Sanya Abdelqader‏‏

As technology continues to advance rapidly, artificial intelligence has emerged as one of the key drivers of economic growth and national competitiveness. Its role is no longer limited to the development of advanced technologies, but has expanded to improving production efficiency, supporting innovation, enhancing services, and reshaping various sectors of the economy. Against this backdrop, countries are increasingly competing to invest in AI technologies as a key tool for building the economies of the future.China stands out as one of the world’s leading examples in this field. Beijing has adopted an integrated strategy to harness AI in support of economic development by promoting research, developing digital infrastructure, and integrating AI applications across industry, trade, services, and the financial sector. This approach has helped boost productivity, foster innovation, and create new investment opportunities, further strengthening China’s position as one of the world’s leading powers in the AI economy.Strategic MovesChina is pursuing a series of coordinated, phased initiatives that aim to reshape its national AI landscape. The most significant of these include the following:1. Adopting a National Strategy to Integrate AI into the Economy: The <a href="https://carnegieendowment.org/emissary/2025/09/ai-china-90-percent-economy-why-wont-work" rel="noopener noreferrer" target="_blank">Chinese government</a> has placed artificial intelligence at the heart of its development strategy. In 2025, China’s State Council announced a plan to integrate AI applications across a wide range of economic and service sectors, setting the ambitious goal of expanding their adoption to approximately 90% of the economy by 2030. The plan covers six major areas, including research and development, industry, public services, and governance, reflecting Beijing’s efforts to establish AI as a key driver of economic growth.China has also relied on the "AI+" <a href="https://carnegieendowment.org/emissary/2025/09/ai-china-90-percent-economy-why-wont-work" rel="noopener noreferrer" target="_blank">initiative</a>, launched during the Central Economic Work Conference in December 2024, to integrate AI technologies into traditional sectors, following the model of the "Internet+" initiative, which helped drive China’s digital transformation over the past decade. Through AI+, Beijing seeks to expand the use of artificial intelligence across industry, services, government administration, and smart cities, thereby improving economic efficiency and boosting productivity.2. Expanding AI Adoption Across Manufacturing and Production: China has adopted an <a href="https://www.uscc.gov/sites/default/files/2026-03/Two_Loops--How_Chinas_Open_AI_Strategy_Reinforces_Its_Industrial_Dominance.pdf" rel="noopener noreferrer" target="_blank">integrated strategy</a> centered on making open models widely available, particularly open-weight models, to accelerate the deployment and adoption of AI technologies across manufacturing and other productive sectors while keeping operating costs as low as possible.This approach allows factories and domestic companies to integrate, adapt, and customize existing models for specific tasks without paying substantial licensing fees or investing heavily in training and developing models from scratch. Small language models can also reduce day-to-day operating costs by a factor of <a href="https://www.uscc.gov/sites/default/files/2026-03/Two_Loops--How_Chinas_Open_AI_Strategy_Reinforces_Its_Industrial_Dominance.pdf" rel="noopener noreferrer" target="_blank">between</a> 10 and 30 compared with more advanced model alternatives. This has helped create an environment conducive to innovation, resulting in the development of more than 100,000 derivative models based on Alibaba’s Qwen family on Hugging Face, many of which are smaller models tailored to specific tasks.Beijing is also seeking to reshape the <a href="https://brie.berkeley.edu/publications/rise-china-artificial-intelligence-power-evolution-explanation-and-implications" rel="noopener noreferrer" target="_blank">geopolitical and technological</a> landscape through an open-source approach to AI adoption, a strategy which has emerged as an alternative to the U.S. model of costly, closed systems. The rapid development of models such as DeepSeek and Alibaba’s Qwen family—which has become one of the world’s most widely adapted families of foundation models—has enabled China to lower operating costs and promote AI as a "global public good," providing countries across the Global South and startups with access to advanced technologies at relatively low cost.3. Consolidating the Legislative and Institutional Framework for China’s Digital Business Environment: China has made a <a href="https://www.nature.com/articles/s41599-026-06811-1" rel="noopener noreferrer" target="_blank">strategic shift</a> toward institutionalizing the digital economy and adopting a comprehensive legal framework for its digital business environment. President Xi Jinping outlined the foundations of this approach in November 2020 during the 27th APEC Economic Leaders’ Meeting, where he introduced the concept of a "digital business environment" as a means of bringing the digital economy within a rule-of-law framework and promoting a more dynamic market through transparent and efficient regulatory systems.This approach has taken shape through a two-tier legislative strategy. At the national level, China’s State Council has issued <a href="https://www.nature.com/articles/s41599-026-06811-1" rel="noopener noreferrer" target="_blank">central regulations</a>, most notably the Regulations on Optimizing the Business Environment. Meanwhile, local governments have developed complementary regulatory frameworks, particularly in Beijing, Shanghai, and Chongqing, which have been selected as key pilot areas for developing rule-of-law assessments for digital government.4. Outpacing Other Countries in the Speed and Scale of AI Adoption: China has demonstrated a significant advantage in the speed and scale at which <a href="https://www.cfr.org/articles/chinas-platform-economy-is-an-ai-deployment-engine-the-u-s-is-still-looking-for-its-own" rel="noopener noreferrer" target="_blank">AI applications</a> supporting economic activity are being adopted. One example is OpenClaw, which was launched under the name Clawd in November 2025. By mid-March 2026, China had approximately 85,000 active use cases, compared with 48,900 in the United States, meaning adoption in China was nearly twice as high.The emerging private-sector ecosystem surrounding the technology has also expanded rapidly, including the establishment of businesses offering OpenClaw installation services. One Beijing-based programmer, for example, reportedly transformed a side business within weeks into an operation employing more than 100 people and receiving 7,000 orders. This growth coincided with a 40% increase in computer sales on Tmall, illustrating the broader commercial activity associated with the rapid adoption of AI applications.Economic ImpactChina has witnessed a rapid expansion in the use of artificial intelligence in recent years, with AI emerging as a key driver of digital transformation and economic growth. This has been accompanied by growing investment in digital infrastructure, computing capacity, and data generation, with repercussions across the economy, from the value added of the digital economy and industrial production to employment and public services. The most significant implications include the following:1. The Digital Economy’s Core Industries Now Account for More Than 10.5% of GDP: China’s digital economy became an increasingly important part of the national economy in 2025, with the <a href="https://english.www.gov.cn/archive/statistics/202604/29/content_WS69f1fe49c6d00ca5f9a0ab3d.html?" rel="noopener noreferrer" target="_blank">value added</a> of its core industries exceeding 10.5% of GDP. This coincided with a significant increase in data generation, which reached approximately 52.26 zettabytes, representing annual growth of 27.28% and accounting for around 27.44% of global data generation. Businesses contributed approximately 90% of the increase in data generation, underscoring the growing importance of data and digital infrastructure as drivers of economic growth.2. Expanding Investment in Digital Infrastructure: Beijing has sought to harness AI to support economic growth through substantial <a href="https://fgw.beijing.gov.cn/gzdt/fgzs/mtbdx/bzwlxw/202603/t20260304_4549611.htm" rel="noopener noreferrer" target="_blank">investment</a> in digital infrastructure as the foundation upon which the digital economy rests. In 2025, Beijing added 5,122 new 5G-Advanced base stations, bringing the total to 18,000. It also added 38,000 petaflops (a measure of computing capacity equivalent to one quadrillion operations per second), bringing total computing capacity to 60,000 petaflops and providing the technological infrastructure needed to develop and operate large-scale AI models. A petaflop is a measure of computing speed equivalent to one quadrillion operations per second.These developments have also had an impact on the performance of key economic sectors. The value added of Beijing’s major electronics enterprises increased by 20.2%, approximately 9.6 percentage points above the national average, while the software and information <a href="https://fgw.beijing.gov.cn/gzdt/fgzs/mtbdx/bzwlxw/202603/t20260304_4549611.htm" rel="noopener noreferrer" target="_blank">technology</a> services sector grew by 11%. Beijing also strengthened its leading position in the digital economy, with 32 platform companies included among China’s top 100 internet companies in terms of overall capabilities—the highest number nationwide. The city has also established a total of five Lighthouse Factories, seven national model enterprises for smart manufacturing, and 19 high-level smart factories, reinforcing its position as a leading model for digital transformation in China’s industrial sector.3. Restructuring the National Economy Through AI: China is seeking to restructure its <a href="https://jawlah.co/60706" rel="noopener noreferrer" target="_blank">national economy</a> by positioning artificial intelligence as a major engine of growth, helping the country move beyond its current economic slowdown toward a development model increasingly driven by advanced technology. As several traditional sectors—most notably real estate and construction—have weakened, AI and other technology-intensive industries have emerged as strategic alternatives. Bloomberg Economics <a href="https://www.taipeitimes.com/News/biz/archives/2026/07/21/2003861086" rel="noopener noreferrer" target="_blank">estimates</a> that high-tech and green industries now account for approximately 20% of China’s GDP, surpassing the contribution of the real estate sector for the first time.This structural shift was reflected in economic performance during the <a href="https://jawlah.co/60706" rel="noopener noreferrer" target="_blank">second quarter</a> of 2026. According to some estimates, the electronics and information technology sector contributed approximately 1.4 percentage points to the country’s overall annual GDP growth of 4.3%. While overall industrial output grew by 5% during the first half of 2026, electronics production increased by 15%, and capital investment in the sector rose by 7%, even as traditional fixed-asset investment declined by 6%.4. Expanding the Use of Automation and Robotics by Chinese Companies: China aims to establish itself as a leading global <a href="https://www.rand.org/pubs/perspectives/PEA4012-1.html" rel="noopener noreferrer" target="_blank">AI power</a> by 2030 by deploying industrial policy tools across the technological ecosystem, from semiconductors to practical applications. As part of this strategy, Beijing aims to increase AI <a href="https://www.breakingviews.com/columns/considered-view/chinas-job-first-policy-risks-blunting-ai-gains-2026-06-17/" rel="noopener noreferrer" target="_blank">adoption</a> across key sectors to 70% by 2027.By 2030, China also seeks to develop AI into an industry generating $100 billion in <a href="https://www.rand.org/pubs/perspectives/PEA4012-1.html" rel="noopener noreferrer" target="_blank">direct economic value</a>, while creating more than $1 trillion in additional value across other sectors. This strategy encompasses the modernization of traditional sectors such as manufacturing, agriculture, and healthcare, while also supporting emerging industries built around physical AI applications, including robotics, autonomous vehicles, and drones.Overall, China’s experience with artificial intelligence demonstrates that AI is no longer simply an emerging technology, but has become a central pillar of the country’s economic restructuring and competitiveness. Beijing has sought to harness its potential through an integrated national strategy combining the development of digital infrastructure, support for innovation, a stronger regulatory environment, and the accelerated integration of AI applications across productive and service sectors. These efforts have contributed to higher productivity and economic growth. Despite continuing challenges related to financing, technological constraints, and international competition, China’s approach reflects a long-term strategy aimed at consolidating its position as a leading global power in the AI economy by 2030.

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