What Global Executives Must Know To Stay Ahead

China has set a bold objective to become the global leader in AI by 2030. By 2030, AI could potentially add $600 billion to China’s economy annually. The country hosted over 4,500 AI companies in 2024, representing 15% of the global total. China is also leading the Nature Index 2024 of scientific contributions worldwide; and driving global discovery in terms of number of patents in the AI category over the last decade. Moreover, 2024 saw an almost five-fold increase in the total private investment in the generative AI field in China from $650 million in 2023, to around $3.15 billion in 2024 based on Statista market forecasts.

China is not just a competitor in the AI race; it’s a force reshaping the global landscape. With unprecedented government support, a thriving ecosystem of innovative companies, and a laser focus on industry-specific applications, China presents both immense opportunities and urgent challenges for global executives.

China’s Four Strategic AI Advantages In 2025

China’s AI dominance isn’t just about flashy models. It’s a strategic play. In my research with leading Chinese AI players, incumbents and newcomers, I see four strategic AI advantages emerging for China in 2025:

1. Government-Backed AI Innovation: Beijing’s unwavering support, from research funding to infrastructure development, provides an unparalleled advantage. This coordinated effort accelerates breakthroughs and fosters a vibrant ecosystem. China’s push into scientific research has paid off, as China is now leading the Nature Index 2024 by a leap.
2. AI ecosystem play: Leverage AIaaS and MaaS platforms to rapidly deploy and scale AI solutions, potentially gaining a competitive edge without significant upfront investment. Alibaba, Huawei and Baidu are driving applications through an ecosystem approach: they enable others – large and small companies – to leverage their tech stack to grow and innovate. Modularity to maximize optionality is what making future ready champions in 2025.
3. AI value to the real world: China will differentiate itself from the US regarding AI development and application, by combining AI and hardware to impact the physical world. In the words of Alibaba CEO Wu, the real revolution of AI lies in its application to the real world, not the virtual world.
4. Vertical AI focus: Unlike the West’s initial focus on general-purpose AI, China prioritizes industry-specific applications. This vertical approach yields faster, more impactful solutions across sectors like healthcare, smart living, finance, and manufacturing.

The Rise of China’s Divergent AI Powerhouses

China’s AI sector has experienced explosive growth, driven by a potent combination of government backing, private sector innovation, and a large pool of data.

The main players in the Chinese GenAI space can be divided into four groups:

• Government-supported research centers and labs
• Tech giants, including Alibaba, Baidu, Tencent, 360, ByteDance and Huawei
• Small-to-medium tech companies, which are unfamiliar names in the West
• Startups, including a few unicorns (with valuations over $1bn), worth watching are Moonshot AI, Minimax AI, ZhiPu AI, Baichuan AI, 01.AI, and Modelbest.

Tech giants like Baidu, Alibaba, Tencent, and Huawei are at the forefront of this AI revolution, developing sophisticated large language models (LLMs) that start to rival their Western counterparts in capability and scale.

One of the most striking aspects of China’s AI landscape is the diversity and specialization of its models. From Baidu’s ERNIE Bot (the most frequently used GenAI product by domestic users, with an 11.5 per cent share) to Alibaba’s Tongyi Qianwen, these AI powerhouses are not just replicating existing technologies but innovating in ways that cater to the unique linguistic and cultural nuances of the Chinese market.

AI Application Scaling In China: Accessible AI Infrastructure

A key driver of China’s AI boom is the rapid development of accessible AI infrastructure. Cloud giants like Alibaba Cloud, Huawei Cloud, and Tencent Cloud are offering AI-as-a-Service (AIaaS) solutions that democratize access to advanced AI capabilities. This shift from traditional Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) models to AI-centric platforms is lowering the barriers to entry for businesses looking to leverage AI technologies.

For instance, Huawei Cloud’s Ascend service has dramatically reduced the development time for large model training from five months to just one, while Moonshot AI’s collaboration with Alibaba Cloud has significantly boosted model inference efficiency. Then, Baidu’s Qianfan platform offers 54 pre-configured models and a comprehensive toolchain (a collection of software development tools used together to perform a complex task) for customization, potentially reducing training costs by up to 90% compared to in-house development.

This approach – Model-as-a-Service – not only reduces costs but also accelerates the adoption of AI across various industries.

China’s Industrial Advantage for AI: Industry-Specific Applications

China is making significant strides in developing industry-specific AI applications. From finance and healthcare to education and manufacturing, Chinese companies are customizing AI solutions to address sector-specific challenges.

For instance, MedGPT AI Doctor by Yilian has demonstrated professional-level capabilities comparable to human doctors in real-world testing, showcasing the potential of AI in medical diagnostics. Similarly, the Shanghai City Xuhui Government Services Large Model, launched in June 2024, focuses on enterprise lifecycle consulting, significantly improving government service efficiency.

Another case in point is global appliances manufacturer Haier: the focus is on integration of AI across its entire ecosystem, from product development to customer interaction. HomeGPT, their lead AI, uses advanced natural language processing and multimodal interaction capabilities to enhance user experiences by enabling more intuitive and responsive interactions with smart home devices.

This trend towards vertical integration and specialization presents global executives with an opportunity to explore partnerships or collaborations with Chinese AI companies that have deep expertise in specific industries.

Chinese Government’s Proactive Approach to AI Governance

The Chinese government has taken a proactive approach to AI governance, balancing innovation with risk prevention. The issuance of the 2023 “Interim Measures for the Management of Generative Artificial Intelligence Services” marks China’s leadership in global AI regulation, providing clear guidance for AI development and governance.

Moreover, China’s launch of the “Global Initiative for AI Governance” in October 2023 signals its commitment to international cooperation in AI governance. This initiative outlines China’s approach to AI governance from the perspectives of development, security, and regulation, contributing to the construction of a global framework for responsible AI development.

More recently, in May 2024, the National Information Security Standardization Technical Committee (NISSTC) released new draft regulations titled Cybersecurity Technology – Basic Security Requirements for Generative Artificial Intelligence (AI) Service. It covers protecting AI models, securing training data, and implementing overall security protocols. It offers guidance for security assessments and establishing regulations for service providers and regulators alike.

Looking Ahead: The Three Challenges to China’s AI Development in 2025

As China continues to push the boundaries of AI application, global executives who can navigate this complex landscape stand to gain significant advantages in the AI-driven future of business. But, China’s AI development in 2025 is not without challenges.

First, ongoing technological rivalry between the United States and China has led to significant export controls, particularly advanced semiconductors for AI development. How much will this impact China’s computing power capabilities?

Second, attracting and retaining top AI talent remains a challenge. Although China produces a significant number of AI graduates, competition with global tech hubs and a diverging geopolitical reality, can deter talent from staying or returning to China.

Third, data availability. Contrary to popular belief, China has a data problem. Much data is fragmented across sectors and government bodies. Moreover, data quality has been an ongoing concern. Lastly, due to geopolitical tensions and restrictions, Chinese companies may have limited access to global datasets that are crucial for training competitive, generalized AI models.

By understanding the unique characteristics of China’s AI ecosystem and adapting their strategies accordingly, business leaders can position their organizations at the forefront of the global AI revolution.