The acquisition this month by ride-hailing company Didi Chuxing Technology of Uber Technologies’ China operation was a reminder of how strong Chinese tech companies have become domestically at outmaneuvering foreign rivals.

But the biggest buzz in China’s internet industry isn’t about besting global tech giants by better adapting existing business models for the Chinese market. Rather, it’s about competing head-to-head with the U.S. and other tech powerhouses in the hottest area of technological innovation: artificial intelligence.

Venture capitalists have been pouring money into startups focused on AI, which broadly refers to efforts to make computers emulate human cognitive functions such as recognizing speech or images. Chinese tech companies such as search giant Baidu have been investing heavily in the technology, and poaching high-level talent from foreign rivals.

Enthusiasts of the technology in China say those resources, along with some particular advantages in China, such as the sheer volume of data generated by its enormous population of internet users, makes this an area where China can excel.

“China is poised to be a leader in AI because of its great reserve in AI talent, excellent engineering education and massive market for AI adoption,” says Kai-Fu Lee, a former Microsoft and Google executive who is now chief executive of Sinovation Ventures. The firm, formerly known as China’s Innovation Works, has invested $100 million in 25 AI-related startups in the U.S. and China in the past three years.