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While international attention often centers on China’s latest foundation models or its constrained access to high-end artificial intelligence (AI) chips, these headlines obscure the broader architecture of China’s AI strategy. China is pursuing a dual-track approach that combines frontier model development with a coordinated effort to promote widespread diffusion (人工智能扩散) of AI technologies across sectors.
This strategy operates at two levels. Nationally, Beijing has launched top-down initiatives to embed AI into education, industrial planning, and public governance. Simultaneously, provincial and municipal governments are deploying bottom-up, localized incentives, to include compute vouchers, model subsidies, and talent attraction policies, to accelerate adoption and build out regional ecosystems.
Rather than focusing merely on technological breakthroughs, China’s approach emphasizes integration: ensuring that AI capabilities are not only developed, but also deployed across the real economy. Understanding this policy model and the mechanisms that support it is essential to evaluating China’s long-term trajectory in global AI competition.
Bottom-Up: The Provincial Race to Build an AI Ecosystem
Local governments across China, including Beijing, Shanghai, and Shenzhen, have begun issuing computing power vouchers, which subsidize the cost of renting computing time for AI startups. Voucher and are typically worth around US$140,000 to $200,000 but can go higher: Zhejiang (the home province of Deepseek) has offered to cover costs up to ¥8 million RMB (around US$1.1 million). Companies can redeem these vouchers for time in data centers to train or run new AI models, which helps lower the upfront costs for smaller AI startups.
Although compute vouchers are issued locally, their adoption was first encouraged at the national level. After a December 2023 meeting, the National Development and Reform Commission included computing power vouchers in its implementation guidance for the national Eastern Data, Western Computing (EDWC, 东数西算) initiative, which is constructing massive computing clusters across energy-abundant western China. EDWC primarily targets the supply side (building large pools of compute and greener power), while compute vouchers operate on the demand side by subsidizing firms’ ability to access those resources.
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