DeepSeek, Unitree, and the Six Dragons: Hangzhou’s Plan to Shape Technology’s Future

Executive Summary:

• Decades of policy support from provincial, city, and district governments underpin the successes of AI firm DeepSeek and five other tech companies domestic observers are referring to as “the six little dragons of Hangzhou.”
• Since 2019, Zhejiang Province (in which Hangzhou is located) became the first to implement a “chain leader system,” extending party-state control over supply chains through a structure that involves close coordination between senior local civil servants and industry association heads.
• Buoyed by the firms’ recent successes in AI, robotics, gaming, and brain-computer interface technology, Hangzhou has signaled it will continue policy support in the medium term to maintain a leading role in new technologies.

DeepSeek’s open-source large language model (LLM) R1 has made headlines outside the People’s Republic of China (PRC) since the turn of the year for its novel architecture and claims about its cost efficiency. PRC State media have made note of this—a recent article quotes venture capitalist Marc Anderssen heralding it as artificial intelligence’s (AI) “Sputnik moment” (People’s Daily Online, January 29).

The company behind the new model, Hangzhou DeepSeek Artificial Intelligence Basic Technology Research (杭州深度求索人工智能基础技术研究), was founded in Hangzhou in 2019. The city, often referred to as the PRC’s “e-commerce capital” (电商之都) has long been a focus of Beijing’s industrial policy-led growth targeting the tech sector, having set up set up a pilot zone for cross-border e-commerce there in 2015 (Hangzhou Daily, March 8, 2023; Hangzhou Online, July 11, 2023).

Now the city is pitching itself as a hub for tech startups, emphasizing the “six little dragons of Hangzhou” (杭州六小龙)—a term that gained popularity in early 2025 that refers to a set of emerging firms linked to Hangzhou, of which DeepSeek is one (Hangzhou Investment Promotion Bureau, Janaury 16; National Business Daily, February 7). [1] The other five include Game Science (游戏科学), the game developer behind the wildly successful “Black Myth: Wukong” (黑神话: 悟空) (The Paper, February 12); Unitree Robotics (宇树科技), whose robotic dog captured the attention of Elon Musk, as PRC state media was again quick to point out (Xinhua, December 31, 2024); Manycore Tech (群核科技), a 3D design software firm; Brain Co. (强脑科技), a noninvasive brain-computer interface company similar to Neuralink; and DEEP Robotics (云深处科技), another firm that builds intelligent four-legged robots (The Paper, February 12).

The PRC’s top leadership have shown an interest in Hangzhou’s innovation scene in recent weeks. Premier Li Qiang (李强) visited the city’s Chengxi Science and Technology Innovation Corridor (城西科创大走廊) and Zhijiang Lab (之江实验室) at the end of 2024, before meeting with DeepSeek founder Liang Wenfeng (梁文锋) the following month (Shanghai Observer, January 22). Officials also discussed DeepSeek’s technology at the annual Two Sessions meetings in Beijing in early March (Xinhua, March 10). This may in part be helped by the fact that President Xi Jinping was Zhejiang Province’s party secretary in the mid-2000s. Some of Hangzhou’s tech-oriented industrial policies began at that time under his watch, and his patronage may count for something in the current round of support for nascent tech firms.

Hangzhou’s Decades of State Support

Investment by local governments in Hangzhou’s technology sector long predate the rise of these six firms. Between 2002 and 2007, while Xi was party secretary, Zhejiang Province’s expenditure on research and experimental development increased by over four times to RMB 28 billion ($3.9 billion). The province introduced “Digital Zhejiang” (数字浙江), a plan to use informationization to drive industrialization and modernization of the province, and the “Eight Eight Strategy” (八八战略), which outlined eight general advantages of the province with eight corresponding actions to promote or accelerate their development (CCTV, July 10, 2023). One of this latter strategy’s eight advantages was “massive specialty industries” (块状特色产业)—sometimes translated as “massive economic”—and led to a number of instruments promoting concentrated and specialized industrial bases and advanced manufacturing hubs (Baidu Baike, accessed March 19). For instance, Game Science’s home district of Xihu (西湖区) provided digital content companies, including those in the gaming industry, with rent subsidies or full waivers for up to three years (China National Radio, February 10).

In 2010, Hangzhou’s government launched “Project Eagle (雏鹰计划)” to support science and technology startups (Hangzhou Government, April 20, 2010). [2] The project collaborates with incubators and accelerators to identify high-potential technology firms. It also provides public funding and other support for startups founded by college graduates and returning overseas students. Unitree was a beneficiary of its initial round of support to 1,000 technology start-ups in its first five years (PRC National Radio, January 31). The firm likely also benefited from industrial subsidies from the government of Binjiang District (滨江区), where it is headquartered. The district allocates at least 15 percent of its annual expenditure to support high-tech industries (CCTV, February 9).

Party-state steerage and massive government subsidies are integral to the functioning of this innovation ecosytem (OECD, February 4). In 2019, Zhejiang became the first province to implement a “chain leader system” (链长制). Originally introduced in the city of Changsha, Hunan in 2017, the system extends party-state control over supply chains through a structure of “chain masters (链主)” and “chain leaders (链长).” Chain masters—usually local ledering enterprises—serve as market coordinators, while chain leaders—typically senior local civil servants and industry association heads—act as key advocates (Chinese Institute for Quality Research, January 17, 2021). The same year, Hangzhou started funding and supporting fundamental AI research (Hangzhou Government, December 12, 2019).

This support is set to continue in the medium term. Released in early January, the latest “Hangzhou AI Industry Chain High-Quality Development Action Plan” (杭州市人工智能全产业链高质量发展行动计划) prioritizes computing power infrastructure, LLM technologies, and AI applications—further underscoring the state’s successful control over the supply chain and the city’s tech sector (Zhejiang Document Library, January 8). Hangzhou’s government also aims to recognize over 2,000 new national high-tech enterprises, launch more than 300 major technology projects at the municipal level, and roll out more than a thousand key municipal projects, with a total planned annual investment of more than RMB 300 billion ($40 billion) (CCTV, February 12). It also renewed “Project Eagle” in September 2024, and in February 2025 announced that it will coordinate over 15 percent of existing industrial policy funds to focus on investing in high quality and new quality productive forces, increasing support for future industries (The Paper, February 12).

Conclusion

The growth of Hangzhou’s “six little dragons” has been supported by over twenty years of policy support from ditrict, city, provincial, and central governments. Recent successes for DeepSeek, Game Science, and Unitree are in part a result of the innovation ecosytem the Party has underwritten in the region. The Party is now doubling down on the strategy. In early February at the city’s “First Spring Conference” (新春第一会), party secretaries from all 13 districts announced their policy goals for the 2025 fiscal year. Many were related to the “Six Little Dragons” (The Paper, February 14). Whether Hangzhou can become a critical hub for emerging technologies remains to be seen, but it has the political will and, perhaps, the political backing to make progress in that direction.

Notes

[1] DeepSeek’s most important operations likely take palce in Beijing, but the Hangzhou government still applauds DeepSeek as a local miracle (China Brief, February 11; 36kr, March 3).

[2] The full name of the plan is: “Project to Cultivate Hangzhou’s Science and Technology Startups” (杭州市科技型初创企业培育工程). In September 2024, the Hangzhou government renewed “Project Eagle” (Hangzhou Science and Technology Bureau, September 10, 2024)