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The Private Firms Powering China’s Military AI Push

China’s private firms are winning its military AI bids – and Washington doesn’t seem to grasp the implications.

In February 2026, a notice on the People’s Liberation Army’s procurement platform revealed that Shanxi 100 Trust Information Technology, a 266-person IT firm headquartered in China’s coal belt, had been banned from military procurement for one year for submitting falsified bidding materials. What made the penalty remarkable was not the violation itself, which is common enough in PLA procurement. It was the company. 

100 Trust is what a Jamestown Foundation analysis identified as “the only wholly privately-owned firm” in China’s xinchuang (信创) domestic IT innovation framework. Yet this private company from Taiyuan holds classified-project clearance and has won some of the PLA’s largest DeepSeek integration contracts. 

The empirical picture is striking, and consistent across every major dataset available. According to a Georgetown CSET study, of the 338 entities that won AI-related PLA contracts, close to three-quarters were nontraditional vendors with no self-reported state ownership ties. The Jamestown Foundation analysis, which looked at hundreds of DeepSeek-specific procurement tenders, found the same pattern: private companies, not state-owned enterprises (SOEs), won a majority of integration contracts. The trend spans domains, from autonomous combat-support vehicles to battlefield scenario assessment tools, as Reuters documented in a separate investigation. 

Beijing is clearly serious about military AI. But private firms, not the state’s own defense industrial base, are doing most of the delivering.

Why Private Firms Win

Two structural conditions explain the pattern, predict which firms are most likely to keep winning, and offer a framework for tracking how this market evolves.

The first is dependence on state-controlled resources. U.S. export controls on advanced chips have created what might be called an export control paradox: restrictions intended to slow China’s military AI development have simultaneously deepened private firms’ reliance on the Chinese government for access to computing power. With Nvidia hardware increasingly difficult to obtain, firms seeking government and military contracts have converged on domestic alternatives, primarily Huawei’s Kunpeng processors and Ascend AI chips, whose adoption may have become a de facto prerequisite for access to state procurement. 

Firms building on this stack have a structural incentive to demonstrate political reliability, and winning PLA contracts is among the most visible ways to do so. 100 Trust’s own product page highlights “domestically produced core components” as a key selling point, and its primary computing infrastructure runs on the Huawei stack. This is not just about branding. It is a market signal directed at the state.

The second condition is organizational capacity for rapid integration. DeepSeek’s open-source architecture compressed what was once a model-layer advantage into a deployment-speed competition. When the underlying model is freely available, the differentiator becomes how fast a firm can customize, integrate and deliver a working system to a military end user. 

DeepSeek-related procurement accelerated throughout 2025, and compressed tender timelines structurally favor the firms that can move fastest. Private IT firms, lean and technically agile, hold a structural edge in precisely this kind of competition. Researchers at Xi’an Technological University demonstrated the potential: a DeepSeek-powered system assessed 10,000 battlefield scenarios in 48 seconds, a task they estimated would take conventional military planners 48 hours.

The interaction between these two conditions matters most. Firms with both high dependence on state-controlled compute and high capacity for rapid integration are the ones that win repeated PLA contracts. This is a structurally predictable outcome, and it is precisely the profile of companies like 100 Trust.

The Potential for Corruption

On paper, 100 Trust is the ideal case of private-sector alignment with military priorities. Beyond the PLA contracts and classified-project clearance described above, the company builds its computing infrastructure primarily on Huawei’s Kunpeng and Ascend architecture, maintains significant contracts with the China Aerospace Science and Technology Corporation, and says its products were reviewed by top leader Xi Jinping on three separate occasions. By any measure, this is a firm deeply embedded in the defense ecosystem, with every structural incentive to align.

Yet on February 8, the PLA’s military procurement platform published a penalty notice from the Cyberspace Force procurement department: 100 Trust had submitted falsified materials in a bidding process and was banned from all military procurement across all service branches for one year. The penalty extended to the company’s legal representative and its authorized bidding agent.

The violation, ironically, stems from the very structural logic that explains private firms’ outsized role in PLA AI procurement. The same agility that allows a small private company to outcompete state-owned defense giants in rapid integration cycles also creates the conditions for opportunistic bid inflation, overstating capabilities to win contracts in a market where demand outpaces verified supply. Private-sector speed is a double-edged sword: it accelerates both genuine integration and the temptation to........

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