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(Refiles story to correct formatting, tweak to bullets) By Eduardo Baptista and Fanny Potkin BEIJING/SINGAPORE (Reuters) -China's state-owned defense giant Norinco in February unveiled a military vehicle capable of autonomously conducting combat-support operations at 50 kilometres per hour. It was powered by DeepSeek, the company whose artificial intelligence model is the pride of China's tech sector.  The Norinco P60’s release was touted by Communist Party officials in press statements as an early showcase of how Beijing is using DeepSeek and AI to catch up in its arms race with the United States, at a time when leaders in both countries have urged their militaries to prepare for conflict. A Reuters review of hundreds of research papers, patents and procurement records gives a snapshot of the systematic effort by Beijing to harness AI for military advantage. Specifics of how the systems behind China's next-generation weapons work and the extent to which it has deployed them are a state secret, but procurement records and patents offer clues into Beijing's progress toward capabilities like autonomous target recognition and real-time battlefield decision support in a way that mirrors U.S. efforts.  Reuters couldn't establish if all the products had been built and patents don't necessarily indicate operational technology. The People's Liberation Army (PLA) and affiliates continue to use and look for Nvidia chips, including models under U.S. export controls, according to the papers, tenders and patents.  Reuters could not determine if those chips were stockpiled before Washington imposed restrictions as the documents do not detail when the hardware used was exported. Patents filed as recently as June show their use by military-linked research institutes. In September 2022, the U.S. Commerce Department banned exports to China of Nvidia’s popular A100 and H100 chips. Nvidia spokesman John Rizzo said in a statement to Reuters that while the firm can't track individual resales of previously sold products, "recycling small quantities of old, second-hand products doesn't enable anything new or raise any national security concern. Using restricted products for military applications would be a nonstarter, without support, software, or maintenance." The U.S. Treasury and Commerce Department did not respond to questions about Reuters' findings.  The Chinese military has also in 2025 increased its use of contractors that claim to exclusively use domestically-made hardware like Huawei AI chips, said Sunny Cheung, a fellow at the Washington-based Jamestown Foundation defence policy think-tank, who analysed several hundred tenders issued from the PLA Procurement Network over six months this year.  Reuters couldn’t independently confirm his assertion but the shift would coincide with a public pressure campaign by Beijing on domestic firms to use China-made technology. The news agency's review of procurement notices and patents filed to China’s patent office found demand for and use of Huawei chips by PLA affiliates, but it was not able to verify all the tenders seen by Jamestown, which is releasing a report this week that it provided early to Reuters.  Huawei declined to comment when asked about military deployment of its chips. The Chinese defence ministry, DeepSeek, and Norinco did not return requests for comment about their use of AI for military applications. The universities and defence firms that filed the patents and research papers seen by Reuters also did not respond to similar questions. DEEPSEEK DEPENDENCE Usage of DeepSeek models was indicated in a dozen tenders from PLA entities filed this year and seen by Reuters, while just one referenced Alibaba's Qwen, a major domestic rival.   Alibaba didn’t return a request for comment about military use of Qwen.  DeepSeek-related procurement notices have accelerated throughout 2025, with new military applications appearing regularly on the PLA network, according to Jamestown.  DeepSeek's popularity with the PLA also reflects China's pursuit of what Beijing calls "algorithmic sovereignty" – reducing dependence on Western technology while strengthening control over critical digital infrastructure. The U.S. Department of Defense declined to comment about the PLA's use of AI. A State Department spokesperson said in response to Reuters' questions that "DeepSeek has willingly provided, and will likely continue to provide, support to China's military and intelligence operations."  Washington will "pursue a bold, inclusive strategy to American AI technology with trusted foreign countries around the world, while keeping the technology out of the hands of our adversaries," the spokesperson added.  AI-POWERED PLANNING AND APPLICATIONS China is looking at AI-powered robot dogs that scout in packs and drone swarms that autonomously track targets, as well as visually-immersive command centres and advanced war game simulations, according to the documents.   In November 2024, the PLA issued a sci-fi-esque tender for AI-powered robot dogs that would scout together for threats and clear explosive hazards.  Reuters couldn't identify if the tender was fulfilled. China has previously deployed armed robot dogs from AI robotics manufacturer Unitree in military drills, according to images released in state media.  Unitree didn’t respond to queries about its PLA work.     The review of patents, tenders and research papers published in the past two years shows how PLA and affiliated entities are looking to AI to improve military planning, including developing technology to quickly analyse images taken by satellites and drones.  Researchers at Landship Information Technology, a Chinese company that integrates AI systems into military vehicles including Norinco's, said in a February white paper released to promote their services that its technology built on Huawei chips can rapidly identify targets from satellite imagery, while coordinating with radars and aircraft to execute operations.   The time taken for military planners to shift from finding and identifying a target to executing an operation has also been shortened by AI, according to Xi'an Technological University. Researchers at that institute said in a summary of their findings released in May that their DeepSeek-powered system was able to assess 10,000 battlefield scenarios – each with different variables, terrain, and force deployments – in 48 seconds.  Such a task would have taken a conventional team of military planners 48 hours to complete, they said.  Reuters could not independently verify the researchers' claims. AUTONOMOUS WEAPONS Chinese military entities are investing in increasingly autonomous battlefield technology, the documents suggest.  Two dozen of the tenders and patents seen by Reuters show the military attempting to integrate AI into drones so they can recognize and track targets, as well as work together in formations with little human intervention.  Beihang University, known for its military aviation research, is using DeepSeek to improve drone swarm decision-making when targeting "low, slow, small" threats – military shorthand for drones and light aircraft – according to a patent filing this year.  Chinese defence leaders have publicly committed to maintaining human control over weapons systems amid growing concern that a conflict between Beijing and Washington could lead to the unchecked deployment of AI-powered munitions.  The U.S. military, which is also investing in AI, is aiming to deploy thousands of autonomous drones by the end of 2025 in what officials say is an attempt to counter China's numerical advantage in unmanned aerial vehicles. U.S. CHIPS, CHINESE MODELS Chinese defence contractors like Shanxi 100 Trust Information Technology have touted in marketing materials their reliance on domestically produced components like Huawei's Ascend chips, which allow AI models to operate.  The firm didn't respond to …

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By Leika Kihara TOKYO (Reuters) -The world's first stablecoin pegged to the yen will be launched in Japan on Monday, a small but significant move in a country where traditional payment means like cash and credit cards dominate financial infrastructure. A Japanese startup, JPYC, said it will begin issuing stablecoins that are fully convertible to the yen and backed by domestic savings and Japanese government bonds (JGB). The move follows U.S. President Donald Trump's support for the sector that has sparked a revival of interest in the idea of using blockchain in the mainstream financial system. China, too, is considering allowing usage of yuan-backed stablecoins, a sign of growing momentum worldwide of the use of the digital currency – typically pegged to a fiat currency and offering faster and cheaper transactions. Japan's three megabanks will also jointly issue stablecoins, the Nikkei daily reported earlier this month, which may push the digital asset into the mainstream in a once cash-loving population. Stablecoins backed by the U.S. dollar currently dominate the market, accounting for over 99% of the global stablecoin supply, according to the Bank for International Settlements. In Asia, Japan laid out rules in 2023 to allow issuance of stablecoins. South Korea has also pledged to allow companies to introduce won-based stablecoins. While various financial institutions have announced plans to look at launching stablecoins, policymakers have expressed concern that stablecoins could facilitate the movement of funds outside regulated banking systems and potentially undermine the role of commercial banks in global payment flows. "Stablecoins might emerge as a key player in the global payment system, partially replacing the role of bank deposits," Bank of Japan Deputy Governor Ryozo Himino said in a speech last week, urging global regulators to adapt to new realities in the financial system. Known as a population favouring physical currency, Japan has gradually embraced digital innovation with the ratio of cashless payments having risen to 42.8% in 2024 from 13.2% in 2010, according to government data. The Japanese startup has said it will initially not charge transaction fees for its stablecoins, named JPYC, to focus on expanding its usage, and instead earn money from interest on holdings of JGBs. Tomoyuki Shimoda, a former BOJ executive who is currently an academic at Japan's Rikkyo University, said it would take time for yen stablecoins to spread unlike those backed by the U.S. dollar – the world's reserve currency used across the globe. "There's a lot of uncertainty on whether yen stablecoins will become widespread in Japan," Shimoda said. "If megabanks join the market, the pace could accelerate. But it could still take at least two to three years." (Reporting by Leika Kihara; Editing by Sonali Paul)

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