Tencent tests AI assistant in China's most popular app as it looks to catch up with rivals

Chinese tech company Tencent is a gaming giant and the parent company of WeChat, the ubiquitous social messaging app in China.

Tencent on Monday said it is testing an AI assistant within WeChat in China as the tech giant looks to step up efforts to challenge rivals in the country's competitive artificial intelligence market.

Xiaowei, "a native AI assistant," is being tested "on a small scale" in Weixin, the Chinese version of WeChat, Tencent said in a statement translated by CNBC.

Users can interact with Xiaowei with text or voice, communicate with friends and launch "mini-programs," Tencent added. Mini-programs are apps that run inside of WeChat.

Tencent executives have been mulling further integration of AI into WeChat since last year, with investors watching closely to see if this can be a new revenue stream and a way to monetize AI.