Analysis: How deep is the integration of AI technologies in China?

• The application of artificial intelligence (AI) technologies in China is extraordinarily deep and pervasive, impacting almost every sector of the economy and society.

• Beijing has made AI a national strategic priority and is investing heavily in the development and adoption of this technology.

• China is not only adopting AI, it is deeply integrating it into the fabric of its economy and society at a pace and scale that few other countries can match, with the goal of gaining a global competitive advantage.

Artificial intelligence (AI) is rapidly reshaping industries around the world, with China emerging as a key player in the integration of AI technologies in various sectors, including industry, surveillance, healthcare, and smart cities.

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AI development, in particular, is driven by a strategic vision that aims to position the country as a global leader in AI innovation by 2030.

This ambition is outlined in key policy frameworks such as the Next-Generation AI Development Plan (2017) and the Made in China 2025 initiative, both of which emphasize the importance of self-sufficiency in AI, the creation of innovation hubs, and the adoption of this technology in various sectors of the economy and society.

Continued investment in basic infrastructure, combined with strategic prioritization of industry-specific AI applications, has spurred rapid progress.

A key aspect of the AI Development Plan is its strategic focus on promoting innovation and entrepreneurship, primarily through the creation of entrepreneurial foundations.

These bases serve as hubs where entrepreneurial ventures can flourish, contributing significantly to the overall ecosystem of AI development. To this end, tech giants such as Baidu, Alibaba, Tencent and Huawei are working closely with the government to advance research, while universities such as Tsinghua and Peking University are at the top of the world for AI research.

Complementing this is an emphasis on digital financial inclusion, which plays a crucial role in meeting the capital needs of entrepreneurs. By integrating AI into financial inclusion scenarios, China's plan on AI not only tends to improve convenience for the user, but also to expand the reach and accessibility of financial services.

Central to this transformation agenda is also the development of indigenous AI models, particularly DeepSeek, which not only challenge the dominance of Western counterparts such as OpenAI's ChatGPT, but also offer cost-effective and scalable solutions tailored to different applications.

It was Chinese President Xi Jinping who insisted on greater "self-sufficiency and self-enhancement" in artificial intelligence development, urging a nationwide effort to narrow the gap with the United States in this critical technology race. In his speech during a Politburo study session in April, Xi stressed the need to "comprehensively promote technological innovation, industrial development and applications based on artificial intelligence."

He added that China should leverage its "new national system" to accelerate the progress of artificial intelligence, with policy support in areas such as procurement, intellectual property rights, research and talent development. Recognizing the challenges ahead, Xi stressed the need to strengthen basic research and master key technologies, such as high-end chips and core software, to build an "independent, controllable and collaborative" artificial intelligence ecosystem.

He also called for faster progress in creating artificial intelligence regulations, risk alert systems and contingency protocols to ensure that the technology develops safely and responsibly.

Applications and impact of China's AI models.

With a growing artificial intelligence sector valued at more than $70 billion, and a dynamic ecosystem of more than 4,300 companies, China offers insights into how nations can align strategy, innovation, and ecosystem development to harness the transformative potential of AI.

With its ability to integrate technologies such as digital twins, predictive maintenance, and generative AI, sectors such as manufacturing, healthcare, transportation, retail, and energy are witnessing major transformative advances in China.

These include optimizing manufacturing processes, improving diagnostics and patient care, enabling autonomous transportation systems, personalizing consumer experiences, and improving renewable energy management.

Below are some key areas of artificial intelligence application in China.

Intelligent manufacturing

China's manufacturing sector is undergoing a profound transformation driven by the integration of advanced AI technologies such as LLM, machine learning, computer vision and digital twins.

"This convergence is not only improving efficiency, but also redefining the strategic priorities and competitive dynamics of the industry," argues the World Economic Forum's AI Governance Alliance in its white paper Industries in the Intelligent Age - Blueprint to Action: China's Path to AI-powered Industry Transformation.

Artificial intelligence, such as production optimization, maintenance, intelligent quality control and AI-assisted design, is revolutionizing traditional manufacturing processes in China, enabling real-time data collection, advanced analytics and automation of production processes.

AI-powered robots, for example, are increasingly used in factory assembly, reducing human error and improving safety.

AI and China's 5G-driven industrial internet are supporting mass customization and flexible manufacturing by connecting a wide range of industrial equipment.

AI and 3D visual inspection technology (including robots) have made great strides in China in their ability to analyze complex structural products.

Overall, it is predicted that mobile and collaborative robots equipped with artificial intelligence will grow by more than 20 percent per year by 2027.

E-commerce and retail

Artificial intelligence-based recommendation systems, customer service chatbots, and intelligent supply chain management are widely adopted by major Chinese e-commerce platforms.

In particular, fueled by a large internet user base and the influence of commercial giants such as Alibaba, JD and ByteDance, China's New Retail model involves the deep integration of AI into online and offline shopping to improve customer engagement and personalization.

The country's retail giants use traditional AI for operational efficiency, such as supply chain automation and demand forecasting, while using genAI for dynamic consumer-facing innovations, such as personalized shopping recommendations and virtual assistants.

The power of genAI and other forms of AI enables Chinese retailers to improve customer engagement, address operational challenges, and quickly adapt to China's highly competitive retail market.

Indeed, surveys show that more than half of merchants operating on China's major e-commerce platforms have already used at least one genAI-enabled tool.

According to the most recent data, 55 percent of companies in China say GenAI has impacted their customer strategy by automating some part of customer service.

GenAI, in particular, can collect and analyze customer feedback from reviews and social media, enabling retailers to refine products based on consumer suggestions. In addition, it can provide personalized content and recommendations by integrating customer data and can predict their needs with high levels of accuracy.

AI has also been deeply integrated into Chinese supply chains and logistics operations.

AI-powered hosts can operate 24/7, effectively mimicking human expressions and interactions. Routes are optimized for delivery fleets, inventory management and accurate demand forecasting, ensuring timely and efficient distribution of goods, while the 3D visualization solution can generate warehouse layouts, using natural language instead of computer code.

Financial Services

China's financial sector has established a strong digital foundation and is at the forefront of AI transformation efforts.

For example, 12 Chinese financial companies made it into the global top 20 ranking by the Massachusetts Institute of Technology (MIT) for public patent applications related to AI models.

Chinese financial institutions are also actively creating AI ecosystems, collaborating with tech giants, telecom operators, and commercial customers. The goal is to aggregate multidimensional data, high-performance computing power, and advanced algorithms to make their respective companies truly AI-oriented.

In Chinese finance, AI applications range from fraud detection, credit risk assessment, algorithmic trading, personalized financial advice, and digital payments.

In particular, AI is believed to be able to expand financial access by using alternative data for credit scoring, enabling banks to lend to people without a traditional credit history.

It is, moreover, able to predict the cash flow of small businesses, allowingfinancial institutions to offer tailored asset management services.

It should be mentioned that, in terms of digital finance, China is leading in market size, number of users, and net interest income: $460 billion in 2024, or about 31 percent of the global total.

The country is also a leader in digital payments, with platforms such as Alipay and WeChat Pay ubiquitous in everyday transactions.

Renewable energy

Regional and seasonal imbalances in energy production and demand, along with operational inefficiencies, are common challenges for utilities around the world.

To address these competitions, China is rapidly developing a new energy system powered by artificial intelligence technologies, with key initiatives already underway. These include ungridded power plants, more efficient energy storage, and improved smart grid operations.

Artificial intelligence predictions of Chinese electricity production and demand are improving the integration of renewable sources into the grid.

AI is also believed to improve grid stability through real-time monitoring of electricity flows, optimization of power distribution, and more.

AI also powers smart operations. In China, robots are widely used for equipment inspection and testing, replacing about 80 percent of manual labor.

Finally, by transforming Chinese utilities' business models through applications such as virtual power plants, carbon trading, and transactions on spare parts platforms, AI is also improving operational efficiency.

Agriculture

China is one of the leading countries globally in actively integrating AI technologies into its agricultural sector.

The Chinese government supports artificial intelligence in agriculture through initiatives such as the pilot zones "Digital Agriculture" and "Smart Agriculture" .

Partnerships between artificial intelligence technology companies, agricultural cooperatives and universities have accelerated its research and implementation.

AI currently helps Chinese farmers optimize resource use and maximize crop yields through precision agriculture. To this end, AI-powered drones and satellites collect high-resolution images to monitor crop health, detect pest infestations, and assess soil conditions.

AI systems also analyze weather data, soil moisture levels and crop needs to automate irrigation, saving water and improving efficiency.

AI models trained on vast datasets can identify plant diseases, pests and nutritional deficiencies through image analysis, with farmers using AI-powered smartphone apps to take photos of crops and receive immediate diagnoses.

Companies such as XAG and DJI (both Chinese technology companies) have developed autonomous agricultural machines that use artificial intelligence to move around fields, plant seeds and harvest crops without human intervention, while AI-driven robots are being used to harvest delicate fruits such as strawberries and apples, improving efficiency and reducing labor costs.

AI also helps simplify the agricultural supply chain in China by analyzing market trends and weather conditions to predict crop yields and optimize distribution.AI algorithms, in turn, help manage cold chain logistics to ensure that perishable goods are transported efficiently and safely.

Chinese farms use facial recognition via AI to monitor the health and productivity of individual animals.

The AI also can analyze the behavioral patterns of animals to detect early signs of disease or stress.

AI-controlled greenhouses adjust temperature, humidity, lighting and nutrients in real time to create optimal growing conditions. This technology is increasingly being used in urban agriculture and high-tech farming areas.

Utilities and smart cities

China is actively promoting the application of AI in public sector management to increase efficiency, optimize public services and improve decision-making processes.

A key aspect of this strategy is the development of "smart cities," which aim to address urban management challenges and meet citizens' demands by integrating technologies such as big data, AI, and digital twins.

China has already implemented smart city initiatives for 94 percent of provincial capital cities and 71 percent of prefecture-level cities. It is expected that AI will further improve the operational efficiency and innovation capabilities of Chinese cities.

Using the extensive 5G infrastructure and intelligent transportation networks, the country's autonomous driving companies are actively enhancing their intelligence systems. These advances are supported by pilot tests and operational authorizations in Beijing, Guangzhou, Wuhan and other major cities.

The development of autonomous driving in China aligns closely with the country's "vehicle-roadcloud" collaboration framework, which facilitates the integration of vehicles, road infrastructure and cloud computing. More broadly, autonomous transportation has emerged as a key area for AI innovation and application in China.

Currently, autonomous cabs are being experimented in more than 50 Chinese cities. Obstacle detection with computer vision technology allows vehicles to make real-time decisions without being subject to potentially dangerous distractions, while route optimization allows vehicles to integrate map and traffic data in real time.

More than 67 percent of new vehicles sold in China in the first quarter of 2024 were fitted with smart cabs that use sensor and GPS data to provide travel tips and services such as chat, entertainment, and route planning.

In 2024, Apollo Go, Baidu's autonomous ride-hailing service operating in several Chinese cities, has completed significant progress in commercializing fully driverless operations. It has begun offering 100 percent fully driverless operations throughout the city of Wuhan.

Apollo Go provided about 899,000 rides in the second quarter of 2024, an increase of 26 percent from the previous year. As of July 28, 2024, the total rides provided to the public exceeded 7 million.

Health care

In healthcare, AI leverages mobile health technologies to improve healthcare delivery, employing advanced algorithms to provide personalized therapies, improve patient outcomes. but also for drug discovery and robotic surgery.

In China, technologies such as wearable interfaces enable continuous monitoring of individuals, offering real-time data collection and analysis that can detect even the smallest changes in health, thus facilitating early intervention and reducing long-term healthcare costs.

AI also plays a key role in the interpretation of medical images, with capabilities that equal or even exceed those of human radiologists, as reflected in the detection of abnormalities in X-rays and CT scans.

In addition, predictive AI modeling is critical for identifying at-risk populations, optimizing health care delivery by improving staffing levels and patient flow, thereby reducing wait times and hospital admissions.

Currently, 76% of Chinese physicians are confident in using AI for clinical decision making, a figure higher than the global averageof 61%.

It is predicted that China's AI-driven drug R&D sector will reach $187 million by 2024, accounting for 12 percent of the global market, growing at an annual rate of 30 percent.

Education

In school education, AI is generally implemented for personalized learning, in intelligent tutoring systems and automated assessment.

As part of the recent education reform, China has decided to integratethe applications of AI in teaching, textbooks and curricula as part of education reform. The initiative, aimed at primary, secondary and high school students and teachers, comes at a time when the world's second-largest economy seeks to spur innovation and find new sources of growth.

The initiative comes after Chinese universities launched courses in artificial intelligence and expanded enrollment after startup DeepSeek gained global attention in January with the launch of a competitive model in a broad language that is cheaper to develop than its U.S. peers.

Social governance

In China, AI is also used for surveillance, public safety, and potentially for social credit systems. The system, however, is highly invasive.

Extensive video surveillance networks in cities are equipped with facial recognition systems based on artificial intelligence to track individuals in real time.AI can identify people even with partial obstacles (e.g., masks, sunglasses) and compare identities with national databases.

In so-called "behavior analysis," AI is used to monitor body language, crowd behavior, and unusual activities (e.g., loitering, sudden running), with some systems also reportedly able to predict crimes or flag suspicious behavior before it occurs (so-called predictive policing).

Artificial intelligence algorithms analyze crime patterns, helping Chinese police departments allocate resources more efficiently.

AI-assisted tools help in suspect profiling, real-time alerts and digital forensic investigations.

In the social credit system-the government initiative to evaluate citizens and businesses based on trustworthiness, compliance with laws and ethical behavior-AI processes huge amounts of data from financial records, social media, purchasing habits, legal records and even interpersonal behavior.

Science

According to a analysis, Chinese scientists have integrated AI into their work more quickly than their colleagues in the EU or the United States.

New artificial intelligence tools, such as AlphaFold, a protein folding prediction tool, have changed the way some scientists work, although there is concern that over-reliance on AI may reduce scientific randomness.

The share of Chinese scientific articles using artificial intelligence has increased from just under 30 percent in 2010 to nearly 40 percent in 2022.

The analysis notes that China has experienced a "particularly amazing performance" since 2016. Since then, the number of Chinese scientific articles using artificial intelligence has soared, surpassing both the United States and the European Union, reaching more than 25,000 by 2022, according to the dataset used.

Military sector

The application of artificial intelligence (AI) in the Chinese military, particularly in the People's Liberation Army (PLA), is a field of great and growing strategic importance. China has an ambitious vision of "intelligentization" of warfare, aiming to integrate AI into every aspect of its military capabilities.

1. Autonomous and Unmanned Systems (Unmanned Systems):

• Drones (UAVs) and Land/Navy Robots: China is investing heavily in the development of AI-powered air, land, naval, and submarine drones. These systems are designed to operate autonomously or semi-autonomously for reconnaissance, surveillance, attack (including drone swarms), logistics, and support. Examples include armed robot dogs and drones with automatic rifles.

• Lethal Autonomous Weapons (LAWS): Although there are ethical and international debates about the use of fully autonomous weapons, China is among the countries actively exploring the development of systems that can select and engage targets without human intervention.

2. "Intelligentized" Warfare (Intelligentized Warfare):

• Decision Support and Command and Control (C2): AI is being used to analyze massive amounts of battlefield data, identify patterns, predict enemy moves, and provide recommendations to commanders in real time. This includes the development of AI-based "virtual commanders" for simulations and planning.

• Electronic Warfare and Cyber Warfare: AI is critical for optimizing electronic warfare operations (e.g., jamming, signal detection) and conducting more sophisticated and rapid cyber attacks and defenses.

• Intelligence, Surveillance and Reconnaissance (ISR): AI is used for automatic analysis of satellite imagery, video and other intelligence data to identify targets, monitor movements and assess threats more efficiently.

3. Logistics and Predictive Maintenance:

• AI is used to optimize military supply chains, inventory management, and predictive maintenance of equipment, reducing downtime and improving operational efficiency.

4. Training and Simulation:

• AI-based training systems and simulators allow militaries to practice in complex and unpredictable scenarios, improving preparedness and the ability to make decisions under pressure. China is developing AI-based war-gaming software, such as AlphaWar.

5. Dual-Use Applications and Civil-Military Fusion:

• A distinctive feature of the Chinese approach is the "civil-military fusion" (Military-Civil Fusion) strategy, which encourages the development of AI technologies with both civil and military applications. This allows the PLA to rapidly benefit from private-sector innovations and to use open-source AI models (such as Meta's Llama models) by adapting them for military and security purposes, including for non-combat functions such as managing military hospitals (as in the case of DeepSeek).

6. Research and Development:

• China is investing heavily in basic and applied AI research for military purposes, including areas such as computer vision, natural language processing, machine learning, and robotics. The Chinese Academy of Sciences and the National University of Defense Technology are key centers in this area.

In summary, the application of AI in China's military is extremely deep, covering a wide range of functions and capabilities. The goal is to transform the PLA into an "intelligentized" force capable of conducting complex operations with greater efficiency, precision and autonomy in order to assert its position as a global military power.

In conclusion, China is not only adopting AI, but is deeply integrating it into the fabric of its economy and society at a pace and scale that few other countries can match, with the goal of gaining a global competitive advantage.