The artificial intelligence industry and in China, a country in constant evolution par excellence, is evolving at an increased speed. At stake are not only billions of yuan, which are naturally covered by entrepreneurs, experts, academics, investors, but also the future leadership of a sector that is expected to be fundamental for our lives.

While on the one hand China has “pierced” the two previous great industrial revolutions, the British one and the subsequent one led by the Americans, it now does not want to be left behind in a new and disruptive phase of change that is expected to be structural.

The country has the capacity, the numbers and the market, to impose its own indelible mark on the development of such a powerful technology.

1. Planning and Strategies

China’s artificial intelligence (AI) journey is unfolding at an unprecedented pace, positioning the nation as a global leader in AI development and adoption. With the core AI industry set to exceed $140 billion by 2030 and related sectors set to reach a staggering $1.4 trillion, the country is leading the way for transformative advances across industries. This article explores the key drivers, enablers, challenges, and impacts of China’s AI-driven industrial transformation.

1.1 Strategic Vision and National Governance

China’s commitment to AI development is anchored in its “Next Generation AI Development Plan” (2017), which outlines a phased development strategy. By 2020, China has aimed to synchronize its AI capabilities with global standards, while by 2025, AI is expected to drive significant industrial and economic transformation, culminating, according to Chinese leaders, with the creation of a China global AI innovation hub by 2023. This roadmap reflects a nation that prioritizes AI as the cornerstone of its technological and economic future.

To support this vision, China has introduced adaptive regulations that balance innovation with safety and governance. Policies such as the “Next Generation AI Governance Principles” (2019) and the “AI Code of Ethics” (2021) establish frameworks for the responsible use of AI. Regulations addressing algorithmic recommendations, deep fakes, and generative AI services further demonstrate China’s commitment to ethical and safe AI implementation. Multi-level policy design complements these efforts, with central and local governments coordinating strategies.

Planning and the role played by China’s “technocratic” leadership, including in this area, is critical. Over the years, the Chinese government has identified the “National AI Teams”, including 15 China-based companies such as Baidu, Tencent, Alibaba, SenseTime and iFlutek. Each of these companies initially had the goal of developing a specific AI sector in China, such as facial recognition, software/hardware development, and speech recognition. In recent years, new technologies have consequently been developed in a “scientific” way within the country, in a state that has the highest number of internet users in the world, and can therefore carry out a “machine learning” process with a frightening amount of data.

In addition to the key strategies already listed, other policies related to AI have been launched in China over the last few years. Among these, we highlight the comprehensive strategy of “Made in China 2025” (2015), the “Internet + AI Three year implementation Plan” (2016), the “Guidelines for the construction of a national open innovation platform on the generation of new artificial intelligence” (2019) and the “China Data Security Law” (2023)

1.2 Key Enablers of China’s AI Ecosystem

After a careful analysis of the documents released by the Chinese government, we can state that China’s AI ecosystem is fueled by four key enablers: infrastructure, data, energy, and talent.

• Infrastructure: China has invested heavily in advanced infrastructure, including extensive 5G networks, high-capacity data centers, and robust cloud computing facilities. These developments provide the backbone for training and deploying AI models at scale
• Data: As the world’s largest data producer, China’s annual data volume is expected to grow from 24 zettabytes in 2022 to 77 zettabytes by 2027. This can be a huge advantage to continue “training” new Chinese models in a highly digitalized country.
• Energy: The energy demands of AI are substantial, but China has been a leader in renewable energy for several years and continues to invest in this sector, exploring new applications and utilizing the vast expanse and diversity of its territory
• Talent: China’s emphasis on cultivating AI talent is evident in its 535 universities offering AI-related majors. Nearly half of the world’s top AI researchers are based in China, supported by institutions such as Tsinghua University, which promotes innovation and entrepreneurship in AI

2. Key Companies

2.1 Chinese AI Champions

The key AI sectors in which the Chinese state has invested most heavily in recent years are facial recognition, biotechnology, quantum computing, medical intelligence and autonomous vehicles. As of 2023, there are a total of 15 Chinese AI “champion” companies, and the list has been updated three times since the first announcement in 2017. In particular, in the latest “batch” of 2019, Yitu, Minglamp technology, Huawei, Pingan, Hikvision, JD.com, Megvii, Qihoo 360, TAL Education Group, and Xiaomi were added to the list.

2.2 Leading Artificial Intelligence Start-ups (“AI Tigers”):

In the last year, several international media have talked about Chinese “AI tigers”, companies that have recorded impressive development and have established themselves at a national level, also becoming competitors of the most renowned American companies. These “AI Tigers” are considered the new wave of AI companies focused on “LLM” technology, similar to Western counterparts such as OpenAI and Anthropic. Other notable AI startups include StepFun and Model Best.

The top Chinese AI Tigers are:

• Zhipu AI: This is often referred to as China’s most important generative AI startup, with a high valuation and a focus on achieving artificial general intelligence (AGI). It was incubated in the research labs of Tsinghua University. It is also backed by Saudi investment.
• Baichuan AI: This startup is another of the “AI Tigers,” also founded by Tsinghua faculty or alumni, and is known for its advances in large language models (LLM).
• Moonshot AI: This company is known for its focus on long-form processing capabilities in LLMs, with its Kimi chatbot capable of handling a very large context window. It is backed by Alibaba.
• MiniMax: This is another of the “AI Tigers”, also founded by Tsinghua professors or alumni, and is a key player in the generative AI ecosystem.
• 01.AI: This is another AI startup, based in Beijing, and focused on producing open source products. It was founded by Kai Fu Lee, and is backed by industry giants such as Xiaomi and Alibaba.

3. Practical Applications of AI in China

• Artificial intelligence is revolutionizing industries in China, driving innovation, efficiency, and competitiveness in key sectors. Below are some industry sectors and an example of AI application.
• Industrial manufacturing: AI technologies such as machine learning and computer vision are transforming manufacturing processes. Applications include production optimization, predictive maintenance, and intelligent quality control. Examples of AI applications in industrial manufacturing include Haier’s COSMOPlat platform and AI-powered visual inspection systems from Guangzhou-based Sino-Japanese automotive joint venture GAC Honda.
• Automotive and autonomous transportation: Self-driving cars and smart cabins are redefining transportation in China. Companies such as Baidu’s Apollo Go are pioneering fully driverless ride-hailing services, with significant advances in business operations.
• Retail: China’s “New Retail” model leverages AI for hyper-personalized customer engagement, supply chain optimization, and virtual assistants. JD.com’s technology and Chinese sports champion ANTA’s AI-powered content strategies illustrate how AI is reshaping retail experiences.
• Healthcare: AI can be a powerful tool for businesses and patients to address systemic challenges in healthcare by improving diagnostics, telemedicine, and drug development. Innovations like GE Healthcare’s AI platform for CT imaging and Tsinghua University’s virtual hospital demonstrate AI’s potential to improve healthcare access for millions of people.
• Public services: China’s smart cities are integrating AI into urban management tasks, improving traffic flow, public safety, and environmental monitoring. Alibaba’s City Brain project in Hangzhou is an example of how AI can be used to solve real-world problems in China’s metropolitan areas.

4. Our Viewpoint

As with previous articles written for Agenda Digitale, we would like to close with some of our considerations.

The transformation of China’s AI-based industry shows a synergistic combination of regulatory frameworks, complex ecosystems and innovation. By prioritizing infrastructure development, data exploitation and talent cultivation, China is positioning itself as a global leader in AI.

However, numerous challenges remain on the horizon for the Chinese government. Addressing them, particularly in infrastructure, data management, talent training and support, and research will be critical to achieving scalable and transformative impact. Collaborative efforts between the public and private sectors, academia and international partners on the ground are essential to building an open and innovative ecosystem that is not only inward-looking but can also improve through open innovation and external investment.

China’s journey offers valuable lessons for other nations seeking to harness the potential of AI for economic growth, sustainability and social progress. It is therefore useful to study the Chinese case, and follow step by step the developments of this giant of innovation, a real laboratory for the growth and development of this strategic sector.

5. The arrival of DeepSeek and a new chapter in the US-China competition in artificial intelligence.

The arrival of DeepSeek has perhaps brought us “into the unknown”, as the name that appears on the company website says. Or perhaps, it is an awareness of the level reached by Chinese companies in the field of artificial intelligence. Trump himself has stated that competition can also be positive, while Altman, CEO of OpenAI, wrote on his X profile that the model is “impressive”, especially for the quality-price ratio.

We do not know where this competition will take us, but one thing is certain – We live in interesting times

Written by Marco Bonaglia and Antonio Frisoli