Streamlined Insights

How China May Be Poised To Win The AI Video Generation Race

Liz Shackleton

30 Apr 2026 — 10 min read

China solar energy farm (credit: iStock)

My recent trip to Beijing made me realise that the six years I spent during and after the pandemic living in a small village in Hong Kong, while comfortable, was the lifestyle equivalent of living under a rock. This past week of meeting tech companies in Beijing was the equivalent of being dragged out from underneath that rock and thrust into the sunlight, kicking and screaming. And sunlight is the apposite word here because, although Chinese indie films give us the impression that China is always overcast with a depressing gloom, the country does in fact have a lot of sunlight. And it’s that sunlight that may help China pull ahead in the AI video generation race.

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China’s Advantages In Power Generation & Open Source Tech

So back to China..and sunlight. As the image above demonstrates, China has vast, sparsely populated regions in the West of the country that are now home to solar energy farms the size of small cities. Renewable energy, including wind, solar and hydropower, already accounts for around one third of China’s electricity output and the country is forecast to have around 400 gigawatts of spare power capacity by 2030 – three time what the entire world will need to meet data centre demands. Donald Trump can invade all the oil-producing nations he wants, but the US is not going to be able to produce the same volume of electricity so cheaply any time soon.

And this matters to the entertainment industry because AI consumes a huge amount of power and the country with a cheaper energy source has a natural advantage. As for the other factors in the AI race – capital expenditure, technical capability, access to advanced microchips – experts are saying that China is a few months behind the US by some measures and racing ahead on others. In some ways, Trump blocking China from acquiring Nvidia’s chips might just have forced tech companies to be more creative in developing large language models (LLMs) and video generation tools with fewer or less advanced chips.

Then there’s the fact that China’s AI development has been mostly open-source – unlike most of the AI models developed by US companies – so the Chinese tech has been widely adopted by developers around the world. Companies such as Airbnb and Pinterest say they’re downloading and customising Chinese AI tools for their platforms because its faster and cheaper. It’s likely that international filmmakers are finding China’s AI video generation apps more user friendly too. Kuaishou’s Kling AI recently reported that around 70% of its revenue is generated from markets outside of China.

Of course, video generation is just one small corner of the AI universe, but it’s one that the entertainment business is watching closely. Already, Hollywood has been badly shaken by the release of Bytedance’s Seedance AI video generation tool, coming just a few months after the Deepseek LLM was unleashed on the world, and resulting in a slew of cease-and-desist letters and copyright infringement claims. But Seedance is just one tool and there are plenty more in China’s open-source, AI gold rush era – in addition to Bytedance and Kuaishou, China’s other ‘big three’ tech giants, Baidu, Alibaba and Tencent, along with a host of smaller tech players, are also releasing AI video tools. Several models were released in China this year alone. Some of these tools, like Seedance and Kling, can potentially be embedded in huge social media platforms (Douyin and Kuaishou, respectively).

At the same time, OpenAI finally shut down the Sora app and website this week, while its API will be discontinued from September, a decision made despite Disney’s planned $1bn investment due to high compute costs and the company’s upcoming IPO. The way that Sora was presented to consumers, as a gimmicky social media feed that quickly became full of AI slop, was possibly not the best use of this technology – and OpenAI is most likely still working on video generation tech behind the scenes – but the move sets back US dominance at least at the consumer level. While other US tools, including Runway and Google’s Veo, may be leading in premium quality, Chinese tools could start winning due to cost-efficiency, accessibility, and sheer volume of releases.

Meanwhile, Chinese filmmakers from film school students to leading auteurs such as Jia Zhangke are experimenting with the new technology. An AI-generated short film Paper Phone, produced by a student team at Shenzhen University using Kling AI, was a viral hit over the recent Qingming holidays. Jia collaborated with Seedance to make a short film, Jia Zhangke’s Dance, a meta-fictional exploration of authorship and technology, that was widely circulated during this year’s Lunar New Year holiday.

This is not to say that the Chinese entertainment industry is not having the same existential crisis over the new technology as we’re experiencing in the West. At the risk of over-generalising, China is usually more open to rapid change than the West, just because it’s had to be, but there’s also been massive pushback against AI due to fears over copyright infringement, job losses and loss of human artistic control. The day before I landed in Beijing, iQiyi experienced a huge backlash against the launch of its Nadou Pro platform that facilitates the use of actors’ likenesses in AI content, prompting the company’s founders to take to social media to defend the move.

“The initial purpose of establishing the iQiyi Nadou Pro Artiste Database is to provide AI-generated content creators with a standardised platform to facilitate their selection of artistes during the creation process and to efficiently communicate cooperation details with artistes through iQiyi,” the company stated on its Weibo account.

“It's important to emphasise that joining iQiyi's Nadou Pro artiste database signifies an artiste's willingness to engage with AI-powered film and television projects. However, whether an artiste participates in a specific project or plays a specific role requires separate negotiation and authorisation. This process is consistent with traditional live-action film and television project collaborations.”

As in the West, there are also questions in China’s tech and entertainment industries around capital outlay, monetisation models and the current technical restrictions associated with AI video. Speaking at Hainan International Film Festival last year, Tencent Vice President Sun Zhonghuai talked of issues with visual consistency, with character details drifting considerably over extended shots, and remarked that 4K or DCI compliant resolution necessary to show a film on theatrical screens was difficult to achieve.

But Sun also said these are just temporary issues. Sure enough, just last week, Kling AI rolled out a new 4K mode in its Kling Video 3.0 series that matches standards required for broadcast television and theatrical releases.

Also this week, Caixin Global reported that the China Film Bureau has approved the first AI-generated feature film to be released in cinemas – Bona Film Group’s Sanxingdui: Future Memories. (By coincidence, I visited the Sanxingdui Museum while I was in Chengdu and can attest that the artifacts produced by this Bronze Age civilization are truly mind-blowing). To be fair, it’s not the first AI-generated film claiming to be the first to be released in cinemas, but its approval demonstrates that the Chinese film authorities are open to the tech.

On the other hand, Chinese authorities quite often let new tech and industry innovations run wild for a while, assess their impact, then rein them in with regulation. It will be interesting to see if fears over job losses, copyright infringement or potential threats to the existing Chinese film industry, which is not doing great despite a few outsized hits each year, prompts the CCP to start clamping down on AI usage. Already, around one third of Chinese microdramas are thought to be “AI-driven”, without any comment from the authorities, although regulators have recently started cracking down on “CEO Romance” microdramas, featuring relationships between wealthy bosses and poor women, arguing that they promote “distorted values, materialism and unrealistic lifestyles”.

Last week, the White House issued a statement accusing Chinese AI companies of “industrial-scale campaigns” to steal advances in US technology, through a process called distilling, and said it would work more closely with US firms to help them protect themselves against such theft. But this industry is so fast-moving, I wonder if threats, tariffs and slow-moving regulation are really going to slow it down – either in the US or China?

The potential disruption to the global content industries is terrifying but, I’m increasingly thinking, also inevitable. At the end of the day, this tech will be driven by consumer (and filmmaker) demand, just like China’s dominance in the manufacturing of physical goods, and regulation would only drive it underground. China’s AI tech is fast and cheap, and one thing we learned through China’s economic rise from the ‘90s onwards, is that the world can’t get enough of fast and cheap stuff. Then it’s only a matter of time before China starts offering the high-end premium products. In the AI video generation space, they might already be there.

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How China May Be Poised To Win The AI Video Generation Race

Liz Shackleton

China’s Advantages In Power Generation & Open Source Tech

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