China's tech giants are rapidly integrating AI into everyday life, signaling a shift towards an AI-driven digital economy.
More than 600 million people in China have utilized various AI applications, signaling a rapid integration of technology into everyday life, according to The Economist.
"The country is quickly advancing toward a future where artificial intelligence will handle the selection, purchase, and delivery of numerous goods and services, fundamentally altering the digital economy," the publication notes.
For instance, in Shanghai, ordering coffee can be as simple as asking an app to choose a drink on behalf of the user, who only needs to confirm the order for it to be delivered promptly. However, this reliance on AI for decision-making comes with its own set of challenges. A journalist from The Economist reported an unexpected experience after requesting a "special" coffee, receiving a beverage that tasted like vinegar with rose petals instead.
The Third Internet Era
Chinese internet users have experienced two distinct phases of internet evolution:
- The early 2000s, dominated by the Baidu search engine;
- The post-Google exit period, where Baidu monopolized the market, leading to user dissatisfaction as services became heavily monetized. This dissatisfaction prompted a transition to super apps—platforms that amalgamate shopping, entertainment, communication, and payment functionalities.
This evolution has enabled major tech players like Alibaba, ByteDance, and Tencent to create extensive digital service portfolios and logistics networks, positioning them to develop autonomous solutions for users.
As the AI sector heats up, any of these tech giants could emerge as the frontrunner in this new internet era. The competitive landscape is already shifting, as noted by The Economist.
For instance, on May 11, Alibaba fully integrated its Qwen chatbot into its Taobao shopping app, allowing users to make purchases through simple voice commands. Meanwhile, ByteDance is preparing to do something similar by merging Doubao with Douyin.
Tencent, often viewed as a "dark horse," has recently revamped its AI team and is testing a new model called Hy3, which is expected to be incorporated into WeChat.
AI-Driven Super Apps
AI-powered super apps could serve as a significant growth avenue amidst a period of reduced consumer spending in China. Alibaba reported a 40% decline in its e-commerce division's operating profit in the first quarter of 2026 compared to the previous year, although its cloud business continues to thrive, requiring substantial investment.
While Chinese tech firms assert that their AI super apps do not prioritize promoted products, The Economist suggests that they may need to revise their strategies.
Protective Measures
Chinese companies appear cautious about AI devices with embedded agency capabilities that could rival super apps. OpenAI is developing such a device designed to fully understand a user's environment unobtrusively, which it claims will become a primary device alongside the MacBook Pro and iPhone.
In December, ByteDance attempted to launch a smartphone equipped with a pre-installed AI assistant in collaboration with ZTE, but the project faltered due to Alibaba and Tencent restricting access to their payment systems.
In March, Xiaomi unveiled plans to integrate new AI models into smartphones and vehicles, with Huawei also poised to enter the fray.
As the Chinese internet moves into this new phase, an intense struggle for market leadership is anticipated, The Economist concludes. Notably, in August 2025, China outlined its ambitions for national AI integration.
