Chinese AI: SOEs lead adoption of Large Language Models

Policy support spurs AI momentum

Since 2023, the Chinese government has issued a series of policies to encourage AI development, with a particular focus on state-owned enterprises. One key initiative is the "AI+ Specific Industry" program launched by the State-owned Assets Supervision and Administration Commission (SASAC), which aims to accelerate AI integration into targeted industrial sectors. These policy efforts have created a favorable environment for SOEs to adopt and scale LLM applications.

AI procurement by SOEs sees rapid expansion

AI procurement by Chinese SOEs surged in 2024. A total of 931 procurement projects were initiated, marking a dramatic increase from 92 projects in 2023. Of these, 551 projects disclosed a combined procurement value of ¥3.22 billion, accounting for 49.8% of the overall AI procurement market. The actual figure is expected to be higher, given that nearly half of the projects did not disclose financial details.

Leading SOEs such as State Grid, China National Petroleum Corporation (CNPC), and China Merchants Group are at the forefront of this trend, actively investing in AI technologies to improve efficiency and performance.

Rising internal capabilities and LLM teams

A recent survey of 97 Chinese SOEs highlights a clear trend toward internal AI capability building.

• 36% of surveyed enterprises have established dedicated LLM teams.
• 24% have launched their own proprietary or co-developed LLMs.

This shift reflects a growing emphasis on developing customized solutions aligned with enterprise-specific needs and long-term strategic goals.

Focus on business-oriented AI applications

• Knowledge assistants (72%)
• Data analysis tools (64%)
• Employee productivity tools (41%)
• Intelligent document assistants (39%)
• Coding assistants (39%)

These figures show a strong preference for mature, high-return applications aimed at enhancing productivity and operational efficiency.

Market leaders and industry tailoring

Enterprise-focused AI developers are gaining traction in this evolving landscape. Zhipu AI and Zhongguancun Kejin have emerged as key players, securing contracts with numerous central enterprises and delivering tailored LLM solutions for various industrial sectors.

The overall market is moving toward industry-specific and co-developed AI applications that align with operational realities. This approach is expected to reinforce technological self-reliance, improve profit margins, and enhance operational efficiency across China's SOE sector.

Outlook for 2025: Continued acceleration

Looking ahead, the trend is set to continue. In 2025, SOEs are expected to further accelerate their AI adoption, with Large Language Model applications becoming a central pillar of enterprise digital transformation strategies. The focus remains on leveraging AI to drive measurable gains in efficiency, performance, and national competitiveness.