What Changes Next in Chinese AI: Catalysts and Scenarios

The Chinese AI market is not a single race but a multi-dimensional competition across seven layers, three archetypes, and evolving time horizons. The next 2-3 years will be decisive.

The Three-Way Race

Three archetypes compete with different strategies:

• Big Tech Platforms — embed AI into super-apps, zero-margin inference, model-agnostic hedging. Advantage: 1B+ daily touchpoints.
• Frontier Research (DeepSeek) — efficiency breakthroughs, open-weights, research independence. Advantage: disruption potential at 143M MAU.
• Infrastructure Sovereigns (Huawei) — domestic chip production, Ascend-optimized models, CloudMatrix. Advantage: 35-40% chip share growing to 50%.

Key Catalysts

DeepSeek R2/V4 (2025-2026): The next potential efficiency breakthrough could reset competitive dynamics and force platform reintegration.

Agentic Commerce (2025-2027): Shifts evaluation from chat quality to task completion. With 10B+ daily agent tool calls already, reliability becomes more important than convenience.

Huawei Full-Stack (2026-2028): Complete vertical integration. Ascend targets 50% chip share by 2026. CloudMatrix, Pangu models, and consumer devices create an alternative stack.

Export Controls (Ongoing): Tighter controls accelerate domestic innovation under constraint. Geopolitical factors introduce uncertainty.

Signals to Watch

Distribution winning: Doubao/Tongyi MAU keeps growing. DeepSeek churn continues. Super-app AI usage deepens.

Frontier winning: DeepSeek R2 delivers major breakthrough. Platform integration deepens. Agentic task success rates diverge by provider.

Infrastructure winning: Ascend share accelerates past 50%. Huawei consumer AI launches. New export controls imposed.

Three Scenarios

Distribution Dominance Persists (65% probability): Big Tech platforms maintain consumer AI dominance through super-app embedding.

Frontier Disruption Cycle (25%): Recurring efficiency breakthroughs from DeepSeek periodically reset dynamics.

Infrastructure Sovereignty (10%): Huawei’s full-stack play reshapes the competitive foundation.

Bottom Line

China’s AI economy is not a “model race.” It is a stack-and-distribution game. Platforms win the steady state because they own habits, payments, and workflows. DeepSeek wins the resets because it can change economics through efficiency. The next regime shift is agentic commerce, where capability becomes measurable and distribution advantages can weaken.

If you are not at a pole, you are the product.

This is part of a comprehensive analysis. Read the full analysis on The Business Engineer.