Compiled from a report by China Daily on March 13.
China’s traditional Chinese medicine (TCM) industry is undergoing a significant transformation, integrating artificial intelligence, smart manufacturing, and digital supply chain solutions to modernize operations and expand its global footprint.
Policy support for the sector was reinforced during China’s annual two sessions, where government leaders pledged to “advance the inheritance and innovation of TCM and strengthen integration with Western medicine”, while also promoting TCM on the international stage. These initiatives align with the 15th Five-Year Plan (2026–2030) and a newly released industrial policy targeting high-quality development of the sector.
AI and Smart Manufacturing Lead the Upgrade
Artificial intelligence is emerging as a central driver of modernization. Experts highlight that AI can streamline processes across the entire TCM value chain, from herbal sourcing and R&D to quality control and manufacturing. This addresses longstanding challenges such as product standardization and quality consistency — key concerns for investors and global partners.
For example:
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Shijiazhuang Yiling Pharmaceutical reports that AI-driven R&D projects have shortened drug development cycles by approximately 30%, accelerating time-to-market for new therapies.
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Kangmei Pharmaceutical combines AI with blockchain tracking to monitor herbal medicines from cultivation to retail, increasing supply chain transparency and regulatory compliance.
According to Xiao Wei, deputy to the 14th National People’s Congress and an academician at the Chinese Academy of Engineering, “AI models can connect data across the entire industrial chain, enabling higher efficiency, quality, and scalability in TCM production.”
Global Expansion and Market Opportunities
China is also positioning TCM as a strategic export industry. By mid-2025, TCM practices had reached 196 countries, with acupuncture recognized in 113 WHO member states. TCM exports totaled $5.09 billion in 2025, reflecting growing international demand for natural and preventive healthcare products.
Industry leaders see the next five years as critical for transforming the sector into a global, technology-driven industry. Guo Lanping, head of the Institute of Chinese Materia Medica, noted that policy measures and AI adoption are expected to accelerate modernization, quality improvement, and international competitiveness.
Investment and Innovation Outlook
The Chinese government’s plan calls for:
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60 high-standard herbal raw-material bases
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5 national innovation centers
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20 smart manufacturing plants by 2030
For international investors and industrial observers, this signals a substantial opportunity to participate in a sector that is simultaneously:
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Technologically upgrading, leveraging AI, automation, and blockchain
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Scaling globally, with rising export potential and cultural influence
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Supported by clear government policy, ensuring industry stability and structured growth
By transforming centuries-old practices into a tech-enabled, globally integrated industry, China’s TCM sector offers a unique convergence of cultural heritage, innovation, and international market opportunity — positioning it as a compelling area for long-term strategic investment.