According to a report by China Daily on March 12…
For years, artificial intelligence in China was largely discussed in terms of algorithms, benchmarks, and limited commercial applications. But the 2026 Government Work Report marked a new milestone: for the first time, it introduced the goal of creating new forms of smart economy.
Industry leaders and global investors view this linguistic shift as a signal that AI is moving beyond laboratories and isolated applications to become the foundational architecture for industrial growth and systemic economic development.
AI as a Driver of Industrial Transformation
Chen Changsheng, deputy director of the Research Office of the State Council, said the smart economy initiative aims to expand the breadth and depth of AI empowerment across industries, unlocking large-scale commercial opportunities and fostering new business models.
Liu Qingfeng, chairman of iFlytek, emphasized the need for practical applications. “AI must address real-world production and daily life needs,” Liu said. “It should bring tangible benefits to people and concrete improvements to industrial processes.”
A clear example is the surge in humanoid robotics. Chinese companies have introduced over 300 types of humanoid robots, more than half of the global total, according to the Ministry of Industry and Information Technology.
Lei Jun, founder of Xiaomi, described humanoid robots as the next potential disruptive technology, following computers, smartphones, and new energy vehicles. Morgan Stanley forecasts that China’s humanoid robot shipments could exceed 2.6 million units by 2035, generating a market surpassing 140 billion yuan ($20.2 billion), eventually reaching the trillion-yuan scale.
From Labs to Factories
Despite the first-mover advantage, challenges remain. High hardware costs, limited process stability, and insufficient factory deployment have slowed large-scale adoption. Lei Jun stressed that expanding applications in smart manufacturing is essential to move robots from experimental demonstrations to fully integrated production lines.
Qi Xiangdong, chairman of Qi-Anxin Technology Group, described the smart economy as a gateway to immense potential, creating demand for AI application scenarios and accelerating economic and social development.
AI Agents and Intelligent Terminals
The 2026 report distinguished between intelligent terminals—physical AI carriers like robots, smart phones, and connected vehicles—and AI agents, software capable of understanding complex tasks and executing them autonomously.
Li Lecheng, Minister of Industry and Information Technology, emphasized investment in next-generation AI products, including brain-computer interfaces, autonomous vehicles, and robotics, as part of integrating AI with the manufacturing sector.
China’s phased roadmap links AI deployment to economic milestones: by 2027, core smart economy industries will grow rapidly; by 2030, the smart economy becomes a significant growth pole; and by 2035, China enters a new stage characterized by a fully developed smart economy and smart society.
Industrial and Policy Support
Policy support underpins these ambitions. The government is promoting:
Large-scale AI adoption across industries
Open access to AI technologies
Development of AI-specific infrastructure
Risk-sharing and investment incentive mechanisms for high-risk, high-reward technologies
Zhu Keli, founding director of the China Institute of New Economy, explained that these measures provide a clear roadmap for investors while preventing fragmented resource allocation.
Nancy Wang, country manager at LinkedIn China, highlighted China’s role as both a critical market and global innovation reference point. Data shows a 19.1 percent increase in newly established foreign-invested enterprises in 2025, while outbound recruitment from Chinese firms has grown more than 30 percent, spanning smart hardware, industrial robotics, healthcare, and new energy sectors.
AI’s Broader Economic Impact
The smart economy encompasses:
AI Plus: empowering traditional industries with AI
AI-native business models: entirely new industries, products, and services built from AI foundations
Huang Qunhui, former head of the Institute of Economics at the Chinese Academy of Social Sciences, said this dual approach demonstrates how AI creates both incremental improvements and fundamentally new economic structures.
China’s commitment to research is evident: R&D spending reached 2.8 percent of GDP in 2025, and the digital economy’s core output now accounts for over 10.5 percent of GDP. Strategic emerging industries such as integrated circuits, aerospace, biomedicine, and low-altitude economy are prioritized alongside future-focused sectors like green energy, quantum technology, embodied intelligence, brain-computer interfaces, and 6G.
A Global Opportunity
Experts say the smart economy represents one of the largest opportunity spaces for innovators and investors in the world’s second-largest economy. With technology breakthroughs, government support, and expanding real-world applications, China is positioning AI not only as a tool, but as a central pillar of economic transformation, offering vast potential for both domestic and foreign enterprises.