TLDRs:
- China’s AI virtual character market set to reach $3.5B by 2029, growing rapidly.
- Yangtze River Delta launches AI Digital Human Alliance for regional collaboration.
- New educational and research initiatives aim to strengthen AI talent pipeline.
- Mandatory AI content labels drive compliance opportunities for platforms and vendors.
China’s market for AI-powered virtual characters is on an upward trajectory, with projections indicating it will reach 25 billion yuan (US$3.5 billion) by 2029.
This represents a significant increase from 4.1 billion yuan (US$576 million) recorded in 2024, marking an 85.3% year-on-year growth, according to a report shared by the International Data Corporation (IDC) at a forum in Wuxi, Jiangsu province.
The sector encompasses a wide variety of digital human applications, including 2D avatars, 3D virtual characters, motion-capture-driven models, and AI-generated voices. While IDC’s report provides a broad outlook, detailed breakdowns by 3D versus 2D applications, enterprise versus consumer usage, and revenue by industry remain unclear.
However, industry leaders such as Baidu, SenseTime, and Xiaoice continue to dominate the landscape.
Regional Collaboration Boosts Innovation
The AI Digital Human Forum in Wuxi, held alongside the China International Intelligent Communication Forum 2025, served as a platform for regional collaboration.
During the event, the Yangtze River Delta AI Digital Human Industry Alliance was officially launched to encourage cooperation among companies, research institutions, and other stakeholders in the AI virtual character space.
The alliance aims to accelerate innovation and create shared resources for development, addressing challenges such as talent shortages, infrastructure needs, and standardization. In addition to the alliance, several international communication projects for Wuxi were introduced, including a documentary initiative and an upgraded English-language website, expanding the city’s global AI presence.
Education and Research Initiatives Launched
Alongside industry collaboration, new educational and research efforts were announced to strengthen China’s AI talent pipeline.
These include an industry-education integration community, a digital human application laboratory, and a language service internship and training base.
A joint platform developed by CCTV.com, Beijing Foreign Studies University, and Jiangnan University was also revealed, aiming to enhance practical research and application in AI-driven virtual characters.
These programs are designed to combine academic research with hands-on industry experience, allowing students and professionals to work directly with AI-powered avatars, natural language models, and other digital human technologies. This approach ensures that China’s growing AI ecosystem is supported by skilled professionals who can innovate and scale solutions effectively.
Regulatory Rules Shape AI Industry
China’s mandatory AI content labelling rules add another layer of complexity and opportunity for the sector. Platforms offering virtual characters or customer-facing digital humans must now implement clear flags for AI-generated or edited text, images, audio, and video.
These regulations place liability on model providers, developers, and platforms, creating demand for robust compliance solutions.
Currently, the Eleventh Batch filing with the Cyberspace Administration of China (CAC) lists 211 registered AI algorithms. Companies with public opinion influence or social mobilization capabilities are required to comply, prompting platforms to integrate detection systems, audit trails, and labelling APIs. International SaaS vendors targeting China must also retrofit their products to meet CAC standards, opening opportunities for local compliance and infrastructure providers.
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