Generative AI adoption is becoming mainstream in China's gaming industry, with the country leading globally in AI applications for gaming and strengthening its development capabilities. At ChinaJoy, the gaming expo held in Shanghai from late July to early August, approximately 900 exhibitors from China and abroad showcased more than 1,000 new game titles, drawing over 430,000 visitors across the four-day event. The booth for "Where Winds Meet," a role-playing game distributed globally by NetEase (9999.HK), drew large crowds due to its AI-powered system enabling characters to engage in natural conversation based on player questions and actions, a shift from pre-scripted dialogue. AI adoption is also advancing in development; Tencent Holdings (0700.HK) showcased "LAP," an AI-powered game production management tool for background and character assets and animation generation. A survey by the Game Publishing Committee found that 86.4% of companies apply AI in production processes, while 73.7% remain at the "AI-assisted exploration" stage. On the player side, among the top 100 mobile games by revenue in the first half of 2026, approximately 15% of products have introduced AI features, accounting for 42.6% of sample revenue. Tencent's "Game for Peace" has seen cumulative users of AI NPC-related features reach 110 million, with peak daily active users of 17.7 million. A CITIC Securities report notes AI is shifting