TLDRs;
- China’s AI adoption soars with 20 foundation models, surpassing EU and UK totals, driven by cost efficiency.
- Training costs have dropped 90% since 2024, making AI more accessible across government, finance, telecom, and healthcare.
- DeepSeek, Alibaba, and Baidu pivot from performance to usability, driving real-world AI integration across industries.
- China plans to triple AI chip production by 2026, reinforcing self-sufficiency and long-term global competitiveness.
China is rapidly emerging as a global leader in artificial intelligence (AI), with a strategy centered on cost efficiency, wide adoption, and self-sufficiency.
According to a new report from research firm Frost & Sullivan, the country now hosts 20 foundation models, surpassing the combined total of the European Union and the United Kingdom. This growth is fueled by a dramatic 90% drop in AI training costs compared to last year, making AI development and deployment accessible to more companies and government agencies.
The report highlights that China’s AI penetration has already reached significant levels in multiple sectors. Government usage tops the chart with an adoption rate of 95%, followed by finance at 78%.
Telecommunications and healthcare also show strong AI integration, each with adoption rates above 60%. This suggests that AI in China is no longer limited to experimental applications but is becoming deeply embedded in everyday operations.
From Performance to Usability
One of the most striking developments in China’s AI ecosystem is the shift in focus from pure technical performance to usability and real-world application.
Companies like DeepSeek, Alibaba, and Baidu are spearheading this transition, moving beyond the race for benchmark supremacy to prioritize accessibility, scalability, and ecosystem integration.
This pivot reflects a broader maturation of China’s AI industry. Instead of showcasing extreme performance on global leaderboards, firms are developing solutions tailored to industry-specific scenarios, ranging from smart city governance to fintech risk management. The move signals that China’s AI push is no longer about catching up with global leaders but about shaping practical applications that drive measurable economic and social outcomes.
AI Self-Sufficiency Strategy
Behind China’s rapid growth lies a calculated plan for AI self-sufficiency. The government aims to triple AI chip output by 2026, reducing reliance on foreign suppliers such as Nvidia.
This hardware expansion is designed to complement the nation’s software advances, ensuring that China maintains control over both the brains and the backbone of its AI systems.
Economic analysts suggest this integrated approach could have a substantial impact on China’s GDP. Goldman Sachs recently upgraded its projections, estimating that AI could add 0.2 to 0.3 percentage points to China’s economic growth by 2030, double earlier forecasts.
Global Competition Heats Up
China’s strategy sets it apart from Western counterparts. While Europe and the UK continue to grapple with fragmented regulations and debates around ethical frameworks, China has already created a business environment that supports rapid scaling of AI. By lowering costs and focusing on usability, China has moved past the experimental stage into a phase of large-scale commercialization.
This momentum places China in a stronger position to compete globally, not only with Europe but also with the U.S., which continues to dominate through companies like OpenAI and Google. If the current trajectory continues, China could leverage its ecosystem
