Article04 Apr 2023

China AI: What Lies Ahead?

A recent report from Citi Research’s Alicia Yap takes a detailed look at the AI landscape in China across areas like conversational AI, quantum computing, voice recognition, and natural language processing.

With the artificial intelligence (AI) era well underway, what’s happening in China? First, market size. According to a China AI digital market outlook for 2021-25 issued by Qianzhan, the generative AI application market in China will grow from Rmb66.3bn in 2022 to Rmb207bn by 2025. That’s a CAGR of 46%. That forecast is based on data from the Ministry of Commerce, Gartner, and other third-party research, as well as on interviews. Gartner itself forecasts that, by 2025, data generated from generative AI will account for 10% of total data, up from less than 1% today.

China Generative AI Application Market Size (Rmb bn)

© 2023 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source:, Citi Research


Qianzhan has estimated that China’s AI digital commercialization market will grow from Rmb49.5bn in 2022 to Rmb185.3bn by 2025, representing a CAGR of 55%.

The main driver? AI digital services. These are expected to grow from Rmb29.5bn in 2022 to Rmb110.2bn in 2025, a 55% CAGR. Meanwhile, digital commercial content is expected to grow from Rmb11.1bn to Rmb49.5bn, a CAGR of 65%.

It remains unclear how these forecasts would translate into monetization opportunities or incremental revenues for China-based chatbot companies.

As per IDC estimates, the AI Software and Application Market in China is expected to grow at a CAGR of 32.9%, to US$21.1bn in 2021-26E. With the advent of generative AI and AI use-case, Citi Research predicts this will revolutionize the SaaS industry by offering scalability and flexibility to extend product offerings in a less costly, more personalized, and contextualized way, resulting in a potential TAM expansion and improvement in client business efficiency.

China Cybersecurity Market Size

Global Cybersecurity Market Size



© 2023 Citigroup Inc. No redistribution without Citigroup’s written permission.

© 2023 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: IDC, Citi Research

Source: IDC, Citi Research



IDC estimates that China’s cybersecurity market size will reach US$31.9bn in 2026, growing at a fast CAGR of 21.2% in 2021-26E, driven by demand from a digital economy, network threats, and government policy support. Increased demand is stemming from new technology developments including cloud computing, industrial Internet development, and IoT, according to an IDC report. The global cybersecurity market is more developed with a stable 11.3% CAGR in 2021-26E.

The full report goes into detail on potential beneficiaries and implications for particular companies in the Internet, software, and hardware tech sectors. It also looks at how data privacy and content censorship could affect the progress and outcomes of China’s AI efforts.

For more information on this subject, please see: China Internet & Technology - Generative AI: Assessing Potential Beneficiaries & Implications (published 14 March 2023).

Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.




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