BEIJING, Feb. 5 (Xinhua) -- China had 1.125 billion internet users by the end of 2025, with the penetration rate climbing to 80.1 percent, according to an official industry report.

The report, released by the China Internet Network Information Center (CNNIC) on Thursday, underscores broader adoption of generative artificial intelligence (AI) technology across the country's consumer and industrial sectors, with user numbers reaching 602 million by December 2025, a striking 141.7-percent increase from the end of 2024.

As of December 2025, the nationwide adoption rate of generative AI stood at 42.8 percent, a year-on-year increase of 25.2 percentage points. Generative AI is rapidly integrating into daily life and various production sectors, becoming a key engine driving the digital and intelligent transformation of society, the report said.

In terms of computing infrastructure, 42 ten-thousand-GPU intelligent computing clusters have been built, placing China among the world's leaders in this regard and providing strong support for the rapid development of its AI industry, said the report.

According to the Ministry of Industry and Information Technology earlier this year, China had more than 6,000 artificial intelligence (AI) enterprises last year, while the scale of the country's core AI industry was expected to exceed 1.2 trillion yuan (about 171.39 billion U.S. dollars) in 2025.

AI applications have now expanded to cover key industries including steel, non-ferrous metals, power and telecommunications, and are increasingly being applied in product research and development, quality inspection and customer service, the ministry said.

With its ability to address challenges like R&D, high costs and low efficiency, AI also serves as a powerful tool for transforming small and medium-sized enterprises (SMEs) in China, according to the CNNIC report.

For instance, it helped a new energy company cut the defect rate of its production line from three per thousand to five per ten thousand, said Wang Changqing, an official with the CNNIC.

In the first quarter of 2025, a total of 254,000 new SMEs specializing in AI software R&D were established in China, the report added.

According to Wang, SMEs are focusing on specialized areas such as large models for vertical industries and industrial intelligent agents, becoming the main force in technological innovation.

"Together with leading companies, they are building a healthy ecosystem of collaboration among large, medium and small firms, enabling AI to truly permeate the 'capillaries' of the real economy," he added.

Meanwhile, empowered by AI, China's industrial expansion overseas is shifting from scale growth to value increase. This is particularly true in the cultural industry.

Technologies like AI-powered automatic translation have enabled cultural products to "go global in minutes," allowing online novels and micro-dramas to reach global audiences immediately, Wang said.

According to a 2025 report on the international communication of Chinese online literature released by the online literature center under the China Writers Association, by the first half of 2025, Chinese online literature had already reached over 200 countries and regions worldwide.

Behind this growing popularity was the rise of AI in the development of text translation and dissemination, the report said, as it is now widely applied in translation and distribution, especially in non-English language markets, where revenues from AI-translated works are growing rapidly.

Moreover, AI supports overseas content distribution by enabling semantic recognition, keyword extraction, user preference modeling, and other applications, allowing personalized recommendations through content profiling, according to the online literature report.

AI has also enabled intellectual properties to rapidly transform into diverse forms, including animation, short dramas and games, boosting the vitality of Chinese culture, according to Wang.

According to data from China Netcasting Services Association, the overseas market for micro-series generated 1.53 billion U.S. dollars in revenue from January to August in 2025, a 194.9 percent year-on-year increase, with downloads soaring 370.4 percent to approximately 730 million.

Online literature platform practitioners have also attributed the surge to AI, as they believe that AI technology brings entirely new possibilities for adapted drama production by assisting in script development, optimizing production processes, and leveraging deep learning to predict audience preferences.