China’s AI strategy: Can Beijing turn state power into technological dominance?

China is betting that a combination of state funding, industrial policy and widespread adoption can propel it to the forefront of artificial intelligence — even as Beijing faces shortages of advanced chips and specialised talent.

In an analysis, The New York Times examines how President Xi Jinping has made artificial intelligence a central part of China’s economic and technological strategy. During a February visit to a technology park outside Beijing, Xi watched two robotic hands thread a needle, presenting the technology as part of a broader vision in which AI transforms factories, hospitals and schools.

The NYT describes a campaign backed by the full weight of the Chinese state. Hundreds of companies at the park are developing advanced chips and AI models, while the city government is providing tens of millions of dollars in computing power. Economists cited by the newspaper estimate that state-led funds invested more than $184 billion in Chinese AI firms between 2000 and 2023, with hundreds of billions more pledged by the government and state-owned banks last year.

China’s approach also differs from the AI strategy dominant in the United States. While many American technology companies are focused on artificial general intelligence, Chinese officials have concentrated on more immediate applications, including robotics, healthcare and manufacturing.

The NYT notes that China’s ageing and shrinking population has created an incentive to develop intelligent machines capable of replacing retiring workers. Beijing has also set a goal of having AI-powered tools and agents permeate 90 per cent of Chinese society by 2030.

Xi’s strategy has deep roots. According to the NYT, a 2014 speech in which he argued that China should become not merely the largest market for intelligent machines but their leading manufacturer helped set the direction for the country’s AI policy.

China subsequently issued a national AI plan in 2017 that called for the country to become a world leader in the technology by 2030. State and private investment surged, while Chinese AI patents expanded rapidly.

The emergence of DeepSeek further altered perceptions of China’s capabilities. The previously little-known startup demonstrated that Chinese companies could compete with Silicon Valley in large language models, prompting Xi to meet leading technology executives in 2025.

“It is the right time for private enterprises and entrepreneurs to fully demonstrate their abilities,” he said. Those gathered must “unify our thinking” and “serve the country.”

Yet the NYT analysis highlights important limits to Beijing’s model. Unlike electric vehicles and solar panels, where government support could help established technologies scale, AI leadership depends heavily on technological breakthroughs. China also lacks sufficient access to the most advanced chips and faces a shortage of specialised talent.

Cole McFaul, a researcher at Georgetown University’s Centre for Security and Emerging Technology, argues that subsidies can do only so much in AI. Still, Chinese authorities have increasingly sought to give private companies greater room to innovate, recognising that firms such as DeepSeek and Alibaba have driven important breakthroughs.

The results are increasingly visible. The NYT reports that China had more than 6,000 AI companies by the end of 2025, while its core AI industry was valued at $171 billion. China also has more than 2 million industrial robots, more than the rest of the world combined.

For Xi, the strategy represents a long-term bet: that coordinated state support, private-sector innovation and mass adoption can turn China from an AI follower into a major technological power.

By Sabina Mammadli