China’s AI Industry Surges Past 1.2 Trillion Yuan
China’s artificial intelligence technology industry is experiencing explosive growth, with the AI core industry scale surpassing 1.2 trillion yuan (approximately $173.9 billion) in 2025—a 30% year-on-year increase—according to data disclosed by Minister of Industry and Information Technology Li Lecheng at the 2026 Two Sessions. The sector has expanded rapidly across computing infrastructure, applications, and services, cementing AI as a key driver of the country’s digital economy, as reported by Xinhua News.
A Milestone Year for Chinese AI
The explosive growth spans multiple dimensions of the AI ecosystem. China now hosts over 6,200 specialized AI enterprises, and the national-level AI open-source community has gathered more than 11 million users hosting over 70,000 models, covering a full-stack open-source system from foundational software to large model applications. Perhaps most striking is the global reach of Chinese open-source technology: cumulative downloads of Chinese open-source large models have surpassed 10 billion worldwide, ranking first globally. According to Hugging Face statistics cited in the report, Chinese-developed open-source models account for 41% of new open-source model download traffic on the platform over the past year, surpassing the United States.
The World Internet Conference reported that in the global mainstream large model invocation rankings, the top six models are all from Chinese teams, and for 9 of the past 12 months, domestic models have maintained the global open-source model scale ceiling. China also ranks first globally in AI patent ownership, according to CCTV data from January 2026.
Industry financial performance reflects the sector’s vitality. As of late July, 248 AI industry chain listed companies had disclosed semi-annual reports or performance forecasts, with 159 reporting positive results—a trend that analysts say confirms China’s AI industry has moved from the concept incubation phase into a new cycle of industrialization and structural optimization. The Beijing Daily, citing CCTV Finance, reported that these results “exceeded market expectations” across multiple metrics.
Meanwhile, the regulatory framework has kept pace with the industry’s rapid evolution. As of the end of June, 988 generative AI services had completed filing or registration, and 598 applications had completed registration with the Cyberspace Administration of China. The “Interim Measures for the Administration of AI Anthropomorphic Interactive Services,” jointly issued by five departments, took effect on July 15, establishing an integrated governance framework covering filing management, safety assessment, and ethical review.
The Rise of AI Agents and Open-Source Leadership
2026 has been widely recognized as the “Year of AI Agents” in China. The China Academy of Information and Communications Technology (CAICT) noted in its Internet Agent Development Research Report that “AI agents with task planning, tool invocation, cross-platform execution, and continuous interaction capabilities are the key carrier for large models to achieve large-scale industrial implementation.” The enterprise-level AI agent market reached 23.2 billion yuan in 2025, growing 120% year-on-year.
The shift toward agents marks a fundamental paradigm change. As Xinhua News Agency reported, “The Chat paradigm centered on dialogue has come to an end, and AI competition has shifted to the agent era of ‘being able to do things.’” Zhang Yaqin, Dean of Tsinghua University Institute for AI Industry Research, noted that “DeepSeek marks the emergence of a differentiated breakthrough in China’s AI technology route. China has shifted toward embracing lighter models, smarter architectures, higher efficiency, and lower prices.”
Humanoid Robots and Embodied Intelligence
China’s embodied intelligence sector has accelerated significantly. The country now has over 400 humanoid robot complete machine products, accounting for more than half of the global total. Humanoid and quadruped intelligent robots account for 80% of global sales share, with quadruped robots alone holding nearly 70% of global sales. On the technology front, VLA (Vision-Language-Action) models and world models are accelerating deployment, with core breakthroughs in whole-body force control, dexterous grasping, environmental adaptation, and fault self-recovery. These advances are efficiently bridging the gap between natural language instructions and physical actions, moving embodied intelligence from demonstration scenarios into real industrial and service environments.
According to a Wanlian Securities research report, “The humanoid robot industry is at a critical stage of transitioning from technological breakthroughs to scaled commercialization, and 2026 may become an important window for mass production implementation and scenario verification.” Major companies are already moving forward: BYD confirmed a humanoid robot product launch in August, and XPeng’s humanoid robots have entered trial production at its Guangzhou factory.
Policy Framework and Governance
The explosive growth is underpinned by a comprehensive policy framework. The State Council’s “Opinions on Deeply Implementing the ‘AI+’ Action” (August 2025) established targets of 70% penetration rate for new-generation intelligent terminals and agents by 2027, and 90% by 2030, as detailed in the official government document. China has also built a multi-layered “3+1” regulatory framework: the State Council’s “AI+” Action as top-level policy, the CAC’s “Intelligent Agent Implementation Opinions” for agent-specific governance, and the five-department “AI Companion Measures” effective July 15, 2026, as reported by Xinhua Finance. The Ministry of Industry and Information Technology has also jointly released the “International AI Ethics Governance Action Plan,” calling for cooperation on AI lifecycle ethics governance, risk classification, and agile governance mechanisms.
At the international level, the World Artificial Intelligence Cooperation Organization (WAICO) was established in Shanghai on July 16, 2026, with 29 founding member countries—the world’s first intergovernmental AI organization. The 2026 World AI Conference (WAIC), held in Shanghai from July 17-20, drew more than 1,100 exhibiting enterprises across an exhibition area exceeding 100,000 square meters.
Economic Impact and Investment
The economic impact of AI’s expansion is substantial. In Q1 2026, AI accounted for 45% of China’s internet investment and financing, approximately $38.25 billion out of $85 billion total, according to CAICT data. The National Development and Reform Commission stated that AI-related industries maintained over 30% high-speed growth in the first half of 2026. Retail sales of wearable smart devices, including smart glasses, grew by more than 100% in the first half of the year. AI-powered terminals—including AI smartphones, AI PCs, and smart wearables—are increasingly entering government, enterprise, and household settings, unlocking significant consumer market potential.
The manufacturing sector is a key beneficiary. AI adoption in China’s large-scale manufacturing enterprises reached 30%, according to MIIT Minister Li Lecheng. The integration spans the full production lifecycle—from research and development through production, quality inspection, and operations management—demonstrating that AI is no longer confined to the technology sector but has become a transformative force across traditional industries.
AI-driven growth is also reshaping energy consumption patterns. Jiang Debin, Deputy Director of Statistics and Digital Intelligence Department at the China Electricity Council, noted that “the new kinetic energy industries represented by high-end manufacturing and digital intelligence economy continue to grow strongly, becoming the core engine driving the growth of total social electricity consumption.” Internet data service electricity consumption reached 49.4 billion kWh in H1 2026, approaching the full-year 2024 level, underscoring the massive computing demands of AI applications.
Computing Infrastructure and Future Outlook
China’s intelligent computing power reached 1,590 EFLOPS in 2025, with 42 ten-thousand-card clusters. The 8 major computing hub nodes under the “East Data West Computing” project account for 80% of national intelligent computing capacity. Daily token call volume surged from 100 billion in early 2024 to 140 trillion in March 2026—a growth of over 1,000 times, reflecting the rapid scaling of AI applications across the economy.
Looking ahead, the Nankai University China New Generation AI Technology Industry Development Report 2026 describes 2026 as “a turning year for AI development in China and the world.” Liu Gang, Chief Economist of the China New Generation AI Development Strategy Research Institute at Nankai University, noted that with foundational model performance improvements and the development of industry models, agents, and embodied intelligence, “the boundary between information intelligence and physical intelligence has been broken.” The report highlights that China’s weekly token call volume on the OpenRouter platform surpassed that of the United States in February 2026, and by early May had reached 2.11 times the US level—suggesting that a new intelligent economy is emerging first in China.
The National Development and Reform Commission predicts China’s AI core industry scale will maintain over 30% growth in 2026, and the National Data Administration estimates that by the end of the 15th Five-Year Plan period (2030), China’s AI-related industry scale could exceed 10 trillion yuan.
As the original Xinhua report concluded, “AI has transcended a single technology category, deeply integrated into the national economic cycle, becoming the core engine for cultivating new quality productive forces, releasing stronger development momentum.” With technology, applications, ecosystem, and governance advancing in coordination, China’s AI industry is entering a new stage of accelerating innovation outcomes and accelerating industrial value realization. The path forward is clear: 2026 marks not just a milestone year for Chinese AI, but the beginning of a new era in which intelligent technology becomes the foundation of the country’s economic transformation.