China's tech titans are giving away money and cars in 'The Lunar New Year AI War'

The Year of the Horse kicks off this weekend, and China's artificial intelligence companies are splashing out the cash in what is being called "The Lunar New Year AI War."

To land prime placement for its Doubao AI model, TikTok owner ByteDance is handing out 100,000 prizes during the country's main holiday TV gala, including luxury cars. It is giving away money packets, too, with some an auspicious CNY8,888, about $1,280.

Baidu, Tencent and Alibaba are offering even bigger digital red envelopes, with some as high as CNY10,000, about $1,450, as well as vouchers, gadgets, and other freebies.

Baidu has allocated CNY500 million, about $72 million, to promote its Ernie chatbot. Tencent doubled that at CNY1 billion, about $145 million, for its Yuanbao model. Alibaba is spending a whopping CNY3 billion, about $434 million, to get users to try out Qwen.

The giveaways have created such a commotion that Alibaba admitted it had to "urgently add resources" to end outages on its Qwen app.

Analysts say companies see this moment as key to grab AI-curious customers for their own survival.

"They are in a high-stakes race to capture users and build developer ecosystems before rivals lock in market dominance," Charlie Dai, principal analyst at research group Forrester, told CNBC. "The issue is that profitability and sustainable business models remain unclear, for every major player in the global market."

Companies are upgrading their models as well.

On Thursday, ByteDance officially unveiled a new video generation model Seedance 2.0, which the company said is designed for professional film production. An AI-generated video of Tom Cruise and Brad Pitt fighting made on the platform quickly went viral and turned heads in Hollywood.

The new AI release has already gotten the attention of Elon Musk, who replied to a post about the release on his social media platform X with the comment, "It's happening fast."

On Wednesday, Startup Zhipu AI, or Z.ai outside of China, rolled out a new AI model GLM-5 to compete with rivals like Anthropic's Claude Opus 4.5 on coding and other tasks.

Shanghai-based MiniMax has released its M2.5 model for the public to test.

The industry expects DeepSeek and Alibaba to announce next-generation models around the holidays, too.

Lunar New Year traditionally is a time when people spend and companies create buzz around new products.

A year ago, Chinese startup DeepSeek shocked the industry globally when it released its low-cost AI model—a development often referred to as the "DeepSeek moment."

The cash incentives and cutthroat competition are reminiscent of the early stages in other industries Beijing aimed to dominate globally, like steel, solar panels, and EVs, that eventually led to pushback from its trading partners for flooding world markets with unfairly cheap products.

In 2015, Lunar New Year promotions for tech giant Tencent led to explosive growth for the company's now dominant messaging app WeChat.

Amid the aggressive AI promotions, Beijing is also joining the push.

Premier Li Qiang chaired a government study session on AI, calling for stronger coordination of data, computing, power and the internet, saying China should accelerate the "large-scale commercial application" of AI.