upon distribution was temporarily suspended as systems strained under the load.  A red-envelope war, reimagined for AI  A decade ago, digital ‘red envelopes’ transformed China’s mobile payments market. Tencent’s WeChat converted hundreds of millions of users into payment customers almost overnight by gamifying the centuries-old Lunar New Year tradition of gifting cash, accelerating its evolution into a financial super-app and reshaping the country’s fintech landscape. Now the same playbook is being redeployed for large language models. Alibaba’s 3 billion yuan pledge triples the spending promised by rivals such as Tencent and Baidu, which have rolled out their own red-packet campaigns for AI chatbots Yuanbao and Ernie. Tencent’s Lunar New Year initiative, valued at 1 billion yuan, allows users to claim digital envelopes and share cash-reward links with contacts. Baidu, meanwhile, has pledged 500 million yuan in incentives, with individual red envelopes worth up to 10,000 yuan.  Even ByteDance, the owner of TikTok and China’s Douyin, has entered the fray. After state broadcaster CCTV named ByteDance’s cloud arm as the exclusive AI partner for its Spring Festival Gala, the company positioned its Doubao chatbot for a high-profile appearance during the country’s most-watched television event.  The DeepSeek effect The urgency behind this year’s marketing blitz can be traced to a shock delivered 12 months ago. In early 2025, startup DeepSeek rattled global markets with its R1 model, which reportedly matched top Western systems using a fraction of the compute. The launch became a point of national pride and spurred hundreds of millions of Chinese users to experiment with generative AI during the holiday period. The result was twofold: Faster mass adoption and fiercer domestic rivalry. According to the China Internet Network Information Center, generative AI users in China reached 515 million by June 2025, up 266 million in just six months, with penetration at 36.5 per cent. That growth has convinced incumbents that the AI interface could become the next strategic choke point in China’s digital economy. From chatbot to super app The battleground now goes far beyond mobile payments and becomes foundational AI infrastructure itself.  Chinese AI labs increasingly envision their models not just as conversational assistants but as agentic platforms capable of executing tasks, including ordering food, booking train tickets, generating videos and shopping online. Alibaba’s Qwen has begun integrating with the company’s sprawling commerce network, including Tmall and Freshippo, effectively turning chat into a transaction layer. Tencent is embedding Yuanbao more tightly with WeChat’s payments infrastructure, allowing users to withdraw digital red envelopes directly into their wallets. ByteDance recently released Seedance 2.0, an AI video generator supporting eight languages, as part of a series of Spring Festival product drops.  The ambition is clear: Whichever chatbot becomes a daily habit could evolve into China’s next super app. A holiday window like no other The Lunar New Year provides a uniquely fertile environment for such experiments. Families gather, conversations turn to new gadgets and apps, and hundreds of millions travel or take extended breaks. Viral features spread through group chats and dinner-table demonstrations. AI assistants are being positioned as gateways to search, commerce, entertainment and payments, potentially reordering China’s digital hierarchy. These tech companies are effectively subsidising user behaviour at a scale reminiscent of ride-hailing’s early subsidy wars, betting that habit formation will outlast the red envelopes. “These promotions are very effective at driving awareness and initial downloads,” Jacob Cooke, co-founder and CEO of China-based consultancy WPIC Marketing and Technologies, said on LinkedIn.  “The scale of the giveaways and festive integration naturally generate buzz, installs, and first-time trials. The companies are hoping that users find real, ongoing value in these AI applications beyond the holiday hook.” According to Cooke, over time, this phenomenon reveals several key trends in China’s AI industry. First, land-grab tactics for user bases still matter in early product cycles. Second, companies now view holiday periods as strategic launch windows. Third, the companies best positioned to retain AI users are those that combine promotional energy with genuine utility, ecosystem integration, and clear use cases. Further reading: What does it mean to be visible in an AI-curated world?