Living Buddhas are chosen through the reincarnation system.
Tips
culture
活佛 is the Chinese rendering of the Tibetan tulku - a high lama believed to consciously reincarnate to continue his teaching lineage. Famous lines include the Dalai Lama (达赖喇嘛) and Panchen Lama (班禅喇嘛). Recognition is part religious, part political.
memory
活 (living) + 佛 (Buddha) - 'a Buddha who is alive among us', as opposed to historical or sculpted Buddhas.