In the past decade, China has built a strong structure to support its AI economy and made significant contributions to AI worldwide. Stanford University's AI Index, which evaluates AI improvements around the world across different metrics in research, advancement, and economy, ranks China amongst the top three nations for international AI vibrancy.1"Global AI Vibrancy Tool: Who's leading the international AI race?" Artificial Intelligence Index, Stanford Institute for Human-Centered Artificial Intelligence (HAI), Stanford University, 2021 ranking. On research study, for instance, China produced about one-third of both AI journal papers and AI citations worldwide in 2021. In economic investment, China accounted for nearly one-fifth of international private investment financing in 2021, attracting $17 billion for AI start-ups.2 Daniel Zhang et al., Artificial Intelligence Index report 2022, Stanford Institute for Human-Centered Artificial Intelligence (HAI), Stanford University, March 2022, Figure 4.2.6, "Private investment in AI by geographical location, 2013-21."

Five types of AI business in China

In China, we discover that AI companies typically fall into one of five main categories:

Hyperscalers develop end-to-end AI technology capability and team up within the community to serve both business-to-business and business-to-consumer business. Traditional market companies serve consumers straight by establishing and embracing AI in internal improvement, new-product launch, and client services. Vertical-specific AI companies establish software application and options for specific domain use cases. AI core tech companies provide access to computer vision, natural-language processing, voice recognition, and hb9lc.org artificial intelligence capabilities to establish AI systems. Hardware companies provide the hardware facilities to support AI need in calculating power and storage. Today, AI adoption is high in China in financing, retail, and high tech, which together account for more than one-third of the country's AI market (see sidebar "5 kinds of AI business in China").3 iResearch, iResearch serial market research on China's AI industry III, December 2020. In tech, for instance, leaders Alibaba and ByteDance, both home names in China, have actually become understood for their highly tailored AI-driven consumer apps. In reality, the majority of the AI applications that have been commonly embraced in China to date have actually remained in consumer-facing industries, moved by the world's largest internet consumer base and the ability to engage with customers in new methods to increase client commitment, profits, and market appraisals.

So what's next for AI in China?

About the research study

This research is based upon field interviews with more than 50 specialists within McKinsey and throughout markets, in addition to extensive analysis of McKinsey market evaluations in Europe, the United States, Asia, and China particularly in between October and November 2021. In performing our analysis, we looked outside of industrial sectors, such as finance and retail, where there are already mature AI usage cases and clear adoption. In emerging sectors with the greatest value-creation potential, we focused on the domains where AI applications are currently in market-entry stages and could have an out of proportion impact by 2030. Applications in these sectors that either remain in the early-exploration phase or have mature market adoption, such as manufacturing-operations optimization, were not the focus for the function of the study.

In the coming decade, our research indicates that there is significant opportunity for AI growth in new sectors in China, including some where development and R&D spending have generally lagged global equivalents: vehicle, transportation, and logistics