This report is from this week’s CNBC’s “Inside India” newsletter, which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.

Could the answer to ending trade tensions between India and the United States lie beneath the ground in Houston and Hyderabad?

The unexpected solution is bubbling up from America’s booming natural gas industry, just as the world’s most populous country is betting big on gas imports to power its growing economy.

India is on course to double its liquified natural gas (LNG) imports by 2030, progress that would please Washington while at the same time helping New Delhi reduce its reliance on coal and oil. The surge in demand is driven partly by the government’s intention to increase the share of natural gas in its energy mix to 15% by 2030 from 6.7% at the end of 2023.

“Being one of the fastest-growing energy markets, India is nearly doubling LNG imports globally, by our estimates for this decade” said Mayank Maheshwari, an equity analyst at Morgan Stanley. “Imports of U.S. LNG will be critical to the government’s push for a gas-based economy.”

The timing could not be better. Earlier this month, U.S. President Donald Trump unveiled plans for “reciprocal tariffs” on countries that impose duties on American imports. India, with its higher tariff rates and a substantial trade deficit for goods with the United States, could be particularly vulnerable to such measures.

Energy trade is emerging as a potential bridge between the two nations. During their recent meeting in Washington, Trump and Indian Prime Minister Narendra Modi agreed to work toward making the United States “a leading supplier of oil and gas to India.”

“Hopefully, their number one supplier,” Trump added.

A Gas-Hungry Economy

India’s appetite for natural gas is growing rapidly. The government has aggressively promoted vehicles powered by compressed natural gas, leading to a 33% increase in sales in 2024 to more than half a million vehicles, with Maruti Suzuki taking the lion’s share of the market. The number of households with piped natural gas connections has grown 250% over the past seven years ending November 2023 to 11.9 million.

In 2024, India also announced plans to convert a third of its heavy-duty trucks from diesel to liquefied natural gas over the ensuing five to seven years. Natural gas also plays a crucial role in fertilizer production, contributing to India’s food security.

However, domestic production is unlikely to keep pace with demand.

“Near-term demand is supported by a 51% jump in domestic gas production [between 2020 and 2025], but this will not be enough to meet the country’s growing demand for natural gas,” said Rystad Energy analysts led by Kaushal Ramesh in a report last year. “The result is that India will continue to rely heavily on imports to satisfy its future energy needs.”

The American Solution

This is where American gas exports could play a crucial role. “The interesting part about U.S. LNG exports is that they are affordable on a delivery basis for price-sensitive Indian consumers at [$9 to $10 per metric million British thermal units, or about 30% cheaper than spot LNG prices],” Morgan Stanley’s Maheshwari explained.

“Historically, natural gas companies in India have guided for a mix of oil- and gas-linked contracts as the optimal long-term gas sourcing strategy,” the analyst added. “We believe U.S. LNG contracts, if signed, would be a step in that direction.”

Santanu Sengupta, chief India economist at Goldman Sachs, noted that energy purchases have become a key component of evolving U.S.-India relations. The countries are working toward a trade deal that aims to sharply increase bilateral trade to $500 billion by 2030.

Recent developments, such as India’s state-run companies seeking long-term gas supply contracts, suggest momentum is building and India is serious about increasing gas imports.

The government-owned Gujarat State Petroleum recently signed a 10-year agreement with France’s TotalEnergies for gas supplies, while Indian Oil Corporation secured a 14-year deal with Abu Dhabi’s ADNOC.

The path to balanced trade is unlikely to be straightforward. China’s recent decision to impose additional tariffs on U.S. energy exports, including a 15% duty on LNG, could have unintended consequences. Citi’s Global Commodities Analyst Maggie Xueting Lin suggests this could benefit India by making more American gas available to Indian buyers.

Balancing Act

The broader trade relationship remains complex. India’s bilateral goods trade surplus with the United States has doubled over the past decade to $35 billion, according to Goldman Sachs. The U.S. trade-weighted average tariff rate stands at 2.9%, compared with India’s 9.4%.

But both sides appear willing to find common ground. India has already reduced tariffs on several American products and increased market access for its farm products.

The question remains whether the recent energy partnership can help bridge the wider trade gap that has been a source of friction between Washington and New Delhi.

— CNBC’s Michael Bloom contributed reporting.

India and U.S. aims to double trade to $500 billion by 2030. That’s according to Indian Prime Minister Narendra Modi, who made the announcement at a joint press conference with U.S. President Donald Trump on Feb. 13. Trump acknowledged India’s recent move to reduce tariffs on select imports, saying he would begin talks on disparities on trade and hoped to reach an agreement. India’s simple average tariff on countries with the most-favored-nation status, such as the U.S. stands at 17%, compared with America that levies 3.3%. 

Economic outlook for India is positive. Growth in India’s economy is likely to accelerate in the second half of fiscal year 2024 to 2025, according to the Reserve Bank of India Bulletin for February. Increasing rural demand on the back of a strong agricultural sector, and recovering urban consumption on lower interest rates and taxes, will drive economic expansion, the RBI said.

Nuclear ambitions for India. NTPC, the state power company of India, is planning to construct nuclear power plants that have a combined capacity of 30 gigawatts, according to Reuters, which cited three sources with direct knowledge of the matter. The power company initially intended to build 10 GW of nuclear capacity, but increased its target after the Indian government announced plans to open up the sector, the sources said.

Tesla increases its presence in India. Elon Musk’s electric vehicle company chose Indian cities New Delhi and Mumbai as new sites for two Tesla showrooms, reported Reuters, citing sources familiar with the matter. The locations will be showrooms and not service centers, and Tesla plans to “sell imported EVs in India,” according to the first source, who asked to remain unnamed to speak about private matters. Indian Prime Minister Narendra Modi met Tesla CEO Elon Musk in the United States on Feb. 13.

Indian stocks continued to head lower after a brief positive session earlier in the week. The Nifty 50 index has fallen 0.07% this week and has lost 3.1% of its value so far this year. The benchmark is 12.6% below its most recent high in September 2024.

The 10-year Indian government bond yield has ticked to the 6.66% mark, 3 basis points lower from last week.

On CNBC TV this week, Raghuram Rajan, University of Chicago Booth School of Business professor of finance and former Reserve Bank of India governor, said that U.S.-India ties “could be a key relationship in the 21st century.” The defense and trade ties that the countries share, as well as the presence of an Indian diaspora in the U.S., underpin this relationship. Rajan also noted that India is the world’s largest importer of defense goods, which could mean “more cooperation with the U.S.” as the nation moves away from Russia.

Meanwhile, there will be a “wall of new supply for gas” starting in 2027, mostly from the U.S., Qatar and Australia, said Nikhil Bhandari, Goldman Sachs’ co-head of Asia Pacific natural resources and clean energy research. Moreover, if Russia and Ukraine reach a peace deal and normalize the flow of gas across Europe to pre-war levels, prices could fall to $6 to $7 per million British Thermal Units (MMBtu). That said, the gas market will be tight in 2025 because of a “strong winter,” and Goldman says it will remain so in 2026.

Next week will see a flurry of data releases on the manufacturing and service sectors in various countries, as well as an IPO of a power plant equipment supplier in India.

February 21: Quality Power Electrical Equipments IPO, India HSBC flash PMI for February, euro zone HCOB flash PMI for February, U.K. S&P flash PMI for February, Japan Jibun Bank flash PMI for February, Japan inflation rate for January

February 24: Euro zone inflation rate for January, final

February 27: U.S. gross domestic product for fourth quarter, second estimate

Japan’s inflation in January climbed 4% year on year, hitting its highest level since January 2023, further strengthening the case for rate hikes by the country’s central bank.

The core inflation rate — which excludes prices of fresh food — rose to 3.2% from 3% in the prior month and beat economists’ expectations of 3.1%, according to a Reuters poll. This figure was the highest since June 2023.

The so called “core-core” inflation rate, which strips out prices of both fresh food and energy and is closely monitored by the BOJ, climbed slightly to 2.5% from 2.4% in the month before.

The headline inflation rate, which had come in at 3.6% in December, has remained above the Bank of Japan’s 2% target for 34 straight months.

Immediately after the data release, the yen strengthened 0.15% to trade at 149.39 against the dollar.

The inflation figures boost the case for rate hikes by the BOJ, which deliberated tightening rates at its January meeting, with its summary of opinions warning of inflation risks and weakness in the yen.

“It will be necessary for the Bank to adjust the degree of monetary accommodation from the viewpoint of avoiding the yen’s depreciation and the overheating of financial activities, both of which appear to be due to excessively high expectations of continued monetary easing,” the BOJ summary read.

The data also comes after the country’s GDP growth beat expectations on a quarter-on-quarter and annualized basis, rising 0.7% and 2.8% respectively.

However, full-year GDP growth for 2024 slowed to 0.1%, a sharp fall from the 1.5% growth seen in 2023.

In a note before the inflation data release, the Commonwealth Bank of Australia said the case for an earlier rate hike has strengthened in recent weeks because of strong Japanese economic data.

Bank of America analysts wrote in a note earlier this week that the BOJ was also “likely growing more concerned” about inflation risks, which will raise the possibility of earlier hikes and a higher terminal rate.

The analysts also forecast that the BOJ will hike in June and December, and raise their terminal rate forecast to 1.5% with an additional two hikes in June 2026 and the first quarter of 2027.

GameStop CEO and billionaire investor Ryan Cohen has increased his personal stake in Chinese e-commerce giant Alibaba to roughly 7 million shares worth about $1 billion, The Wall Street Journal reported Thursday.

Citing people familiar with the matter, the Journal said the sizable stake in Alibaba is a bullish bet on China’s economic growth in the long run.

Cohen wasn’t immediately available when CNBC reached out for comment.

The news came after the Chinese titan posted a sharp profit hike in the December quarter amid strength in its Cloud Intelligence unit and e-commerce segment. Shares of Alibaba surged 8.1% on Thursday.

In 2023, the investor urged Alibaba to increase buybacks as he believed the stock was severely undervalued, the Journal said.

Alibaba’s outspoken founder, Jack Ma, who has largely kept out of the public eye since 2020, was among the entrepreneurs who attended a rare closed-door meeting headed by Chinese President Xi Jinping on Monday, during which the Beijing leader urged private businesses to “show their talents” and strengthen their confidence in a “new era” for their activity.

Cohen became CEO of meme stock GameStop after his involvement in the video game retailer partly triggered a historic trading mania on Wall Street in 2021. The investor, who co-founded Chewy, has been leading a turnaround in the brick-and-mortar retailer over the past few years.

Under Cohen’s leadership, GameStop has focused on cutting costs and streamlining operations to ensure the business is profitable even though it is not growing. Earlier this month, CNBC reported GameStop was considering investing in bitcoin and other cryptocurrencies.

— Click here to read the WSJ story.

Alibaba shares jumped on Thursday after the Chinese titan posted a sharp profit hike in the December quarter amid strength in its Cloud Intelligence unit and e-commerce segment.

Alibaba said net income hit 48.945 billion yuan ($6.72 billion) in the quarter ended Dec. 31, compared with an LSEG forecast of 40.6 billion yuan and with the 14.433 billion yuan reported in the same period of last year.

Revenue came in at 280.154 billion yuan, versus analyst expectations of 279.34 billion yuan.

The company’s stock has surged by around 50% on both the New York and Hong Kong exchanges in the year to date.

“This quarter’s results demonstrated substantial progress in our ‘user first, AI-driven’ strategies and the re-accelerated growth of our core businesses,” said Alibaba CEO Eddie Wu in a statement accompanying the results.

“Our Cloud revenue growth reignited to double digits at 13%, with AI-related product revenue achieving triple-digit growth for the sixth consecutive quarter. Looking ahead, revenue growth at Cloud Intelligence Group driven by AI will continue to accelerate.”

U.S.-listed shares of the company were up 8.5% after the release of the results.

Alibaba’s Cloud Intelligence Group posted year-on-year sales growth of 13% to 31.742 billion yuan in the three months to the end of December.

The retail giant’s tech activities are being closely watched by investors after the announcement of the Chinese company’s partnership with Apple to roll out AI features for iPhones sold in Chinese.

Market focus has sharpened on Chinese tech developments following the revolutionary late-January release of local startup DeepSeek’s new AI model, which the company claims is more efficient and affordably produced than sector-leading U.S. counterparts. Alibaba, which first made inroads into AI with the launch of its own ChatGPT-style product Tongyi Qianwen (Qwen) in 2023, earlier this year rolled out a new Qwen 2.5 version of its technology that it claimed exceeds the DeepSeek model, according to Reuters.

“The AI era presents a clear and massive demand for infrastructure. We will aggressively invest in AI infrastructure,” Wu said in a Thursday earnings call, according to a transcript. “Our planned investment in cloud and AI infrastructure over the next three years is set to exceed what we have spent over the past decade.”

Alibaba’s outspoken founder Jack Ma, who has largely kept out of the public eye since 2020, was among the entrepreneurs who attended a rare closed-door meeting headed by Chinese President Xi Jinping on Monday, during which the Beijing leader urged private businesses to “show their talents” and strengthen their confidence in a “new era” for their activity.

Alibaba’s key business units, Taobao and Tmall Group, posted an annual 5% uptick in revenue to 136.091 billion yuan in the December quarter, while the International Digital Commerce Group — which oversees ecommerce businesses such as Lazard and AliExpress — added 32% year-on-year to 37.756 billion in revenues over the period on the back of “strong performance of cross-border businesses.”

Questions have lingered over consumer sentiment in the world’s second largest economy. The latest data indicate that Chinese retail sales jumped by a better-than-expected annual 3.7% in December, as Beijing set out to combat a protracted real estate slump with a spate of stimulus measures – including interest rate cuts and a five-year fiscal package worth $10 trillion yuan. Some analysts have warned of ongoing weakness in consumer spending, but consumer inflation nevertheless accelerated to its fastest in five months in January.

Europe’s largest lender HSBC on Wednesday announced a share buyback of up to $2 billion as its annual pre-tax profit rose 6.5%, helped by the sale of its banking business in Canada.

For the full year, HSBC reported revenue of $65.85 billion, down from $66.1 billion in 2023.

Here are HSBC’s full-year results compared with LSEG mean estimates:

• Pre-tax profit: $32.31 billion vs. $32.63 billion
• Revenue: $65.85 billion vs. $66.52 billion

While the profit before tax marginally missed LSEG estimates, it was higher than the $31.67 billion consensus estimate compiled by the bank.

The bank’s profit before tax for the fourth quarter nearly doubled from a year earlier to $2.3 billion — the lender had incurred an impairment charge of $3 billion in fourth quarter last year impacting its performance. Revenue for the reported quarter declined 11% to $2.3 billion.

HSBC said it expects to complete the announced share buyback by the end of their first quarter of 2025.

HSBC’s buyback is in line with market expectations, said Morningstar’s equity research analyst Michael Makdad, adding that plans to trim costs over 2025 and 2026 were a positive.

The bank in its statement said it would cuts costs by an annualized $1.5 billion by the end of 2026.

HSBC forecast banking net interest income of $42 billion in 2025 compared with $43.7 billion in 2024.

These are the lender’s first full-year results after Georges Elhedery was appointed the CEO of the London-headquartered bank in July last year, following the retirement of Noel Quinn.

Hong Kong-listed shares of the bank dipped 0.29% following the earnings release.

On Tuesday, HSBC dismissed about 40 investment bankers in Hong Kong, Reuters reported. The sectors hit hardest are reportedly M&A, consumer, real estate and resources and energy.

Last October, the bank revealed plans to reorganize its business into four units, separating its operations into an “Eastern markets” sector and a “Western markets” division.

“We are creating a simple, more agile, focused bank built on our core strengths … This includes creating four complementary, clearly differentiated businesses, aligning our structure to our strategy and reshaping our portfolio at pace and with purpose,” Elhedery said.

The bank said in its statement that the reorganization will lead to about $300 million in cost reductions in 2025.

Singapore will likely see only a “limited” direct impact from U.S. tariffs as the country runs a trade deficit with the U.S., the country’s deputy prime minister said.

In 2024, the U.S. had a trade surplus with Singapore of $2.8 billion.

However, Gan Kim Yong, Singapore’s deputy prime minister and minister for trade and industry said that the city-state “cannot underestimate” the impact of tariffs in the longer term.

Speaking in an exclusive interview with CNBC’s “Squawk Box Asia,” Gan highlighted that companies could decide to change their production base. In turn, supply chains and trade patterns will shift, causing “greater friction and greater cost” in the global economy that may slow it down.

When asked if tariffs will affect Singapore’s growth projection, Gan said that Singapore does not take its economic forecast for granted and continually works towards meeting, or even exceeding, its target.

“We try to push the economy a little bit further and hope that we can perform better than we projected,” Gan said, adding that the country will also “prepare to give some room, should there be any disruptions to the economy.”

Singapore’s economy is heavily dependent on trade, with the country boasting a trade-to-GDP ratio of over 300%, one of the highest globally.

Gan’s comments come a day after Singapore Prime Minister Lawrence Wong announced the country’s budget for its 2025 fiscal year. It unveiled a slew of support measures for households and businesses to cope with cost-of-living pressures, as well as schemes to support the development of local companies.

One notable announcement made by Wong in the budget speech was that Singapore would study the potential deployment of nuclear power in the country, after having initially assessed in 2010 that conventional nuclear energy was unsuitable for the city-state.

Gan told CNBC that the main consideration for Singapore was the safety and maturity of nuclear technology, also noting that Singapore’s small land size prevents it from having a large safety buffer zone, such as those in traditional nuclear plants.

The island of 456.3 square miles relies on mainly liquified natural gas to fuel its energy needs. In 2023, around 95% of its energy generation came from LNG. Most of Singapore’s natural gas comes from Malaysia and Indonesia.

The remaining 5% of electricity supply is generated by a mix of of coal, oil, solar and waste.

Hence, Singapore is observing the development of small modular reactors, or SMRs, to assess if they are suitable for the country.

“It all depends on the development of technology, for example, how we can commercialize the SMRs to make sure that they’re viable and they are suitable for us?,” Gan said.

While he did not specify how long it would be before Singapore implements nuclear energy, if at all, Gan said, “It will take time for ourselves to be ready for the SMRs when the technology is available,” he said. “Even preparation of sites will take time.”

New Zealand’s central bank on Wednesday slashed benchmark rates by 50 basis points to 3.75%, marking its fourth straight cut, as easing inflation offers the central bank room to boost a sputtering economy.

The move was in line with expectations from economists polled by Reuters, and marks the lowest the policy rate since November 2022.

In its monetary policy statement, the Reserve Bank of New Zealand said inflation remained near the mid-point of its target band of 1%-3%, prompting it to lower rates.

New Zealand reported headline inflation rate of 2.2% in the quarter ended December 2024, with price growth falling for seven of the last eight quarters, according to LSEG data.

The rate cut also comes at a time when the country’s growth has been declining on a year-on-year basis for five straight quarters to September 2024, according to government data.

The New Zealand dollar strengthened by 0.4% to trade at 0.568 against the greenback.

The central bank is optimistic that economic growth will recover in 2025. “Lower interest rates will encourage spending, although elevated global economic uncertainty is expected to weigh on business investment decisions,” RBNZ said.

The bank, however, warned that consumer inflation in New Zealand was expected to be volatile in the near term, due to a lower exchange rate and higher petrol prices.

“The net effect of future changes in trade policy on inflation in New Zealand is currently unclear,” RBNZ said, adding that if economic conditions continue to evolve as projected, the policy rate could be lowered further in 2025.

RBNZ’s revised inflation forecasts for the year ahead reflect the Bank’s concerns about higher oil prices and a weaker New Zealand dollar, said Abhijit Surya, senior APAC economist at Capital Economics.

He pointed out that the RBNZ has confidence that price pressures owed to domestic factors will continue to abate, as the economy has excess capacity.

While the bank is now forecasting to bring down the policy rate to 3% by the end of 2025, it will “eventually” cut rates to 2.25%, Surya said, without specifying a timeframe.

China is starting to see a rebound in its mergers and acquisition scene after years of decline as the government’s stimulus measures start to bear fruit, while pressure from Donald Trump’s tariffs is also driving industry consolidation.

In 2024, China’s M&A activity was on course to log its fifth straight year of decline, until the final quarter of the year, which saw a sudden acceleration in activity. The value of deals conducted during that period jumped 78.5% to $129 billion from $72 billion in the previous quarter, data from Dealogic showed.

And deal-making is about to pick up more, according to industry watchers whom CNBC spoke to.

The uptick in deal flow in the fourth quarter of 2024 was in part fueled by stimulus efforts introduced by policymakers in late September, said Vivian Wong, head of M&A Analytics at ION Analytics, which is under the same group as Dealogic. Those measures aimed to consolidate domestic industries in order to enhance competitiveness in China’s slowing economy, added Wong.

China’s M&A volume has been trending downward since 2020. Furthermore, the total value of deals logged in 2024 is about 45% less than the $553 billion generated in 2020, according to data from Dealogic.

This was largely because of weak overall economic activity in China and the ensuing bearish sentiments, said Theodore Shou, chief investment officer at Skybound Capital, an alternative assets manager.

The conservative positioning of Chinese corporations also led to less appetite for private market transactions in the past couple of years, he added.

However, 2025 will “see significant merger and acquisition activities involving China,” Zhe Yu, a partner at Shanghai-based Zhong Lun Law Firm, which offers legal support for M&A ventures and IPO deals in China, told CNBC. 

Apart from Beijing’s stimulus measures, the flurry of tariff threats before U.S. President Trump’s term and their eventual implementation are also a key driving force for Chinese companies to adapt by diversifying their supply chains and ensuring they have the means to do so, said Deloitte’s APAC M&A Services Leaders Stanley Lah, who is also the firm’s deputy leader of financial advisory in China.

Trump signed an order imposing 10% tariffs against China on Feb. 1. They came into effect Feb. 4 and will apply on top of the existing tariffs of up to 25% on Chinese goods levied during his first presidency.

That development will nudge domestic companies toward consolidation as they look for alternative shipping routes to the U.S. that avoid China as a point of origin, as well as try to become more effective in global markets, Lah said.

“It’s something they need to do quickly, and buying is faster than building a green field,” he added, referring to building facilities and infrastructure from scratch.

This pressure is most keenly felt by small companies in China.

In the third quarter of 2024, China’s micro and small enterprises reported average revenue of 136,000 yuan ($18,700), marking a 4.8% decline compared with the same period in 2023, according to Peking University’s Centre for Enterprise Research’s most recent survey on MSEs. 

To stay afloat, many MSEs had to cut back on hiring and shrink their operations, among a slew of cost-cutting strategies, the survey said.

M&A transactions also allow small companies to better compete on an international scale. For example, Chinese banks or security houses need to consolidate and attain a large-enough scale to prevent downsizing, said Ernst & Young’s Asia-Pacific IPO Leader Ringo Choi. 

China saw its biggest wave of rural bank mergers last year as smaller banks were plagued by weak loan growth and increasing bad loans, according to Reuters’ analysis of government data.

“It no longer makes economic sense for small players to reinvent the wheels again and again just to stay in the game and ultimately, they will not be able to afford that,” said Skybound Capital’s Shou. Chinese companies are competing “too forcefully” with each other, which is lowering their margins, he added.

Corporate consolidations also offer an attractive exit strategy for some of those companies, especially as filing an IPO in the Chinese stock markets becomes increasingly uncertain, Yu said.

Last September, in a bid to enhance deal-making efficiency, the China Securities Regulatory Commission announced that it will simplify its approval processes and cut down the review time for qualified companies. It will also encourage firms to raise capital for their M&A deals in phases. 

Previously, deal-makers faced long approval periods and had to contend with extensive information disclosure demands that came with antitrust and data security concerns.

While antitrust laws and hurdles remain, merging filing requirements have relaxed significantly, Yu said. “Many transactions that would otherwise have been subject to merger filing clearance are no longer required to be filed.”

Interest rates in China are also likely to remain at current levels, which may keep M&A costs at a reasonable level, he added.

Companies with a stronger balance sheet and cash piles also have the capacity to buy out firms in a weaker position as a form of investment, said Lah.

Bigger domestic companies are accumulating large reserves of cash, with Chinese-listed firms paying out a record 2.4 trillion yuan in dividends last year. Goldman Sachs estimates that Chinese companies’ cash distribution could hit $3.5 trillion yuan this year to notch a new high.

Big tech companies like Pinduoduo, a Chinese online retailer, currently have a lot of dry powder, which could go into dividend payouts, share buybacks and even M&A, Ernst & Young’s Choi observed.

A larger portion of the incoming M&A deals will center around domestic transactions rather than cross-border ones, said Deloitte’s Lah, a sentiment echoed by Shou. Both believe that foreign interest in buying Chinese companies has yet to recover.

Moreover, cross-border M&A activities in the high-tech sector is unlikely because of geopolitical factors, said Yu.

Still, Chinese companies may bail out failing foreign peers by merging with or acquiring them, said Shou.

Domestically, some Chinese companies may opt for joint ventures in attempts to expand to new markets, Shou said. The “really hot sectors” which are doing well, such as technology and green energy, will see money coming in, according to Lah.

Similarly, Zhong Lun Law Firm’s Yu sees many potential consolidation opportunities in industries related to new energy, such as solar and wind energy and nickel mining, among others.

Less competitive industries and companies could also let themselves be bought out as a means to survive, the industry watchers whom CNBC spoke to suggested.

One sector that will experience more deals is “fragmented industries with struggling players,” Lah said, because it’s “difficult to make profits as a small company.”

“They need a bigger scale,” or merge with a company with “bigger performance to survive in this new normal,” he said. 

Artificial intelligence startup DeepSeek has rocketed into global prominence, shaking up the AI world, but the team behind it is relatively unknown outside China.

DeepSeek’s founder, Liang Wenfeng, has been dubbed by some in Western media as China’s Sam Altman. But unlike his Silicon Valley counterpart, Liang has maintained a low public profile.  

Liang’s team, comprising young graduates from some of the country’s leading universities, is also little known. The team consists of fewer than 140 people, according to Chinese state media, though a research paper on its latest R1 reasoning model lists about 200 contributors. CNBC has been unable to confirm the official size of the team. 

Outside of its core technology developers, DeepSeek has mostly shared the senior management team, operation staff, human resources and financial accountants of its mothership High-Flyer, according to sources familiar with the company.

Here’s an overview of the people behind the AI sensation and how the startup came into being.

Liang has received the lion’s share of media attention in recent weeks as DeepSeek’s chatbot ascended to the top of global app charts. 

Last month, he reportedly received a hero’s welcome in his hometown of China and was spotted at a roundtable hosted by Chinese Premier Li Qiang, and most recently at a closed-door symposium chaired by President Xi Jinping earlier this week.  

The 40-year-old founder of DeepSeek has been quite media-shy, apart from two rare interviews with Chinese media outlet 36Kr in July last year and in 2023. 

The interviews paint a picture of an idealistic leader set on achieving artificial general intelligence (AGI) — a type of AI that mimics human capabilities — and transforming China into a technology innovator. 

Born in 1985, Liang grew up in Zhanjiang, a port city and trade center in southern China. He was a straight-A student who was particularly gifted in mathematics, according to local media reports.  

After teaching himself calculus in junior high school, he was admitted to Zhejiang University in 2002 and later received a bachelor’s and master’s degree in information and communication engineering in 2010.

With a specialization in machine vision research, in 2008 Liang started writing machine-learning algorithms to analyze market trends and macro data to make investment decisions, according to Chinese technology-focused media outlet 36Kr, which had interviewed Liang.

AI was not a typical quant strategy at the time, but Liang drew inspiration from Jim Simons, a pioneer of quantitative investing who founded Renaissance Technologies, one of the world’s most successful funds, Liang said in the introduction to the Chinese version of Simons’ biography.

In 2015, Liang and college friend Jin Xu founded High-Flyer Asset Management, a quantitative hedge fund that uses complex mathematical algorithms to predict market trends and make investment decisions.

Xu was a graduate from Zhejiang University’s Chu Kochen Honors College, which selects top students at the elite university.

There, Xu focused his PhD studies on robot autonomous navigation and machine learning — similar to Liang’s focus of postdoctoral research — and was a key member of the visual navigation research project for China’s lunar exploration program. 

Xu, who once worked at Huawei Technologies’ software development in the early 2010s, now leads High-Flyer’s technology development and crafts trading strategies, his profile page on private equity database PaiPaiWang showed.

Zhengzhe Lu, the chief executive officer of High-Flyer, graduated from the same university as Liang and Xu, before earning a master’s degree from the London School of Economics and Politics. 

Prior to High-Flyer, Lu worked at the state-backed China Merchants Bank, where he was engaged with macro research and overseas derivative investment.

In an interview with Chinese state media in 2023, Lu said: “We have set up a new team independent of investment, what is equivalent to a second start-up” — which later grew to become DeepSeek. “We want to do things with greater value and things that go beyond investment industry.”

The pair manage some of the best performing funds under the company’s portfolios, with averaged returns over 20% in 2024, according to PaiPaiWang. That was above gains of about 15% in the CSI 300 index last year, a 5% rise in the small-cap CSI 500. 

The quant fund’s profits were partially channeled to fund the rise of DeepSeek, Liang told 36 Kr in 2023.

In 2023, High-Flyer spun off DeepSeek as an independent enterprise, expanding its remit beyond investment and focusing on pursuing AGI.   

The team consists mostly of local engineering, computer science and AI graduates from top universities in China — such as Tsinghua University and Peking University — many of whom have published recent papers on subjects such as language models and machine learning.

A number of team members are also graduates from top American universities with experience at Nvidia and Microsoft who decided to return to China’s growing AI industry, according to their LinkedIn profiles. 

A key attribute that sets the team apart is age, as DeepSeek favors graduates with less work experience.

Instead, “they emphasize academic degrees, awards at international programming competitions, research papers published at top industry journals,” a headhunter for DeepSeek told CNBC.

In the interview in 2023, Liang said experience is less important in the long run and “foundational abilities, creativity, and passion are more crucial.” 

In 2024, he said that while the top 50 talent in AI may not have been in China, DeepSeek was aiming to cultivate its own.

Top graduates also appear to be attracted to the firm because of its reportedly higher salaries and greater degree of bottom-up management than might be found at a larger tech firm. 

Zihan Wang, a former DeepSeek employee who spoke to the MIT Technology Review in January, said he was given abundant computing resources and freedom to experiment at DeepSeek.

Singapore on Tuesday unveiled steps to support households and businesses in its 2025 fiscal year, as Lawrence Wong set out to combat cost-of-living concerns in his first budget as prime minister.

Wong, who previously delivered Singapore’s budgets as finance minister, said that the measures follow the rise in global inflation following the Russia-Ukraine war and disruptions in energy, food and supply chains.

He announced each household will now receive 800 Singapore dollars ($596) in consumption vouchers over the course of 2025, while all Singaporeans above the age of 21 or the age of 60 will respectively get an additional SG$600 and SG$800 of vouchers in July, to commemorate the country’s 60th year of independence.

A 60% personal income tax rebate was also announced for the 2025 assessment year, capped at SG$200.

On the business front, Wong announced a 50% rebate for corporate income tax for companies.

Eligible companies will receive a minimum benefit of SG$2,000 even if they are not profitable, as long as they are active and have employed at least one local person in 2024. This benefit will be capped at SG$40,000 for each company.

The government will also increase co-funding levels for companies that raise the salaries of lower wage workers.

While Wong said that these measures will help mitigate the impact of rising costs, he added that “the best way to adjust to higher prices is to grow the economy and increase productivity, so that Singaporeans can enjoy higher real incomes and better standards of living.”

Speaking to CNBC after the speech, Song Seng Wun, Singapore economic advisor at CGS International, said that the budget was more focused on the “softer side” of enhancing social policies, such as support schemes for families and children.

Song explained that, “in terms of building up Singapore as a business hub, connections to the world for trade in goods and services, that has generally mostly been done. Now it’s really about enhancing it to maintain its edge versus everybody else.”

Wong pledged Singapore will take “bold and decisive actions to advance our growth frontier” amid intensifying competition, pointing out that “we will be left behind” in the event of failure.

He noted that, while the country’s economy expanded by more than 4% in 2024, that level of growth will be difficult to achieve on a sustained basis.

Wong added that if Singapore could secure an average of 2%-3% growth per annum over the next decade, “we will be able to create better jobs and opportunities, and improve standards of living for all Singaporeans.”

In light of that, the prime minister said, the government will extend support programs for companies that want to globalize, as well as for mergers and acquisitions.

Singapore will also introduce a new SG$1 billion Private Credit Growth Fund to give companies more financing options, Wong said attributing the decision to the emergence of a private credit market that offers “innovative financing solutions to companies.”

Wong pointed out that companies may also want to list on a stock exchange to access more capital, as they scale up.

It comes as Singapore’s monetary authority set up a review group to strengthen the attractiveness of the Singapore stock market back in August 2024, with the first set of measures — including several tax-related recommendations — in on Feb. 13.

Wong said he has accepted the recommendations, and will introduce tax incentives for Singapore-based companies and fund managers that choose to list in Singapore and grow their economic activities locally.

Tax incentives for fund managers will be given to those who “invest substantially” in Singapore’s capital markets, in order to encourage more investment in the country’s capital markets.

“The SGX listing incentives are substantial, but challenges like market liquidity and valuations remain. The impact will also depend on further recommendations from Singapore’s Equities Review Group,” Ajay Kumar Sanganeria, partner and head of tax for KPMG in Singapore, told CNBC on Tuesday.

The review group is expected to deliver a subsequent update on Feb 21.

Turning to technology, Wong said that enterprises must now invest in technology, including in analytics powered by artificial intelligence, so as to enhance their competitiveness and productivity.

He then announced that the government will set aside SG$150 million for a new Enterprise Compute Initiative, where eligible enterprises will be partnered with major cloud service providers to access AI tools and computing power, as well as expert consultancy services, so that they can leverage AI more effectively.

Sanganeria said that, “by prioritizing advancements in infrastructure, exploration of new energy solutions, and climate resilience, Budget 2025 positions Singapore as a global value creation hub.”

He added that Singapore’s focus on fostering leadership in technology and sustainability “reaffirms the nation’s ambition to remain a leader in these critical areas.”

Wong said Singapore’s revenue collection was “better than expected” in the 2024 fiscal year, mainly because of an upside in corporate income tax. He projected that corporate income tax takings will rise to 4.1% of GDP in the 2024 fiscal year, up from about 3.2% in the past.

That’s despite higher expenditure, such as top-ups to Singaporeans’ medical savings accounts and the earmarking of projects such as a fifth terminal for Changi International Airport.

The government therefore expects to end its 2024 fiscal year with a surplus of SG$6.4 billion, or 0.9% of Singapore’s gross domestic product. It anticipates ending the 2025 fiscal year with a surplus of SG$6.8 billion.

CGS’ Song said that the fiscal surplus was “a bit more” than what he expected, pointing out that most analysts had projected the government would deliver an expansionary budget and project a deficit for fiscal year 2025.

Under the Singapore Constitution, an administration must maintain a balanced budget in each term of government and can only tap past reserves with presidential approval. The government is not allowed to borrow to fund its operating expenses.

Correction: This article has been updated to accurately reflect the amount of the expected budgetary surplus in the 2025 fiscal year.