China is currently leading in AI video generation as of early 2026, particularly in production-ready, high-quality text-to-video and image-to-video models. This stems from a combination of aggressive engineering focus, massive domestic adoption, cost efficiencies, and a wave of rapid iterations from major companies.
Key Chinese models dominating benchmarks and user adoption include: Kling from Kuaishou— Versions like Kling 3.0 and earlier 2.x iterations excel in realistic physics, natural human motion, character consistency, and photorealistic outputs. It’s often praised for superior image-to-video realism and handling complex scenes.
Seedance from ByteDance
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab.
Seedance 2.0 went viral in February 2026, impressing even figures like Elon Musk. It handles multimodal inputs; text, images, audio, video, produces cinematic storylines, coherent narratives, camera logic, and professional-grade content for film, ads, and e-commerce at lower costs.
Others like Hailuo/MiniMax, Vidu, and contributions from Alibaba also contribute to the ecosystem. Chinese labs treat video generation as an engineering-heavy problem rather than purely chasing foundational breakthroughs like some U.S. efforts.
This leads to faster practical advancements: Rapid iteration and deployment — China produces models that solve real-world pain points; consistent long clips, accurate physics, lip-sync, multi-modal control sooner. Domestic models are often 10x cheaper ~0.3 RMB per second vs. higher U.S. equivalents, enabling massive scaling in advertising, short-form content, e-commerce, and animation.
Platforms like TikTok (ByteDance), Kuaishou, and others provide enormous video data for training, plus a massive user base for quick feedback and adoption. China leads in AI patents, publications, and STEM graduates. Policies push for scale, speed, and real-world integration, creating a “race to the top” among companies.
Following DeepSeek’s 2025 success, China aggressively open-weights models, boosting global usage and developer innovation (open models jumped to ~30% market share by late 2025). Kling often beats Runway or Sora equivalents in motion realism and physics. Seedance stands out for story-driven, consistent outputs that feel “production-ready” sooner than many Western counterparts.
U.S. models like Runway Gen-4.5, Google Veo, OpenAI Sora updates lead in some creative controls or ecosystem features, but Chinese ones frequently win on raw video quality, cost, and speed for certain use cases. Game engines aren’t obsolete— and probably not anytime soon. Recent hype caused gaming stocks like Unity to drop sharply ~35%, as markets speculated that generative “world models” could generate interactive environments on the fly, bypassing traditional engines.
However, experts and industry leaders push back: Game engines provide deterministic, stable systems for physics, rendering, networking, input handling, and real-time interactivity — essential for playable games.
AI video/world models remain probabilistic and stochastic (random/unpredictable outputs), great for cutscenes, trailers, asset prototyping, or passive generation but unreliable for core gameplay loops requiring consistency and control.
AI acts as a co-pilot; generating assets, behaviors, testing, localization, not a replacement. Tim Sweeney and others emphasize engines handle the “skeleton” (rules, structure), while AI adds “flesh” (content variety). In 2025–2026, AI boosted efficiency in China like animation mass production but led to job shifts rather than engine obsolescence.
Games need determinism for fairness, performance, and player agency. AI video is transforming content creation (ads, films, shorts), and China holds a clear lead there through engineering pragmatism. But for interactive gaming, traditional engines remain foundational — AI enhances, rather than obsoletes, them. The future likely involves hybrid workflows.