Inside China's biggest artificial-intelligence convention, visitors wilted under the heat. With all the hot air from computer servers, people resorted to the ancient device of paper fans and organizers placed large ice blocks all over the exhibition hall.
If the Shanghai event was uncomfortable for the public who lined up by the tens of thousands to get in, it was just as much so for American companies competing with Chinese AI technology. On the first day, Beijing-based Moonshot AI jolted global markets with a new model seen as ranking with the world's best. It took just two days for another Chinese company, Alibaba, to claim to have topped Moonshot with its own new model.
Some 20 football fields of exhibition space were filled with hardware trying to apply AI to everyday life, such as earbuds that listen to a meeting and produce a transcript. Robots were everywhere, dancing in unison, making cappuccinos, shooting soccer goals, massaging visitors and playing the piano. A furry AI pet batted its eyelashes at cooing onlookers.
This was the ninth year for the annual World Artificial Intelligence Conference in Shanghai, and it has emerged as the premier occasion for China to strut its stuff in AI. Beijing flaunted its prowess at overcoming U.S. sanctions that largely block Chinese companies' access to the best AI chips and chip-making equipment.
"It's fun to be at the frontier of the whole thing," said an Alibaba business development manager at the company's booth.
Not everything worked right. The humanoids are still better at gimmicky tricks than useful household tasks. And in an indication of how U.S. export controls are biting, Moonshot had to halt new subscriptions for its premium services after demand for its Kimi K3 model strained its computing resources.
Still, China's advances dashed any hopes the U.S. held for building an impregnable lead in AI.
Chinese AI models are gaining traction globally, including in the U.S., partly because many are open-source -- allowing people to freely download and adapt them -- and are generally cheaper to run than Western models. That mirrors the pattern of industries such as smartphones, electric vehicles and batteries, which emerged in the West only for China to seize dominant market share.
"If it's already happened in three industries, could that happen in AI as well? My answer would be, just given what's already happening in AI today, it's likely," said Mehran Gul, an author and speaker on technology.
Anthropic and OpenAI have accused several Chinese companies of tapping American models to train their own, a practice that Anthropic called "adversarial distillation." Last week, an Anthropic executive said the U.S. lead over Chinese companies could have been a year to 18 months if they hadn't distilled American models.
Moonshot's new Kimi K3 model has upended this discussion because it earned higher scores in many benchmarks than Anthropic's Claude Opus 4.8, the most powerful model it could distill. Research has suggested that a smaller model rarely surpasses the bigger model it distills. In light of Kimi K3, some researchers including OpenAI executive Dean Ball said distillation no longer explained the rapid advances of Chinese models.
China is now focusing on AI adoption, with a government blueprint called AI Plus saying the technology should be used in 90% of the economy by 2030. That explains the proliferation at the Shanghai show of robots, AI gadgets and "agentic" products that can automate complex tasks such as schedule planning.
"Our main focus this year is to find real-world agentic use cases where AI models can be used by many people," said Steven Hoi, an Alibaba executive.
China's manufacturing skills give it an edge in deploying AI in the real world.
"A robot is a complex system, there are many, many components," said Wang Xiaogang, the chairman of Chinese firm Ace Robotics, in an interview at the conference. "You need not just a single company, you need a long supply chain and many partners. In China, they are very good at this."
At the booth for Suzhou-based UniX AI, a $44,000 robot completed household tasks, such as making the bed, putting laundry in the washing machine and doing the dishes. A marketing representative said the robot was already being used in hotels and restaurants.
"Even though it might not be 100% mature right now, once it truly matures and stabilizes, it's quite possible it could perform even better than humans," he said.
But dreaded chores aren't history yet. In a demo, the robot was shaky and slow, with laundry getting stuck on its claw-like hands. Once it missed the dishwasher altogether, sending a plate clattering to the floor.
Write to Katrina Northrop at katrina.northrop@wsj.com and Raffaele Huang at raffaele.huang@wsj.com
(END) Dow Jones Newswires
July 20, 2026 09:29 ET (13:29 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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