China’s AI breakthroughs have captured worldwide attention. Since January’s “DeepSeek shock,” the country’s AI development has accelerated, narrowing—if not eradicating—the gap with the U.S. when it comes to technological advancement.

Yet while the U.S. appears to focus on powerful yet proprietary large language models, enterprise AI, and semiconductors, China is taking a vastly different approach to cultivating its AI industry.

“Robotics is where it’s at in China today,” Rui Ma, founder of Tech Buzz China, said at the Fortune Brainstorm AI Singapore conference on Wednesday. Chinese companies have made a concerted push to integrate AI into physical hardware in what’s called “embodied AI.” Even if the U.S. has the more powerful foundational models, China has gone further in applying AI to industrial uses.

Another difference is China’s wholehearted embrace of open-source AI, noted Paul Triolo, a partner at the DGA-Albright Stonebridge Group. “Chinese companies, with a few exceptions, have moved to open-source and weight models.”

Some of the interest in China’s AI models, like those from DeepSeek and Alibaba, is the result of their open-source nature, which allows developers to freely download, use, and experiment with these models on their own devices.

By making their source code freely available, AI companies are helping build “soft power,” said Helen Toner, director of strategy and foundational research grants at Georgetown’s Center for Security and Emerging Technology.

AI developers in other countries can use these open-source models to develop their own products, spreading China’s global influence.

But in the U.S., companies leading the AI industry, like OpenAI, Anthropic, and Google, have continued to keep their source codes closed. And even Meta, which helped lead open-source AI development with its Llama model, is reportedly considering a shift in strategy to focus on closed-source development.

“If you are in the lead, then you have this incredibly valuable asset,” Toner explained on Wednesday. And leading companies don’t want to give away that asset for free.

Yet for Chinese developers like Moonshot or Alibaba—which may not quite compete at the highest levels but still offer high performance—then an open model is a good way to “buy a lot of goodwill,” she continued.

Toner said there isn’t a consensus in the U.S. about whether to go open- or closed-source, and that the battle is still “anyone’s game.” Yet she admitted that the fight for open-source is “certainly one where China has the edge.”