China seeks to overtake the US by adding AI to manufacturing… “Digital economy is key” [China Watch]

Fostering the digital economy through the five-year plan

Stepping up data-centric industrial policy

Accelerating efforts to narrow the gap with the US

The Chinese government has decided to raise the share of the digital economy in gross domestic product (GDP) to 12.5% by 2030. The strategy is aimed at accelerating the build-out of an advanced manufacturing system powered by artificial intelligence (AI).

The draft of China’s 15th Five-Year Plan (2026–2030), released on the 6th, includes these measures. As of last year, the figure stood at around 10.5%.

Experts say the Chinese government, starting this year, is expected to integrate a substantial part of the digital economy—made up of data- and AI-driven activities—with manufacturing. The goal is to secure new growth engines.

The draft of the 15th Five-Year Plan focuses on strengthening the industrial base and competitiveness, nurturing emerging industries and new growth drivers, advancing cutting-edge technologies, and bolstering innovation capacity. It also outlines 28 key projects to achieve these objectives.

Chinese Premier Li Qiang said at the opening ceremony of this year’s National People’s Congress that “China must build a modern industrial system with advanced manufacturing as its central pillar.”

Li said, “We will continue to advance self-reliance and capability in science and technology, strengthen foundational innovation, and achieve breakthroughs in core technologies,” adding, “At the same time, we will actively push forward the building of a Digital China.”

This year, the Chinese government plans to upgrade fifth-generation (5G) mobile communications networks and expand network connections for factory equipment to further automate, digitalize, and intelligentize production systems. It also plans to foster national-level advanced manufacturing clusters.

Li explained, “We will also further improve the utilization of data resources,” adding, “We will refine the basic制度 for using data as a factor of production and build high-quality data sets.”

China’s digital economy is also viewed as developing faster than the United States in some areas.

Qi Xiangdong, who attended this year’s “Two Sessions” (the National People’s Congress and the Chinese People’s Political Consultative Conference) as a CPPCC member, said on the 5th, “China established the National Data Administration in 2023,” calling it “a leading case among countries that have officially recognized data as a factor of production.”

The chairman of Qi An Xin, a Chinese cybersecurity company, said, “China leads the world in terms of data concentration and the scale of collection,” stressing that “AI development essentially depends on a robust data industry.”

Qi also said, “China’s manufacturing base provides a very strong foundation for future AI development,” noting that “the application of technology is rapidly expanding, particularly into physical industrial domains such as robots.”

Hong Kong’s South China Morning Post (SCMP) assessed this as “China has set a strategy to narrow the gap with the United States by expanding the scale of its digital economy.” The US digital economy is known to account for about 18% of GDP. Germany’s digital economy accounts for about 5% of GDP.

Beijing=Correspondent Kim Eun-jung kej@hankyung.com