Alibaba unveils Qwen3.5 as China’s chatbot race shifts to AI agents

Alibaba Group has released its newest AI model series, featuring enhanced capabilities, as it faces intensifying competition in China's AI space with several models launched in the past week. The Qwen3.5 AI model comes in an open-weight version, which allows users to download, run, fine-tune, and deploy it on their own infrastructure. Alibaba also released a "hosted version," meaning the model can run on Alibaba's own servers. Both models were made available on Monday, the eve of the Chinese New Year, and come just a week after Alibaba released a new AI model designed for robots. The company highlighted that Qwen3.5 offers improvements in performance and cost and was built with "native multimodal capabilities," enabling the models to understand text, images and video simultaneously within one system.Leaning into a major AI trend this year, the model also supports new coding and agentic capabilities and is compatible with open-source AI agents like those from OpenClaw, which recently surged in popularity. AI agents are systems that can independently take actions and complete multi-step tasks on a user's behalf with minimal supervision. These agents and their abilities have garnered a lot of attention in recent weeks, after American AI company Anthropic released new agent tools. The potential for these agents to replace the work of software as a service companies, amongst others, has rocked markets. Alibaba's local competitors such as ByteDance and Zhipu AI also released upgraded models in the past week aimed at supporting more agent capabilities.The company said that its new Qwen3.5 open-weight model comes with 397 billion parameters — variables that shape how an AI system learns and reasons. While less than its previous flagship model, the company said the latest model showed significant improvement based on self-reported benchmark evaluations.Alibaba provided benchmark tests showing that Qwen-3.5's performance was on par with leading models from OpenAI, Anthropic and Google DeepMind, though the comparisons were self-reported. Meanwhile, it also released a "hosted model" called the Qwen-3.5-Plus through its cloud platform Model Studio. Alibaba said this version also demonstrated performance on par with leading competitors. CNBC could not independently verify those claims.The new Qwen3.5 models also support 201 languages and dialects, up from the previous generation's 82. Alibaba is expected to release more open-weight models during this Chinese New Year, Lin Junyang, technical lead of Alibaba Cloud's Qwen team said in a social media post.Following the release of Anthropic's latest Claude AI agent tools, other American AI giants have been accelerating the development of agentic capabilities. OpenAI CEO Sam Altman said Sunday that the creator of the OpenClaw would be joining the company. Last month, Google DeepMind head Demis Hassabis told CNBC that Chinese AI models were just "months" behind Western rivals.Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2026 Versant Media, LLC.

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