On a brisk winter day in Hangzhou, Zhejiang province, a winding line of customers braved the cold outside a bustling milk tea shop. Yet, instead of the usual glow of smartphone menus and the repetitive tapping of QR code scanners, a different kind of interaction was taking place: they were ordering directly through artificial intelligence.

One by one, patrons verbally instructed a digital assistant to curate a drink, pinpoint the nearest storefront and process the order. Within seconds, a ping on their phones confirmed the purchase.

"It was my first 'AI milk tea'. I've used food delivery apps for years, but this was the first time that AI picked my drink," said Qin Xiaomeng, a 25-year-old internet product manager from Hangzhou.

China's biggest technology companies — including the Alibaba Group, Tencent Holdings and Baidu Inc — have spent tens of billions of yuan subsidizing AI-powered services, offering everything from ultracheap drinks to discounted travel bookings.

Qin's experience was a small but revealing moment in the global race to shape AI. While Silicon Valley in the United States pours hundreds of billions into building ever-larger models, China has quietly begun pushing AI into people's everyday life on a massive scale.

For policymakers, companies and industry experts, the humble cup of AI milk tea is a vivid indication of how China hopes to scale the technology across a population of more than 1.4 billion people.

A year ago, in the weeks before China's annual two sessions began, a relatively unknown Chinese startup called DeepSeek jolted Silicon Valley. The reaction was immediate. Users downloaded it by the millions. Venture capitalists began asking whether China might catch up faster than expected.

According to the 2026 Government Work Report delivered at this year's two sessions, China will "advance and expand the AI Plus Initiative", and for the first time the country will "create new forms of smart economy".

The country will also promote faster application of new-generation intelligent terminals and AI agents and encourage large-scale commercial application of AI in key sectors and fields, so as to foster new forms and models of AI-native business, the report said.

Chen Changsheng, a member of the report's drafting team, said: "AI Plus has been included in the Government Work Report for three consecutive years, but it is an entirely new concept of creating new forms of smart economy."

"In essence, it is about seizing the opportunities of AI development, and expanding the breadth and depth of AI's empowerment across all industries, so as to rapidly open up new spaces for economic growth, cultivate new business models, and gear up new drivers of growth," he said.

Bai Chong-En, a member of the 14th National Committee of the Chinese People's Political Consultative Conference, China's top political advisory body, and dean of the School of Economics and Management at Tsinghua University, said that it is important to continue investing in foundation models. However, more importantly, China must find strong application scenarios for these breakthroughs.

"Creating a new form of intelligent economy is ultimately about closely integrating AI technology with industrial and broader societal development, enabling AI to be deployed in a wider variety of scenarios to generate greater value," he said.