Chinese tech giants are playing a different AI game.
US AI companies — like OpenAI and Anthropic — usually keep their most powerful models locked behind paywalls for consumers or license them to enterprises.
China’s biggest players, in contrast, are handing theirs out for free — and rolling them out across everyday tech at breakneck speed, Ray Wang, a Washington-based analyst who specializes in AI and US-China tech statecraft, told Business Insider.
Instead of trying to outbuild leading players like OpenAI, China is out-deploying AI and “undergoing consolidation” — in other words, embedding AI into everything, Wang said.
That rapid integration could prove just as crucial as model quality in determining a country’s overall competitiveness in AI, he said.
While the US maintains “a limited lead in frontier AI models over China,” China’s aggressive push to embed AI into everyday tech could give it an edge in real-world adoption, Wang added.
“China could have broader and faster — or on par with the US — AI integration in consumer devices and applications despite not having the most advanced LLM,” Wang said, referring to large language models.
China’s AI strategy
In recent weeks, companies like Alibaba, Baidu, and Tencent have flooded the market with powerful AI models and upgrades.
In late March, Alibaba announced a new AI model designed for developing cost-effective AI agents. That same month, DeepSeek unveiled an upgraded version of its open-source V3 large language model.
Models like Alibaba’s Qwen2.5-Omni-7B and DeepSeek’s V3 are freely available for anyone to download, modify, and integrate.
DeepSeek’s latest models — especially the reasoning-focused R1 and R2 set to launch later this month or in May — mark a “significant inflection point,” said Wei Sun, the principal analyst for AI at Counterpoint Research.
“These models not only match the best-in-class performance globally, but are also open-sourced under the most permissive MIT License,” she said.
“That changes the game,” she added.
Amid high costs and chip shortages, Chinese firms are also prioritizing rapid AI deployment and consolidation to stay competitive, said Wang.
Tencent has deployed its Hunyuan model and DeepSeek R1 across its massive ecosystem, including WeChat, he said. WeChat, China’s biggest social media app, is used by nearly 1.4 billion people.
Baidu has also integrated DeepSeek R1 into its search engine, Wang said.
Baidu last month released two newer versions of its AI model — Ernie X1, a reasoning model, and Ernie 4.5, a revamped version of the company’s foundational model. The tech giant said it will “progressively integrate” Ernie 4.5 and X1 into its product ecosystem, including Baidu Search, China’s dominant search engine.
“These developments underscore China’s increasing emphasis on AI integration, application-driven innovation, and enterprise solutions rather than solely competing on model sophistication,” Wang said.
The US’s AI upgrades
In contrast, the dominant trend in the US is to build advanced, closed-source AI models that require significant investment in computing power, said Wang.
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Big Tech firms like Microsoft, Amazon, Google, and Meta have spent billions on the infrastructure underpinning emerging AI tech. The four companies are expected to spend a collective $320 billion in capital expenditures this year to broaden their AI capabilities.
Their flagship models — including OpenAI’s GPT-4 and Google’s Gemini — are typically closed-source and monetized through APIs or enterprise licensing. This restricts access and limits how widely developers can experiment or build on them. However, OpenAI’s CEO, Sam Altman, said in January that the company needs to “figure out a different open source strategy.”
On April 10, Anthropic introduced a new $200-per-month subscription tier for its Claude chatbot — matching the premium pricing of rival OpenAI.
Meta is an exception with its open-source Llama model series. But despite its open-source stance, Meta still takes a capital-heavy approach, Wang said. Meta’s CEO, Mark Zuckerberg, has committed as much as $65 billion to AI projects this year.
Where China is catching up
A report released on Monday by Stanford’s Artificial Intelligence Index found that US private AI investment grew to $109.1 billion last year — nearly 12 times China’s $9.3 billion.
While the US has produced more AI models than China, the report found that Chinese models have “rapidly closed the quality gap.”
China also continues to lead in AI publications and patents, the report found.
“Chinese vendors have come a long way from being caught surprised by ChatGPT to now competing head-to-head with top Western vendors,” Lian Jye Su, the chief analyst at Omdia, told BI.
“It will take a while for China to compete in AI chipsets, but China has managed to provide solid alternatives to users looking at non-US AI software and applications,” he added.
