TLDR: China’s artificial intelligence industry has demonstrated robust growth, surpassing 700 billion yuan in 2024 with an annual growth rate exceeding 20%. This expansion is underpinned by strong digital infrastructure, supportive government policies, and increasing market demand, positioning China as a global leader in AI innovation and application.
China’s artificial intelligence (AI) industry has reached a significant milestone, with its scale exceeding 700 billion yuan (approximately $96 billion USD) in 2024, maintaining an impressive annual growth rate of over 20% for several consecutive years. This robust expansion is set to continue, with projections indicating the market will surpass 1 trillion yuan by 2025 and reach 1.7 trillion yuan by 2035, exhibiting a compound annual growth rate of 15.6%.
This remarkable growth is attributed to a synergistic interplay of forward-thinking policy frameworks, robust market demand, and relentless technological innovation. Since the State Council unveiled the New Generation AI Development Plan in 2017, a series of policy incentives at both central and local levels have provided financial support, accelerated scientific research and development (R&D), and bolstered computing power infrastructure.
China’s solid digital infrastructure provides a fertile ground for AI deployment. The nation boasts over 1.1 billion internet users, with mobile payment penetration among mobile internet users reaching 86%. Furthermore, China’s 5G base stations constitute more than 60% of the global total, creating an environment conducive to the rapid adoption and expansion of AI technologies. The number of generative AI users in China has already surpassed 250 million.
In terms of innovation, China has emerged as a global leader. As of April 9, the country had submitted over 1.57 million AI patent applications, accounting for 38.58% of the global total, and holds 60% of the world’s total AI-related patent holdings. Xu Shan, Deputy Director of the International Cooperation and Technical Service Department at the CAICT AI Institute, highlighted that “China’s accomplishment in artificial intelligence stems from a synergistic interplay of domestic innovation ecosystems and proactive global collaboration.” The nation has cultivated over 400 national-level specialized “little giant” enterprises in AI and established a comprehensive AI industry system spanning foundational, framework, model, and application layers. China also accounts for 36% of the worldwide AI large language models, second only to the United States.
Significant investments are pouring into the sector. Capital expenditure on AI in China is forecast to reach between 600 billion yuan and 700 billion yuan (US$84 billion to US$98 billion) in 2025, marking up to a 48% increase from 2024 levels. Government investment is expected to contribute up to 400 billion yuan, with major internet companies projected to add as much as 172 billion yuan. Matty Zhao, co-head of China equity research at BofA Securities, noted that this surge reflects “heightened enthusiasm for the technology on the mainland on the back of DeepSeek’s success.” Leading tech giants like Alibaba Group Holding and Tencent Holdings have pledged substantial AI investments; Alibaba, for instance, unveiled a 380 billion yuan investment plan for computing and AI infrastructure over the next three years.
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AI applications are revolutionizing various sectors, including healthcare, finance, education, and manufacturing, driving increased R&D investment. Chinese brands have demonstrated strong market presence, occupying eight of the top 10 spots in the global smart robot vacuum cleaner market in Q3 2024, with a combined market share exceeding 60%. Collaborations between Chinese automakers and tech firms on autonomous driving systems and smart cockpits are also gaining global attention, alongside remarkable strides in AI-powered robots.
