China is stepping up efforts to regulate its fast-growing “digital human” industry, as emotionally immersive AI avatars – some modeled after deceased loved ones – gain widespread traction across the country. The move comes as both the technology’s commercial potential and ethical risks become increasingly visible.

Grief, Technology And A Growing Industry

Zhang Xinyu, a 47-year-old woman from Liaoning province, turned to artificial intelligence after losing her father to cancer. Working with a company called Super Brain, she created a digital avatar that looks and sounds like him, allowing her to continue conversations online. The experience, she told AFP, helped her cope with grief and regain emotional strength.

Her story reflects a broader trend in China, where AI-generated “digital humans” are rapidly gaining popularity. These avatars – often lifelike in appearance and behavior – are widely used across social media, especially in e-commerce and content creation. According to Xinhua News Agency, the sector was valued at around 4.1 billion yuan ($600 million) in 2024, growing 85% year-on-year.

However, not everyone views the technology positively. Some critics warn that such avatars may create emotional dependency or offer what Zhang herself described as “false comfort,” even if the underlying feelings are genuine.

Regulation Catches Up

In response to these concerns, the Cyberspace Administration of China has issued draft rules aimed at tightening oversight. The proposed regulations require clear labeling of AI-generated content and prohibit the creation of digital replicas without an individual’s consent.

The rules also seek to prevent misuse, including scams, misinformation, and content that could threaten social stability or national security. Companies violating these guidelines could face fines ranging from 10,000 yuan ($1,460) to 200,000 yuan ($29,300).

The urgency of regulation was underscored by a viral incident involving an elderly woman who unknowingly interacted with a highly realistic avatar of her deceased son. The clip, widely shared on Chinese social media, sparked debate over whether such uses of AI represent comfort or deception.

Balancing Innovation And Risk

Experts say China’s approach reflects a familiar pattern: rapid technological development followed by swift regulatory intervention. Authorities are particularly concerned about protecting minors, with proposed rules banning AI systems that encourage emotional dependency or simulate intimate relationships for children.

At the same time, industry players acknowledge that regulation is inevitable. Super Brain’s founder has described the draft rules as a necessary step toward balancing innovation with responsibility.

What Lies Ahead

China’s draft regulations are open for public comment until early May, after which stricter enforcement is expected. The government’s broader goal is to accelerate AI adoption while maintaining tight control over its societal impact.

As “digital humans” evolve from novelty to mainstream tool, China’s regulatory model could become a blueprint for other countries grappling with similar ethical questions – particularly around identity, consent, and the emotional power of AI.