China’s AI Ambition: How Large Language Models are Revolutionizing Public Sector Projects

The Chinese government has accelerated its adoption of artificial intelligence (AI) in 2024, with a significant surge in contracts related to large language models (LLMs) in the first half of the year. According to government data, 81 contracts involving the use of LLMs for public projects found successful bidders in the first half of 2024, up from just one a year earlier.

China’s AI adoption is on the rise

The contracts reflect interest from large Chinese firms, as public disclosures are only required for projects that either involve public interest and safety, public funds, or loans from foreign entities. Tech giants Baidu, Huawei Technologies, and Tencent Holdings, as well as well-funded start-ups, were among the providers with successful bids in the first half.

LLMs are being applied in various industries

Operators in energy, telecoms, finance, and scientific research are the most eager to tap into the potential of LLMs, with these industries seeing 19, 14, 12, and 10 deals, respectively. A district environmental protection agency in Beijing bought bespoke LLMs to help it predict flood seasons. The Nuclear Power Institute of China and China Merchants Securities are counting on LLMs developed by Beijing-based start-up Zhipu AI to help organize knowledge from materials accumulated over years of operations for more convenient staff use.

“The contracts offer a glimpse into the growing adoption of AI in China, who is gaining the most traction in this space, and the industries in which these technologies are being applied.” Tech Trends

Chinese energy powerhouses are also looking to use LLMs to find deficiencies across a variety of equipment used in power grids and for oil exploration. The most prolific bidders were not China’s traditional internet giants. Zhipu AI, known as one of China’s four “AI Tigers”, has won the most LLM-related contracts this year at 12. AI firm iFlyTek, a US-sanctioned company known for its voice-recognition technology, successfully bid on 10 contracts from Chinese state-owned enterprises and government agencies.

LLMs are being used in the energy sector

Baidu and Huawei followed with five and three successful bids, respectively. From month to month, there was a significant pickup in the pace of LLM contract bidding in the second quarter. January, February, and March saw nine, five, and nine contracts with successful bids, respectively. In April, that number jumped to 20 and then 24 in May. There have been 14 in June.

The total value of all 81 contracts is 433 million yuan, with an average of 5.3 million yuan per contract. The most lucrative came from PipeChina, officially known as China Oil & Gas Piping Network Corporation, which is paying 152.6 million yuan (US$21 million) for LLM-related tech from Taifu Industry, a subsidiary of state-affiliated Shandong Energy Group.

LLMs are being used in the oil and gas industry

The contract did not specify how those LLMs will be used. As China continues to accelerate its AI adoption, it will be interesting to see how these technologies are applied in various industries and the impact they will have on the country’s economy.