SHANGHAI, — Chinese President Xi Jinping on Tuesday visited an AI incubator in Shanghai, calling on the city to take the lead in AI development and governance.
The inspection trip came four days after China’s leadership convened a dedicated AI study session, where Xi called for gaining a head start in this strategic sector.
“AI technology is evolving rapidly and entering a phase of explosive growth,” said Xi, as he visited the Shanghai Foundation Model Innovation Center, a large model incubator home to over 100 enterprises
China’s AI industry is a global leader, driven by government support, a vast market, and technological advancements, aiming to dominate by 2030. Recent reports from Statista, Grand View Research, and MIT Technology Review highlight its growth, applications, and challenges.
Market Size: Valued at US$15.77 billion in 2023, China’s AI market is projected to reach US$206.61 billion by 2030 (44.4% CAGR), capturing 26.1% of the global market, per Grand View Research. Beijing, Shanghai, and Shenzhen lead, with Guangdong’s AI sector at RMB 220 billion in 2024, per X post (@sfc_talk
).
Key Sectors: AI powers e-commerce (personalization), healthcare (diagnostics), automotive (56% autonomous vehicle penetration by 2030), manufacturing (digital twins), and military (unmanned systems).
It also supports surveillance and propaganda, with China leading in facial recognition exports, per Wired.
Government Policies: The 2017 AI Development Plan and 2024 AI+ Initiative drive growth. The Cyberspace Administration enforces ideological alignment, while 500+ AI data centers (80% unused) and 1 trillion Yuan in funding support infrastructure, per MIT Technology Review. Open-source models like DeepSeek’s R1 lower costs, per CNBC.
Key Players: DeepSeek’s R1 disrupted markets, Baidu holds 19.9% LLM share, and Huawei’s Ascend 910C challenges Nvidia, per IDC and X (@Investingcom
). SenseTime, Zhipu AI, and Alibaba innovate in LLMs and AI agents.
Talent: China hosts 47% of top AI researchers and leads in patents and papers, per Stanford’s 2025 AI Index. Retention of AI graduates rose to 58% by 2022, per Wikipedia.
Challenges: Unused data centers, U.S. chip export controls, economic slowdown, and strict regulations limit progress. Coastal hub concentration creates disparities, per Wikipedia.
Geopolitical Context: AI strengthens China’s military and surveillance, impacting global dynamics. Amid the Russia-Ukraine conflict, China’s AI-driven energy solutions could support allies like Russia,
while its open-source push counters U.S. dominance, per CEPA.
Conclusion: China’s AI industry is poised for growth but faces infrastructural and geopolitical hurdles. Its advancements in open-source models and applications position it as a formidable competitor, with implications for global security and trade.
Sources: Statista, Grand View Research, MIT Technology Review, Wikipedia, CNBC, Wired, X posts
).
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