Liu Liehong, the administrator of China’s Nationwide Information Administration, the nation’s predominant knowledge regulator, unveiled the time period at a State Council press convention in March, explaining that tokens have been now “the settlement unit linking technological supply with commercial demand.”
The Nationwide Information Administration disclosed that China now processes 140 trillion tokens on daily basis, up from simply 100 billion at first of 2024. Chinese language AI fashions have now surpassed U.S. fashions on OpenRouter, a well-liked market for AI fashions.
Buyers have purchased into the AI increase. IPOs in Hong Kong are at a five-year excessive because of a gentle stream of Chinese language AI and tech startups, together with AI labs MiniMax and Zhipu AI, and chip designer Biren.
“We believe that China is the big winner in this tech war for a number of reasons: valuation, wider adoption of AI, an advantage in power generation,” Mohit Kumar, Jefferies’ world macro strategist, instructed Fortune in mid-March on the financial institution’s Asia Discussion board in Hong Kong.
China’s purpose is now to construct a “token economy,” backed by a proliferation of environment friendly, open-source fashions and a push into real-world AI purposes. But like their U.S. friends, Chinese language corporations are grappling with costly analysis prices and heavy capital expenditure pledges, whereas additionally keeping off Washington’s export controls, designed to maintain them one step behind within the chip race.
Large tech pivots
The AI increase rescued China’s huge tech firms from years of regulatory purgatory.
Alibaba, the e-commerce big, has invested in open-source fashions, which could be downloaded and modified freely by builders. That low barrier to entry has made its Qwen fashions a compelling possibility for startups unwilling to pay for proprietary fashions from OpenAI and Anthropic. Qwen has received over builders from Southeast Asia to the Center East, and it’s additionally satisfied Western customers too: Meta’s most up-to-date mannequin, Muse Spark, is skilled partly off of Qwen.
Not like Alibaba, ByteDance has largely saved its AI fashions proprietary, as an alternative leveraging its product design and shopper expertise strengths to win customers. The corporate’s chatbot, additionally referred to as Doubao, is China’s most-used AI app, with 100 million each day lively customers over the Chinese language New Yr vacation in February.
Tencent, which operates the ever present WeChat messaging platform, has been a step behind its rivals in terms of AI. The corporate launched ClawBot in March, which seems as a contact inside WeChat, permitting its over one billion month-to-month lively customers to attach immediately with OpenClaw and execute duties by means of the messaging interface.
Competitors is fierce inside China’s tech sector. Final week, Alibaba revealed its latest video era mannequin, Blissful Horse, which performs higher than the present chief, ByteDance’s SeeDance, based on some analyses.
And there’s nonetheless potential for an additional huge tech firm to shake issues up. Xiaomi and Meituan, higher identified for smartphones and meals supply respectively, have launched their very own massive fashions.
Smaller startups
A brand new era of Chinese language AI startups are additionally successful converts in Silicon Valley.
When vibe-coding startup Cursor launched Composer 2, its newest coding service, eagle-eyed customers found that the mannequin had been constructed on Kimi K2.5, an open-source mannequin from Beijing-based Moonshot AI. Cursor’s co-founder later acknowledged it was “a miss to not mention the Kimi base…from the start.”
Two different startups—Information Atlas, higher generally known as Z.ai, and MiniMax—have already listed in Hong Kong, giving some uncommon visibility into the economics of a frontier AI lab.
MiniMax reported $79 million in 2025 income, a 159% year-on-year leap, with 70% coming from abroad markets in an early sign of world urge for food for Chinese language basis fashions. But it additionally posted an adjusted internet lack of $250 million. Zhipu AI generated 724 million yuan ($104.8 million) in income, 132% larger than the 12 months earlier than, however its whole losses ballooned to 4.7 billion yuan ($680 million), pushed by R&D spending that jumped 45%.
Buyers don’t appear to thoughts the huge losses. Zhipu’s shares are up greater than 570% from its IPO worth; MiniMax has risen greater than 470%, at one level briefly exceeding the market cap of Baidu. Nonetheless, each shares have swung wildly, rising and falling by double-digit percentages in single periods.
Moonshot AI, backed by Alibaba and HongShan, is reportedly weighing a Hong Kong IPO, coming only a few months after a January funding spherical that valued the startup at $10 billion.
One startup that’s been notably quiet this 12 months is DeepSeek, the Hangzhou-based lab that reset the entire AI dialog final 12 months with its V3 and R1 fashions. Builders are eagerly awaiting the general public launch of V4, the newest model of its mannequin.
Bodily AI
China can also be surging forward in bodily AI, backed by provide chains that may cheaply manufacture superior know-how.
Unitree Robotics, maybe China’s most outstanding humanoid robotic startup, has filed for a 4.2 billion yuan ($610 million) IPO on Shanghai’s STAR Market. Not like a lot of its robotics friends in China and abroad, Unitree doesn’t lose cash, posting an adjusted internet revenue of roughly 600 million yuan ($87 million). Different main Chinese language robotics startups embrace Agibot and UBTech.
Chinese language firms are additionally pushing laborious in automated driving. Pony AI launched Europe’s first industrial robotaxi service in Zagreb, Croatia in early April, in partnership with Uber and Croatian operator Verne. WeRide has additionally partnered with Uber to supply absolutely industrial robotaxis in Dubai.
Governments, shoppers get on board
Chinese language customers are way more comfy with AI than their Western counterparts. An Edelman survey from October discovered that 87% of Chinese language respondents belief AI, in opposition to 32% within the U.S.
The nation’s quick drama business is only one instance of shopper consolation with AI. Video platforms launched roughly 470 new dramas on daily basis in January, because of plummeting manufacturing prices. A brief drama can now be generated with AI instruments for round 100,000 yuan ($14,600), about ten % of the standard value, with the manufacturing window shortened from 15–30 days to underneath 5.
Chinese language shoppers are additionally embracing AI brokers, with a collection of main tech firms internet hosting workshops to stroll potential customers by means of the method of putting in OpenClaw on their private gadgets.
Native governments are amplifying the push, providing subsidies to “one-person companies,” solo entrepreneurs constructing AI agent companies.
Beijing’s method is extra measured, each pushing AI as a strategic precedence whereas additionally proactively shifting to chase away some potential dangers, resembling by warning in opposition to safety vulnerabilities in OpenClaw-based brokers and proposing laws for AI companion apps.
But essentially the most vital coverage benefit is probably not immediately linked to AI in any respect. China has aggressively expanded its energy era and transmission capability in recent times. Goldman Sachs estimates that China can have roughly 400 gigawatts of spare energy capability by 2030, roughly 3 times projected world knowledge heart demand.
Constraints at residence and overseas
Nonetheless, Chinese language AI firms face quite a few headwinds that constrain what they will do, significantly in comparison with the main U.S. AI builders.
Resulting from U.S. export controls limiting the sale of essentially the most superior AI chips to China, home firms are pressured to depend on domestically made chips, primarily from Huawei; abroad knowledge facilities; or on U.S. {hardware} sourced by means of gray markets. Chinese language chips are getting higher: on April 8, Alibaba unveiled a brand new knowledge heart run solely by itself home-designed Zhenwu chips. But manufacturing yields and efficiency nonetheless stay far behind the U.S. chip provide chain.
China’s enterprise capital ecosystem can also be thinner than Silicon Valley’s. Unease with Beijing’s tech regulation and U.S. regulatory stress lead many world buyers to keep away from Chinese language startups. Moonshot AI, at an $18 billion valuation, instructions principally China-based buyers. Anthropic, in contrast, raised $30 billion in a Collection G spherical in February 2026, at a $380 billion post-money valuation, backed by a world consortium of deep-pocketed institutional buyers together with GIC, Coatue, Founders Fund, and ICONIQ.
That funding stress pressured some founders to take radical motion, with some going so far as skipping the Chinese language market solely. Manus AI, which launched a buzzy AI agent final 12 months, reincorporated as a Singapore entity; Meta later acquired the agentic AI startup for roughly $2 billion in late 2025.
Beijing has taken a dim view of the deal. Two Manus co-founders, CEO Xiao Hong and chief scientist Ji Yichao, are actually topic to an exit ban, based on the Monetary Occasions.
The token financial system
But the largest unresolved query in Chinese language AI is far the identical as within the U.S.: Methods to flip tokens into earnings.
Alibaba spent 123 billion yuan ($17 billion) on capital expenditure in 2025, which helped contribute to a 66% plunge in internet earnings. Tencent hasn’t spent fairly as a lot cash, with capex of simply 79 billion yuan ($11.6 billion). ByteDance, as a non-public firm, faces much less stress from shareholders about profitability, however the Monetary Occasionsreported late final 12 months that the TikTok proprietor expects to spend $23 billion on AI infrastructure.
That’s nonetheless rather a lot smaller than what U.S. giants are spending. Alphabet spent $94 billion on capital expenditures final 12 months; Meta spent $75 billion. Each firms plan to spend much more this 12 months.
However monetization stress could already be pushing a few of China’s tech firms to rethink their technique. Each Alibaba and Z.ai have launched a few of their most up-to-date fashions in a closed format, at the very least at first. Each firms, in addition to others like Baidu, are additionally mountain climbing costs for his or her fashions and cloud providers.
Going ahead, China’s tech firms are going to place AI on the heart of their enterprise. Final month, Alibaba reorganized its complete AI operation into what it calls the “Alibaba Token Hub,” which consolidates 5 beforehand separate models, together with Tongyi Laboratory (its foundational mannequin analysis arm), Qwen, and an enterprise AI division referred to as Wukong, underneath CEO Eddie Wu’s direct oversight.
“ATH is built around a single organising mission: create tokens, deliver tokens and apply tokens,” Wu stated in a letter asserting the reorganization.
