Alibaba unveils the powerful Qwen3.5 AI agent model as China’s chatbot race intensifies. China’s AI race is less about who builds the smartest chatbot and more about who builds the smartest agent. This week, Alibaba Group unveiled Qwen3.5, the latest generation of its flagship AI model series, marking a visible shift from conversational AI to systems designed to act independently. The launch lands at a tense moment in China’s technology sector, where domestic players are accelerating releases to keep pace with Western rivals and each other.
Qwen3.5 is an upgrade as well as a repositioning.
The new model series comes in two forms: an open-weight version that developers can download, fine-tune, and deploy on their own infrastructure, and a hosted API version running on Alibaba Cloud’s servers through Model Studio. Both versions were released on the eve of the Chinese New Year, a timing that underscores urgency rather than ceremony.
Alibaba says Qwen3.5 improves performance and cost efficiency over previous versions. But the bigger story sits in what the model is built to do.
The company has leaned heavily into agentic capabilities. AI systems that can plan, execute multi-step tasks, use tools, and operate with limited human supervision. In simple terms, the shift moves AI from answering questions to getting work done.
Agentic AI was the defining theme of the year 2025. When Anthropic released upgraded Claude agent tools in the U.S., markets reacted sharply. Investors began reassessing the future of traditional software-as-a-service models if AI systems can independently manage workflows once handled by human teams.
Alibaba’s move signals that Chinese firms do not intend to lag in that transition.
Qwen3.5 also introduces native multimodal capabilities, allowing the model to process text, images, and video within a single system. That convergence reflects a broader industry push toward unified AI architectures capable of operating across formats without switching models.
Under the hood, Alibaba says the open-weight version carries 397 billion parameters, fewer than its previous flagship model, but reportedly more efficient and higher-performing based on internal benchmarks. The company claims performance parity with leading systems from OpenAI, Anthropic and Google DeepMind, though those comparisons are self-reported and have not been independently verified.
Read more: Alibaba Unveils Qwen 3: A New Era of Hybrid AI Reasoning Models
Beyond benchmarks, compatibility may be the more strategic lever.
Qwen3.5 supports integration with open-source AI agents, including tools from OpenClaw, whose popularity has surged among developers experimenting with autonomous task execution. Characteristic of the fact that Agent ecosystems, not standalone models, are increasingly shaping AI’s competitive landscape.
In China, the competitive intensity is visible. ByteDance and Zhipu AI have released upgraded models in the past week, each emphasizing enhanced agent capabilities. The pattern is unmistakable: chat interfaces are table stakes; autonomy is the new frontier.
Research analysts say the implications go beyond feature upgrades.
Marc Einstein, research director at Counterpoint Research, noted that AI agents could “upend traditional Internet business models” if they gain widespread adoption. The concern is structural. If AI systems can independently execute tasks. From booking travel to managing procurement workflows, the value chain of software platforms, marketplaces, and even app stores begins to shift.
For Alibaba, the stakes are especially high. The company’s cloud division has become central to its growth narrative. Demonstrating advanced AI capability strengthens its position with enterprise customers who increasingly want automation embedded directly into operations, not layered as a chatbot on top.
Language expansion is another signal of ambition. Qwen3.5 now supports 201 languages and dialects, up from 82 in its prior generation. That expansion suggests Alibaba is positioning Qwen not only as a domestic champion but as a global contender.
The geopolitical undertones remain unavoidable. Last month, Google DeepMind’s Demis Hassabis said Chinese AI models were only “months” behind Western rivals. The gap, if it exists, appears to be narrowing through rapid iteration rather than incremental catch-up.
Still, moving from chatbot to agent is not simply a technical upgrade. It is a business model bet.
Agents introduce new risks: error propagation, unintended autonomous decisions, regulatory scrutiny, and enterprise liability concerns. The promise of AI that can independently execute tasks is powerful, but so are the questions about governance and oversight.
Alibaba’s announcement also follows its recent robot-focused AI model release, signaling a broader push into embodied and applied intelligence. The through-line is clear: the company wants Qwen to serve as an adaptable backbone across digital and physical systems.
China’s AI race is no longer about matching ChatGPT-style conversations. It is about who controls the infrastructure layer of autonomous digital labor.
With Qwen3.5, Alibaba is signaling that the competition has entered a new phase. The battleground is shifting from prompt engineering to workflow execution. From responses to actions.
And in that shift, the real question is no longer whose chatbot sounds smarter.
It is whose AI can actually run the system.
