By the end of 2025, China had about 1.125 billion internet users and 602 million generative AI users, with a national adoption rate of 42.8%. China’s comparative advantage in generative AI lies not in producing the world’s best foundation models but in converting AI into usable products, services, and workflows at speed and scale, supported by large-scale unmet demand, mature platform ecosystems, open-source and cost-effective models, manufacturing depth, and regulation that sets guardrails for rapid adoption. Across healthcare, education, and small businesses, practical demand exists for tools that lower costs and extend expertise, as even modest improvements can be multiplied across hundreds of millions of users. In many commercial and industrial settings, “good enough” models that are affordable, customisable, and easy to integrate may matter more than benchmark-leading performance. For example, China has long faced pressure to improve access to quality medical services beyond top urban hospitals, creating strong incentives to adopt AI where skilled human resources are scarce. Falling costs have also lowered the threshold for adoption, as Chinese firms do not always need frontier-level systems.