China Surpasses US in Consumer AI Adoption

China is surging ahead of the US in consumer AI adoption as technology giants like Tencent Holdings and Alibaba Group Holding embed artificial intelligence directly into popular everyday apps, even as American models lead in capability, according to Morgan Stanley. A survey conducted by the bank and published in a report on Monday showed that 80 per cent of Chinese respondents used AI for personal purposes at least weekly, compared with 54 per cent in the US. China’s generative AI user base grew from about 249 million in December 2024 to 602 million in December 2025, scaling significantly faster than mobile internet adoption did over a comparable period, the report said. While basic access to AI remained free in both nations, China’s advantage stemmed from distributing services through everyday platforms tailored to local consumer habits, rather than holding an edge in frontier model benchmark performance, Morgan Stanley noted. In China, generative AI functions – capable of producing text, images, video or code – are embedded directly into shopping, search, messaging and entertainment apps, allowing users to leverage AI without downloading stand-alone software. ByteDance’s Doubao, which received traffic from TikTok’s Chinese sibling Douyin, has emerged as the clear leader among native AI apps, reaching about 399 million monthly active users (MAU) in July, according to QuestMobile data cited in the report.

It was followed by Alibaba’s Qwen – an AI agent designed to execute real-world tasks by plugging directly into Alibaba’s ecosystem of shopping, travel booking, navigation and payments platforms – with 161 million MAUs. However, “multi-homing” was becoming the norm, with 64 per cent of surveyed Chinese respondents using five or more AI tools, Morgan Stanley said. The low cost of switching between apps prevented a winner-take-all situation for stand-alone apps and favoured existing platforms that control user demand, proprietary data and transactions, according to the bank. As a result, incumbents with strong distribution networks were best positioned to benefit, according to Morgan Stanley. Tencent, in particular, was likely to see its WeChat ecosystem of social graphs, mini-programmes and payments enhanced rather than displaced by native AI tools. Alibaba remained a top stock pick for the bank for its full-stack capabilities, particularly in-app commerce features like Taobao’s Qwen shopping assistant, though analysts remained cautious about investments in the stand-alone Qwen app. Meituan and online travel agencies were also well-positioned because of their high conversion efficiency at low incremental acquisition costs. Alibaba is the owner of the South China Morning Post.