(JW Insights) Jul 19 -- Xia Zuoquan, a Chinese billionaire investor who made his fortune betting on the once tiny battery maker BYD, is less certain about China's ability to make big technological breakthroughs such as OpenAI's ChatGPT in the near future, reported South China Morning Post on July 18.

While the 1995 investment in BYD, now the world's largest electric vehicle maker, has earned him enormous returns, Xia sees the lack of fundamental research or a mature capital market as an obstacle for China to make technological breakthroughs.

"I don't think China can all of a sudden produce ChatGPT-level applications or technologies," Xia told the South China Morning Post on July 14 on the sidelines of an industry forum organised by the Shanghai Advanced Institute of Finance in Hong Kong.

"China still lacks a lot of fundamental things," he said. "For instance, certain foundational algorithms are American. Chips are American, and a lot of key industrial software and hardware."

Xia, who remains a non-executive director at the EV giant he co-founded, has been running his own technology investment firm Zhengxuan Investment since 2003. His net worth is $3.7 billion, according to Forbes.

Zhengxuan focuses on hi-tech fields including advanced manufacturing, artificial intelligence (AI), robotics, new energy and semiconductors, according to the company's website. It has backed Chinese companies including rocket maker OneSpace and humanoid robot maker UBTech, which earlier this year filed to go public in Hong Kong, said the SCMP report.

Still, Xia's investment firm remains cautious when it comes to investing in Chinese start-ups working on large language models (LLMs), the technology that underpins ChatGPT-like services, he said.

Chinese start-ups hoping to join the generative AI race face an underdeveloped capital market in the country, where most investment institutions and government-backed funds are hesitant to put in billions of dollars or wait more than a decade for the companies to succeed, according to Xia.

"It's difficult for very fundamentally innovative technologies in the field of AI to come out of China in the short term," he said. "So we're not very hopeful of investing in ChatGPT-like services."

Zhou Hongyi, founder and chairman of Chinese cybersecurity firm 360 Security Technology, said earlier this month that government bodies and enterprises in China should take a cautious approach towards adopting LLMs by keeping them "in a cage", separate from their main businesses, because the tech is still "unreliable".

Investment interest in generative AI is high in China, where the largest number of start-ups in the industry received funding in the first half of the year, according to a report by Zhidongxi, an AI-focused research firm in China. Of 51 generative AI start-ups to receive funding around the world for the period, 22 were in China compared with 21 in the US.

China's AI market continues to attract high-profile figures. Lee Kai-fu, a prominent venture capitalist and former president of Google China, earlier this month unveiled his new venture Lingyi Wanwu, which aims to develop its own LLM.

Lee called LLMs a "historical opportunity" that China must not miss, adding that China faces risks such as high fees and restricted access if it keeps relying on open-source models built by foreign companies, said the SCMP report.