this. Open source is pro-innovation, it’s pro-education, and it’s actually pro-competition. It’s anti-monopolistic by nature. So all of these stuff has to come together. And the China story is, quite frankly, just one interesting iteration of the global movement of open source that has been, again, happening for three or four decades at this point.
Kyle Chan (1:03:19)
Yeah, this is amazing. Wow. Yeah. It’s like, it’s not just the particular projects that come out of the open source movement and all that. You know, it’s this broader, deeper effect that it has on what you can do with code and what you can do to foster this sort of technical capability at a national scale globally. So there’s a lot more to the story. Well, this has really been fantastic. I will definitely link to the piece
that you just wrote. I will link to Interconnected. Are there other ways that people can follow you and your work?
Kevin Xu (1:03:58)
I mean, those links are great. I’m on Twitter probably more than I should, so you can follow me on Kevin SXU is my Twitter handle. Obviously I run my own fund as well. The website is pretty boring, but you can go to interconnectedcapital.com if that side of what I do is what you’re interested in. So thanks again for having me, Kyle. Really appreciate it.
Kyle Chan (1:04:22)
Yeah, this is awesome. Thanks so much, Kevin. So just to wrap up, if you like this episode, please rate and subscribe on YouTube, Spotify, or Apple Podcasts. You can find episode transcripts and more information on the High Capacity newsletter at highcapacity.org. I’m your host, Kyle Chan. Thanks for joining and see you next time.