China’s AI competition has been distilled into two consecutive Lunar New Year campaigns that illuminate a year-long escalation: one focused on model architecture and the other on winning the broader public. Over the Snake Year festival companies such as DeepSeek and several model builders concentrated on upgrading foundational large models; by the following Year of the Horse the fight moved decisively up the stack into consumer-facing apps and traffic acquisition.
Four domestic giants—Alibaba, ByteDance, Tencent and Baidu—treated the Spring Festival as both battlefield and showcase. Alibaba’s Qianwen announced a 3 billion yuan “Spring invitation” and leaned on Taobao and Youku to funnel users into AI experiences; ByteDance’s Doubao ran heavy engagement drives and reported 1.9 billion AI interactions on New Year’s Eve; Tencent deployed its Yuanbao wallet with a roughly 1 billion yuan red‑envelope push; Baidu embedded its Wenxin assistant inside its existing app with 700m+ monthly users and distributed 500 million yuan in incentives to encourage seamless adoption.
The tactics were simple and blunt: cash, viral features (AI-generated avatars, holiday greetings and image tools) and the advantages of existing ecosystems. Alibaba’s home advantage is its open models plus abundant entry points across commerce and content. ByteDance used Doubao’s earlier market lead and product hooks to convert users quickly. Baidu’s strategy was defensive and pragmatic—place AI into an app many users already have and lower the friction for trial. Tencent, despite widely acknowledged gaps in model performance, bet on its distribution and product design to capture mass users.
That spending pushed up the entry cost for anyone seeking to be a national AI portal. Industry insiders warn that the four-way push, amplified by red-envelope economics, will squeeze smaller ChatBot and single‑app players out of the mainstream unless they can match the scale of investment or find alternate niches. One executive suggested that the chatbot era is increasingly a contest between deep integrators with broad reach rather than model-makers alone.
At the same time, innovation is not confined to big tech. New “agent” or smart‑assistant products—LobsterAI, Manus and others—show an alternative route: stitch together multiple models and services in a platform-agnostic way. These products underline a structural difference between model strength and product strength; smaller teams can assemble competitive agents by combining models from several vendors rather than owning an end‑to‑end stack.
Technically, the gap between leading Chinese and American models has narrowed perceptibly. Chinese releases this cycle—GLM‑5, Qwen 3.5‑Plus, MiniMax M2.5 and ByteDance’s SeeDance 2.0—are being judged by analysts and benchmarkers as within a few months of parity on key tasks such as code generation and multimodal outputs. Cost efficiency is another emerging advantage: some Chinese models are designed to run far cheaper, improving affordability and thus accelerating adoption across enterprise and consumer use cases.
The result is a bifurcated landscape. One track is the race for a super‑app entry point—mass daily engagement, payment incentives and closed‑loop services. The other is an ecosystem of interoperable agents and third‑party products that can cherry‑pick models and deliver focused value in verticals like office productivity or developer tooling. Both tracks will shape who wins the cultural and commercial centre of gravity in China’s next AI decade.
For global audiences the development matters for three reasons. First, China’s cost-effective model progress reduces the technological lead that US companies have long held and reshapes the economics of deploying AI at scale. Second, the concentration of user attention inside a few super‑apps creates powerful gatekeepers that will determine which AI products reach hundreds of millions of users. Third, the red‑envelope warfare and escalating capex commitments signal a sector moving from experiment to industrial contest—one that will influence startup strategy, cross‑border deals and standards for interoperability.