China committed to exploiting AI in high-tech and manufacturing

The deep integration of artificial intelligence (AI) into the manufacturing sector in China and across the globe has become a key driving force for high-quality development, according to a leading government figure.

Zhang Fan, a deputy to the National People’s Congress, highlighted the rapid evolution of AI technologies — including large language models, generative AI and embodied AI — saying that they are reshaping global industrial competition and integrating into various industries. Zhang is also director of the science and technology innovation department of China Electrical Equipment Group.

He said: “With the rise of domestic companies like DeepSeek and Unitree Robotics, AI is being pushed toward an era of democratization, breaking the monopoly of Western tech giants and fuelling rapid advancements in AI-powered devices such as smart glasses and robots,” he said in an interview with the China Daily website.

According to this year’s Government Work Report, under the AI Plus initiative China will work to effectively combine digital technologies with the country’s manufacturing and market strengths. The country will support the extensive application of large-scale AI models and vigorously develop new-generation intelligent terminals and smart manufacturing equipment, the report said.

While China has introduced policy frameworks such as the next-generation AI development plan, Zhang argued that manufacturing, spanning 41 sub-industries, requires more precise and sector-specific policy implementation.

Using the electrical equipment manufacturing sector as an example, Zhang pointed out gaps in industry-level AI roadmaps, insufficient guidance for high-value applications and a lack of collaborative mechanisms for tackling common technological challenges.

“The sector needs a clear, tiered national strategy — short-term breakthroughs in foundational applications, medium-term advances in core scenarios and long-term development of a tech system.”

Zhang added that a major concern is inefficiency in industry-specific AI models, saying that industrial AI training is constrained by poor data availability and limited sharing.

Added to that, Zhang also underscored a severe shortage of interdisciplinary talent proficient in both AI and industrial processes. “There is a disconnect between academia and industry, and traditional manufacturing companies lack structured AI talent training mechanisms.”

To address the issues, Zhang said it is necessary for the nation to accelerate AI development planning for key industries. “Given its strategic importance to energy security and China’s dual-carbon goals, the electrical equipment manufacturing sector should have a dedicated AI development roadmap,” he said.

Meanwhile, he said AI innovation hubs should be formed to consolidate resources and develop industry-specific AI models that enhance efficiency and competitiveness.

Innovators benefit from tax breaks

In order to help encourage technological innovation and high-end manufacturing, China has cut 2.63 trillion yuan ($361 billion) in taxes and fees on those operating in the sectors.

Latest data from the State Taxation Administration, the country’s top tax authority, showed that tax breaks for companies’ research and development spending and technology transfers totalled 806.9 billion yuan in 2024.

Tax incentives for high-tech enterprises and emerging industries — including a 1%5 corporate income tax rate and exemptions on new energy vehicle purchases — added up to 466.2 billion yuan in 2024.

To tackle bottlenecks in core technologies and attract talent in key sectors, China offered an additional 132.8 billion yuan in value-added tax deductions.

Li Xuhong, deputy head of the Beijing National Accounting Institute, said: “Such measures will help taxpayers fully save on operating costs through R&D expense deductions. Relief will further stimulate their vitality and drive innovation capability, all of which will be strong drivers of the development of the country’s private sector.”

The Chinese tax authority’s efforts to stimulate innovation are bearing fruit. VAT invoice data showed that last year, sales revenue in high-tech industries grew 9.6 percentage points faster than the national average. Revenue from technology commercialization services jumped 27.1% year-on-year.

The digital economy also saw steady gains, with core industries expanding 7.1% year-on-year and enterprise procurement of digital technologies rising 7.4%, reflecting deepening integration of digital tools in industrial production.

On the other hand, manufacturing, a cornerstone of the economy, grew steadily with sales revenue increasing 2.2 percentage points faster than the national average.

Advanced sectors saw particularly strong growth, with sales in computer manufacturing up 14.4% year-on-year, telecommunication and radar equipment up 19%, and intelligent equipment manufacturing up 10.1%.