On the top floor of a converted office building in Wudaokou, a popular neighborhood in Beijing's Haidian district that is famous for its close distances to leading universities, a crowd gathered around a robot trying to pick up tennis balls.

The contestants were not seasoned engineers from China's biggest technology companies. Many were university students. Nearby, founders discussed open-source robotics projects. Investors drifted between tables. Entrepreneurs exchanged business cards over coffee.

Han Yaqi, branding head of the company that operates Beijing AI Genesis Community, one of Beijing's growing networks of artificial intelligence startup hubs, said, "Sometimes you come here for a cup of coffee and end up meeting your next investor."

The scene offers a glimpse into why Beijing has emerged as China's AI capital. The city last year generated more than 450 billion yuan ($66.4 billion) in core AI industry output, hosted more than 2,500 AI companies and nearly 40 AI unicorns, accounting for more than half of China's total. Beijing is also home to 241 registered large language models, more than any other city in the country.

Behind those numbers lies something more difficult to quantify: a dense ecosystem where universities, startups, investors, manufacturers and policymakers increasingly operate within walking distance of one another.

"Beijing AI Genesis Community is not just an incubator," Han said. "It connects the entire chain, from university research to commercial innovation."

That ecosystem is becoming increasingly important as China seeks to transform AI breakthroughs from laboratory achievements into commercially viable products.

While Silicon Valley remains synonymous with software innovation, Beijing is betting that the next phase of AI will be built around deep integration between research, hardware, manufacturing and real-world deployment.

Beijing has also spent years laying the groundwork. Research and development spending accounts for more than 6 percent of Beijing's economic output, a level comparable with leading global innovation centers. Basic research represents roughly 16 percent of total R&D spending, among the highest shares internationally.

The authorities have launched more than 800 major research projects across fields including AI, semiconductors and biotechnology. The results range from the open-source RISC-V processor core to quantum computing cloud platforms and advanced scientific instruments.

Increasingly, however, policymakers want those breakthroughs to leave the laboratory.

Under Beijing's embodied intelligence development plan, the capital city aims to achieve more than 100 key technological breakthroughs in humanoid robotics and embodied AI by 2027, while producing at least 10 globally leading hardware and software products.