China's artificial intelligence sector has witnessed a significant surge in venture capital, with over 110 billion CNY raised in the first quarter of 2026, marking a 185.4% increase year-over-year. Notable funding rounds in May included Moonshot AI and Jiepao Stars, which collectively secured over 30 billion CNY. Additionally, companies like Weita Power and Luming Robotics attracted substantial investments, highlighting the growing interest in embodied AI. AI startups are channeling their funds into three primary areas: research and development, computing power, and talent acquisition. Leading large model companies are investing billions annually in R&D, surpassing their current revenues, while GPU purchases and cloud services consume 30% to 50% of their funding. This strategic focus has enabled Chinese large model firms to reduce iteration cycles to under three months, cutting AI inference costs and speeding up commercialization efforts.