China leads in generative AI video models and startup growth

China is demonstrating significant dominance in the generative AI sector, particularly in video generation models. According to Artificial Analysis, nine of the top ten video AI models belong to Chinese firms such as ByteDance, Alibaba, Kuaishou, and Skyworks, with Google Gemini Omni Flash being the only non-Chinese model to rank higher.

This technological surge is supported by massive entrepreneurial activity. In the first half of 2026, China registered 55,000 new generative AI companies, a 28% year-on-year increase. The humanoid robot sector also saw rapid expansion, adding 116,000 new companies. The core AI industry exceeded 1.2 trillion yuan ($173.9 billion) in 2025, and venture capital investment in AI startups reached ¥287 billion during 2026.

Beyond media generation, the focus is shifting toward ‘physical AI’ and ‘world models’—systems capable of predicting physical dynamics. These advancements are intended to enhance robotics and autonomous vehicles. The Chinese government is codifying these priorities through the 15th Five-Year Plan, which emphasizes embodied AI and quantum technology.