As the latest tech frontier, the fast development of artificial intelligence is poised to play a pivotal role in driving China's industrial upgrade, experts and business leaders said.

Continuous technological advancements and increased application across a wide range of fields are also expected to give fresh impetus to the country's high-quality economic growth. Multimodal AI-powered large language models, or LLMs, which can process and generate content across multiple modalities — including text, images, audio and video — will lead further development of the AI industry, and bolster the revolution in industries such as computing power, servers and chips, they added.

Meanwhile, Chinese tech companies' investment in state-of-the-art AI technology, which all major economies are scrambling to establish a beachhead in, is experiencing a robust upward trend, with sustained growth projected in the coming years.

To gain a competitive edge in the global AI chatbot race, industry insiders said Chinese enterprises should put more resources into improving computing power and algorithms, accumulate more high-quality training data and ramp up investment in basic scientific research.

AI is forecast to contribute $19.9 trillion to the global economy through 2030, and drive 3.5 percent of global GDP in 2030, according to a report released by global market research company International Data Corp.

In 2024, AI entered a phase of accelerated development and deployment, defined by widespread integration that has led to a surge in investments aimed at significantly optimizing operational costs and timelines, the report said.

By automating routine tasks and unlocking new efficiencies, AI will have profound economic consequences by reshaping industries, creating new markets, and altering the competitive landscape, it noted.

China's spending on AI will likely hit $38 billion in 2027, and account for about 9 percent of the global market, with a compound annual growth rate of about 25 percent from 2023 to 2027, the consultancy estimated.

Zhong Zhenshan, vice-president of IDC China, said LLMs have a profound impact on China's technology sector. They not only spearhead scientific and technological innovation, but also promote industrial transformation and upgrading as well as development of the digital economy, Zhong said.

With the emergence of AI agent technology, the influence of LLMs will be further expanded, especially in the digital transformation of enterprises, improvement of the intelligence level of business processes, and work efficiency, he added.

AI agents are software programs designed to intelligently interact with their environment to achieve specific goals. They can learn and enhance performance through feedback by utilizing advanced algorithms and sensory inputs to execute tasks and engage with their environments.

Major strides

China has made significant strides in developing AI technology. It is now home to more than one-third of the world's LLMs, according to a white paper released by the China Academy of Information and Communications Technology. The number of LLMs worldwide has reached 1,328, with 36 percent from China, the second-largest after the United States, which accounts for 44 percent of the total, it noted.

LLMs are AI models fed huge amounts of text data and are used in a variety of tasks, ranging from natural-language processing to machine translations. They involve key technologies underpinning US-based AI research firm OpenAI's ChatGPT, which has taken the world by storm since late 2022.

Major Chinese tech heavyweights — including Alibaba Group, Baidu, Tencent Holdings, and iFlytek — have stepped up efforts to roll out their own AI-powered LLMs and bolster the commercial application of generative AI technology.

Alibaba Cloud, the cloud computing unit of Alibaba, in September unveiled the latest version of its open-source Qwen 2.5 models, which boasts enhanced capabilities in math and coding.

This version is able to support over 29 languages, while catering to a wide array of AI applications across various sectors including automobile, gaming, and scientific research.

Wu Yongming, CEO of Alibaba Group, said LLM technologies have made rapid progress and currently can handle multimodal tasks including text, speech and vision. They can also understand requirements of humans and finish complex programming tasks. Meanwhile, the inference costs of LLMs have dropped exponentially, he added.

"We remain committed to investing in advanced AI infrastructure to foster the widespread adoption of generative AI technologies across different industries," said Zhou Jingren, chief technology officer of Alibaba Cloud Intelligence.

At present, more than 300,000 enterprises have access to Alibaba's LLMs, with a broad range of application in fields such as code programming, drug research and development, space exploration, and manufacturing.

The company has also announced an upgrade to its proprietary flagship model Qwen-Max, which has demonstrated strong performance in areas such as language comprehension, reasoning, math, and coding. Qwen-Max's capabilities are on par with those of OpenAI's most advanced GPT-4o model that was launched in May and caused a global sensation, the company said.

According to OpenAI, its GPT-4o model surpassed the company's existing models in vision and audio understanding, making the interaction between humans and machines much more natural and easier.

Baidu's AI-powered LLM Ernie Bot has garnered over 430 million users since its debut in March 2023. It handled about 1.5 billion API, or application programming interface, daily calls by early November, a 30-fold increase from the 50 million announced a year ago. In June, the company unveiled the latest version of its LLM called Ernie 4.0 Turbo.

Problem solving

The steep increase reflects the rapid growth in generative AI applications in China over the past two years, said Robin Li, co-founder, chairman, and CEO of Baidu.

AI agents will serve as the predominant form of AI applications and are approaching a tipping point of explosive growth, he said. "Agents are more humanlike, more intelligent, and act like your sales, customer service representatives, or assistants. Agents will become a new vehicle for content, information and services," he explained.

"The most significant change we're seeing over the past 18 to 20 months is the accuracy of answers from the large language models," Li said. "I think … that problem has pretty much been solved, meaning when you talk to a chatbot, a frontier model-based chatbot, you can basically trust the answer."

In AI, the biggest difference between China and some Western countries lies in applications, which are driving the rapid development of the industry in China, he said.

Although there are hundreds of foundation models in the Chinese market, Li believes the so-called product-market fit is more important to people. "We care more about what kind of applications can benefit from these kinds of frontier models," he said.

The company's focus is on reconstructing services with generative AI, from search and document creation to digital avatars for livestreaming shopping, he said. Currently, 18 percent of Baidu's search results are generated by Ernie Bot.

In October, iFlytek unveiled its latest LLM SparkDesk 4.0 Turbo, which outperforms GPT-4o in mathematical and coding capabilities, and achieved breakthroughs in various fields, such as multimodal understanding, text and graphic recognition, and multiple language abilities.

"Chinese tech companies' continuous technological advancements in LLMs will further promote the popularization of AI models, and bring fresh business opportunities for homegrown AI servers, cloud computing and chip companies," said Lu Yanxia, research director at market research company IDC China.

"The multimodal LLM is an undeniable future development direction for generative AI technology," Lu said, adding the open-source LLMs will substantially help enterprises and developers accelerate AI innovation.

Innovation continues

To accelerate the commercial use and popularization of AI technology, Alibaba, Baidu and Tencent, have slashed prices of their major LLM products. This year, they also provided some versions free of charge to enterprise users.

Competition in China's text-to-video AI models has intensified with domestic tech companies throwing their hats into the ring after OpenAI's Sora gained global attention following its launch in February this year.

Experts believe text-to-video generators have the potential to revolutionize the short-video, advertising and movie trailer industries.

Tencent recently launched the "video generation" function of its Hunyuan LLM, with 13 billion parameters and open-sourced capability. Users only need to enter a description to generate videos that support both Chinese and English input.

Video-sharing platform Kuaishou Technology has updated its Kling AI model, which comes with new features such as improved video quality, and image-to-video and video-extension capabilities. The model can interpret prompts to generate high-quality videos that mimic the physical world and create imaginative scenes from text instructions.

In addition, Chinese AI firm Shengshu Technology and Tsinghua University launched what they called the first Sora-level text-to-video large model Vidu in April, which can create a 16-second, high-definition video at 1080p resolution with a single click.

Pan Helin, a member of the Expert Committee for Information and Communication Economy, which operates under the Ministry of Industry and Information Technology, said LLMs have a high demand for data and knowledge in professional fields, and for talent that can fine-tune specialized models based on diverse industrial demands.

"The training of multimodal AI models necessitates massive requirements for computing capacity resources, which will give a strong boost to the development of the computing power industry," he said.

Pan emphasized Chinese tech companies should improve independent innovation abilities in computing power chips and programming software.

They must also invest more in basic scientific research — including mathematics, statistics and computer science — to catch up with leading foreign counterparts amid intensifying global industry competition.

Data advantages

As AI is increasingly used in a wide range of industries, demand for AI infrastructure such as computing power and servers will grow exponentially, said Zhu Keli, founding director of the China Institute of New Economy.

This will significantly promote the coordinated development of upstream and downstream segments of China's AI industrial chain, Zhu said.

Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, said: "China's major advantages in developing AI lie in its abundant data resources and diversified industrial application scenarios, while the US has taken the lead in basic AI research, chips, algorithms and other crucial technologies, and a sound innovation ecosystem."

Chinese enterprises should invest more to improve the quality of data required to train LLMs, cultivate AI talent, and expand cooperation with leading international AI firms, Wang said. More efforts are needed to make breakthroughs in core technologies covering AI chips and cloud servers, he added.

An increasing number of enterprises have emphasized the importance of investing in cutting-edge digital technologies, especially generative AI, to meet mounting challenges, amplify their potential, and reinvent businesses.

Forty-one percent of company executives surveyed in China believe they can realize the deployment of generative AI at their enterprises in six to 12 months, global consultancy Accenture said in a recent report. Seventeen percent are "extremely confident" that they have the right data strategies and the core digital capabilities in place to effectively leverage generative AI.

The report pointed out that companies with an advanced digital core, investments in strategic innovation, and a balanced approach to their technical debt — the cost and effort required to keep IT systems up to date and capable of meeting business needs — achieved higher revenue growth and profits.

Adapting to advances in technology and innovation, like AI, is the primary area of concern for executives heading into 2025, Accenture noted. Half of the business leaders interviewed are planning significant investments in AI technology in 2025.

Improving cybersecurity, fueling revenue growth, and enhancing supply chain resilience are the top three drivers of tech investment among Chinese organizations, it added.

"Organizations are trying to figure out how technology impacts their business operations, especially amid new advancements like generative AI," said Yu Yi, technology lead at Accenture Greater China. Getting value from disruptive technologies with an industry-leading digital core is more than just a critical success factor, it is a survival factor, Yu said.

Despite AI's development opportunities, challenges still remain in regard to ethics, copyright protection, privacy and data security, experts said.

They called for heightened efforts to ensure the safe and reliable application of the technology through global governance, as well as strengthening the protection of personal privacy and sensitive information. An international institutional framework and regulations need to be established to regulate data security, they suggested.

Zeng Yi, a researcher at the Institute of Automation of the Chinese Academy of Sciences, said management and governance of risks brought about by AI are becoming increasingly important issues.

Strengthening international cooperation and establishing a global AI development and governance institution under the framework of the United Nations, will allow for responsible and appropriate use of AI and its steady development, Zeng added.