AI | Janus Henderson: China Has 4 Major Advantages, Lower Overcapacity Risk Than the US

SighingCashier · 2026-03-24T07:04:19+00:00

Janus Henderson points out that China's artificial intelligence industry is catching up while competing, and has the potential to lead the world in certain fields. China has four major advantages: open-source models, capital practicality, infrastructure construction, and lower overcapacity. As the government promotes AI to boost productivity, investors are becoming increasingly optimistic about China's prospects. ByteDance leads in the AI consumer sector, while Alibaba and other giants are actively catching up.

SighingCashier

2026-03-24 07:04:19

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Janus Henderson, a fund company, stated that China’s artificial intelligence (AI) industry has entered a critical development phase this year, shifting from “catching up” to “competing,” and even leading the world in some areas. The risk of overcapacity is significantly lower than in the United States.

Janus Henderson believes that China has four major advantages in the AI race. First, it has built a large global user community through powerful open-source models. Second, compared to American companies, Chinese firms have relatively limited access to funding sources and advanced chip supplies, which makes them more focused on monetization, making the entire AI ecosystem more pragmatic.

Additionally, China is vigorously promoting infrastructure development, especially in the western regions rich in solar and wind energy resources, by building data centers. The risk of overcapacity in China is notably lower than in the U.S., mainly because China’s capital markets have been more cautious in recent years, with funds flowing more prudently.

The firm states that with the Chinese government focusing on using AI to boost productivity, a loose monetary policy, easing US-China relations, and favorable exchange rate trends, more local and international investors are beginning to view China’s long-term prospects more positively.

The firm believes that large-scale applications could quickly create a “winner-takes-all” scenario in the consumer AI sector, especially when existing companies can integrate AI into their current ecosystems, such as payments, e-commerce, social media, and video creation. However, the ultimate winners are not necessarily the generous companies but those that can retain these new users. Overall, ByteDance has been a leader in AI and consumer interaction, with Alibaba (09988) rapidly catching up, and Tencent (00700) along with other existing internet giants actively participating, trying to retain users within their ecosystems.

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