China is pursuing a fundamentally different approach to artificial intelligence development, prioritizing open-source models over proprietary systems to distribute AI’s economic benefits across its entire economy rather than concentrating them among a few tech giants. This strategic philosophy was outlined by Hisham Alrayes, group CEO of Bahrain-based GFH Financial Group, during a Davos panel on China’s “AI+ Economy” strategy.
The clearest example of this approach is DeepSeek, China’s most prominent AI breakthrough, which primarily uses open-source models that have attracted global attention. This stands in stark contrast to many large US language models that remain closed and proprietary, benefiting from tightly controlled commercial ecosystems. Meta’s former chief AI scientist Yann LeCun has credited DeepSeek’s success to its open-source model, arguing it can outperform proprietary systems in efficiency and innovation by building on shared research.
Former Google CEO Eric Schmidt has warned that China’s open-source AI models could gain a competitive edge globally because they’re free, making them more attractive to governments and countries that cannot afford expensive proprietary US systems. Alrayes emphasized that China’s pursuit of open models prioritizes affordability and scale, stating: “It’s not the benefit of that company, of that product, the return of that individual. It’s not an individual — it’s an economy.”
This philosophy is embedded in China’s national “AI Plus” action plan, which focuses on diffusion rather than breakthrough achievements like artificial general intelligence. According to Gong Ke, executive director of the Chinese Institute for New Generation AI Development Strategies at Nankai University, the policy prioritizes embedding AI across multiple sectors including manufacturing, healthcare, finance, and education. The plan sets ambitious adoption targets, expecting AI agents and intelligent terminals to reach 70% penetration by 2027 and 90% by 2030.
Alrayes characterized China’s approach as treating AI as economic infrastructure rather than a profit engine for select companies, reflecting a broader goal of creating value throughout the economy with specific objectives across various sectors, fundamentally differentiating it from Western AI development philosophies.
Key Quotes
You look at the open structure of the China AI philosophy — then you have the non-open structure. That signals that the benefit they want to see is to trickle down into the economy, into the companies.
Hisham Alrayes, group CEO of GFH Financial Group, explained during a Davos panel how China’s open-source approach reflects a fundamentally different economic philosophy aimed at distributing AI benefits broadly rather than concentrating them among tech giants.
It’s not the benefit of that company, of that product, the return of that individual. It’s not an individual — it’s an economy.
Alrayes emphasized that China’s AI strategy prioritizes collective economic gains over individual corporate profits, highlighting the philosophical difference between China’s approach and Western proprietary models focused on company-specific returns.
China is looking to create value throughout the economy, very clear, with very specific objectives across the economy. Not just as a benefit to those companies. This is the difference in the philosophy.
Alrayes summarized China’s strategic intent to make AI an economic utility accessible across all sectors, contrasting it with approaches that concentrate AI’s benefits within a small number of technology companies.
Our Take
China’s open-source AI strategy represents a calculated geopolitical and economic gambit that could fundamentally alter the global AI power balance. By positioning AI as public infrastructure rather than proprietary technology, China is essentially weaponizing accessibility against Western commercial models. This approach mirrors historical technology competitions where standardization and widespread adoption often trumped technical superiority.
The 70% penetration target by 2027 is particularly aggressive and suggests China recognizes a narrow window to establish dominance before Western models become entrenched globally. DeepSeek’s emergence validates this strategy, demonstrating that open-source models can compete with—and potentially surpass—expensive proprietary systems. Western companies may need to reconsider their closed-ecosystem approaches or risk losing market share in developing economies where cost and accessibility matter more than marginal performance differences. The real test will be whether China can maintain innovation velocity while keeping models open, or if the proprietary approach ultimately proves more sustainable for cutting-edge development.
Why This Matters
This development signals a major divergence in global AI strategy that could reshape the competitive landscape between China and Western nations, particularly the United States. China’s open-source approach represents a direct challenge to the proprietary model favored by American tech giants like OpenAI, Google, and Anthropic, potentially democratizing access to advanced AI technology globally.
The implications are far-reaching: developing nations and cost-conscious governments may gravitate toward free Chinese models rather than expensive Western alternatives, expanding China’s technological influence. By treating AI as public infrastructure rather than a profit center, China could accelerate adoption across its massive economy, potentially achieving faster real-world implementation than countries where AI remains concentrated in tech companies.
For businesses worldwide, this creates both opportunities and challenges. Open-source Chinese models may provide accessible alternatives for companies unable to afford proprietary systems, but also raise questions about data sovereignty, security, and geopolitical dependencies. The aggressive 70% penetration target by 2027 suggests China is moving rapidly to embed AI across its economic fabric, potentially creating competitive advantages in manufacturing, healthcare, and other critical sectors.
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Source: https://www.businessinsider.com/china-open-source-model-ai-gains-across-economy-finance-ceo-2026-1