This article explains why and how China aims to set international standards in artificial intelligence (AI), by analysing AI standardisation's place within China's National Innovation System (NIS). Emerging technologies, such as AI, where global norms and governance institutions are yet to be established, offer greater possibilities for latecomers to set international standards. As areas of AI are general-purpose technologies, it matters what kind of standards are set, and who sets them. Building on arguments that domestic technology diffusion has become more important than innovation capacity, we contend that in strategic technology competition it is essential for great powers to diffuse their technology solutions internationally, for which standardisation is a key channel. Through a detailed analysis of China's AI innovation system, we argue that China's AI-related NIS is maturing. China has already developed national AI standards, and its standard-setting is internationalising, as our analysis of Chinese policy documents on AI standardisation shows. Lingering weaknesses in basic AI research, however, still limit the potential for Chinese firms to set de facto standards through market competition, beyond specific AI applications. Amid intense Sino-US strategic technology competition, China's possibilities to successfully pursue international committee- or government-led standardisation, and thereby technology diffusion, have also been restricted. Yet, the recent US turn away from promoting a rules-based order opens new possibilities for Chinese standardisation efforts. The Chinese government has promoted market- and firm-led standardisation around open-source solutions, while increasingly targeting its multilateral standard-setting towards the ‘Global South’, e.g. through its 2025 Action Plan for Global Artificial Intelligence Governance.