China's Core AI Industry Surpasses 1.2 Trillion Yuan; Push to Traditional Sectors Accelerates

Xinhua reported that as of end-2025, China's core AI industry value had exceeded 1.2 trillion yuan (approximately $174 billion), with more than 6,200 AI enterprises operating nationwide. The report emphasized a 2026 push to deepen AI integration into traditional industries and small-to-medium enterprises (SMEs), following the 15th Five-Year Plan's 'AI+ action plan'. A key constraint identified: AI adoption remains concentrated in R&D and marketing functions, with production-line and supply-chain integration still lagging. The State Council's 2026 implementation guidelines direct provincial governments to establish AI adoption quotas for manufacturing enterprises in 10 designated strategic sectors. China's AI market is forecast to exceed 1.73 trillion yuan by 2028. The figures underscore China's position as the world's second-largest AI market by industry value, though the US maintains a substantial lead in frontier model development and AI research investment.