Standing on stage in the eastern China tech hub of Hangzhou, Alibaba’s normally media-shy CEO made an attention-grabbing announcement. “The world today is witnessing the dawn of an AI-driven intelligent revolution,” Eddie Wu told a developer conference in September. “Artificial general intelligence (AGI) will not only amplify human intelligence but also unlock human potential, paving the way for the arrival of artificial superintelligence (ASI).”

ASI, Wu said, “could produce a generation of ‘super scientists’ and ‘full-stack super engineers’”, who would “tackle unsolved scientific and engineering problems at unimaginable speeds”.

Wu also announced plans to invest 380bn yuan (£40bn) in AI infrastructure over the next three years, news that sent Alibaba stocks soaring to their highest in nearly four years.

Wu’s foray into the existential, techno-frontier rhetoric normally deployed by western tech CEOs such as OpenAI’s Sam Altman and DeepMind’s Demis Hassabis caught the attention of observers. “Wu’s ASI speech represents a breakthrough,” the tech writer Afra Wang wrote in her China AI newsletter, Concurrent. “Major Chinese companies are beginning to articulate their own grand visions that carry the flavour of future prophecy.”

AGI, a theoretical state of AI where a highly autonomous system is able to do a human’s job, has become the preoccupation of American tech companies such as OpenAI and DeepMind. Many see it as the next frontier of civilisation, and are in competition with each other, and China, to get there. In May, the president of Microsoft, Brad Smith, told a US Senate committee on AI that the “race between the United States and China for international influence likely will be won by the fastest first mover”.

Many in Washington have internalised these fears. The US-China economic and scurity review commission has recommended that Congress “establish and fund a Manhattan Project-like program dedicated to racing to and acquiring an artificial general intelligence (AGI) capability”. The Manhattan Project was a second world war-era research operation to produce nuclear weapons.

In China, many saw Wu’s speech as articulating the vision of a bold, singular tech company, but not one that represented China’s overall AI industry.

“China certainly has research groups working towards AGI. But most AI companies are working towards better applications,” said Ya-Qin Zhang, the dean of Tsinghua University’s Institute for AI Industry Research and former president of the tech company Baidu.

A combination of limited computing power, a pragmatic approach to technology and a keen awareness of the present day potential of AI has steered China’s national AI policy towards real-life applications rather than frontier research.

In August, the Chinese government published its highly anticipated “AI+ strategy”. The policy document outlined how AI could turbocharge China’s development goals, such as by using AI to improve medical diagnoses and make supply chains more efficient. But it made no mention of AGI.

“The Chinese government is intently focused on reaping the benefits of AI in the here and now and in the near future through diffusion and application of AI across the economy, society, defence, and other areas,” said Julian Gewirtz, a former senior director for China and Taiwan at the White House national security council. “Despite its goal to ‘catch up and surpass’ the United States, we shouldn’t assume that the Chinese Communist party has bought into the idea that AGI is imminent.”

“If you’re just looking at what has been officially published … there is no clear acknowledgment of AGI at all,” said Selina Xu, a China tech analyst. Xu noted that Xi Jinping, China’s leader, had a history of preferring the physical economy to more intangible forces.

“It’s a very different narrative from the AGI race as a lot of people in DC see it,” Xu said.

One of the biggest factors guiding this strategy is the fact that US sanctions have prevented Chinese companies from acquiring the world’s most sophisticated semiconductors, which are needed for advanced AI research.

Washington has banned the sale of hi-tech microchips to China in an effort to rein in the country’s AI development. Nvidia, the world’s leading chipmaker, then developed more basic semiconductors specifically for the Chinese market. In December, Washington approved the Nvidia’s second-most advanced chips, the H200s, for sale in China. But Beijing has reportedly told custom agents that the chips cannot be imported into China, as the government seeks to break the country’s reliance on overseas technology.

China insists that “necessity is the mother of invention” and points to the success of companies such as DeepSeek as proof that the US restrictions will merely spur innovation. DeepSeek’s founder, Liang Wenfeng, is one of the few Chinese tech leaders who, like Alibaba’s Wu, has openly expressed an interest in AGI.

But until China is able to produce its own advanced semiconductors at scale, most tech companies feel it is more profitable to use the hardware they already have to focus on AI applications rather than AGI.

Another factor guiding the US-China tech competition is the availability of datacentres and the energy to power them. In November, Jensen Huang, the CEO of Nvidia, said China would “win the AI race” in part because of its energy subsidies for datacentres.

The subsidies were reportedly introduced after Chinese tech companies complained of higher electricity bills caused by the domestic semiconductors they are obliged to use, which are less efficient than Nvidia’s. In a sign of how determined China is to break its reliance on imported technology, Reuters reported that any datacentres in receipt of state funds could only use domestic chips.

Such measures would reduce Nvidia’s competitive advantage in China and boost domestic chip producers, such as Huawei.

Since 2021, China has reportedly poured $100bn into support for AI datacentres.

But there are signs that the boom may have been overzealous. A recent report from the China Academy of Information and Communications Technology said that nationwide, the utilisation rate for AI datacentres was 32%.

In a recent op-ed in China Economic Weekly, Rao Shaoyang, the director at the China Telecom Research Institute, wrote that in some regions of China, the computing power industry was operating in a similar fashion to China’s beleaguered property sector: build first, find buyers later. He cautioned against “blindly building intelligent computing centres” and said local computing power demand should be considered before building new datacentres.

Despite the surplus in more general computing power, many experts believe China still does not have chips that are sophisticated enough to explore frontier research in AGI. But analysts note that the mood could change quickly.

“The current status quo is highly fluid, and Xi Jinping has explicitly declared an ambition to lead the world in AI,” said Gewirtz. “So the fact that China construes that goal one way at this snapshot moment in time does not give me any comfort that in a year they’re going to construe it the same way.”

Additional research by Lillian Yang