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Genevieve Donnellon-May

Can artificial intelligence become the backbone of a nation’s economy and society? China is betting big on it.
On August 26, the State Council released a high-level directive about the “AI Plus” initiative, marking the next stage of the country’s AI ambitions. First mentioned in the 2024 government work report as a broad slogan and reaffirmed in the 2025 edition, the initiative now comes with concrete targets, timelines and sectoral priorities.
Importantly, the directive is the most detailed blueprint to date, embedding AI across industry, agriculture, energy, services and public administration. Its goal is to accelerate productivity, modernise industries and drive efficiency, positioning AI as a central engine of economic transformation and governance modernisation.
Beyond domestic objectives, the policy underscores China’s ambition to shape the global development of AI. It aims to make Chinese open-source tools widely available, empower countries in the Global South to build AI capacity and bridge the global intelligence divide.
Three major deadlines are outlined. By 2027, AI applications are expected to be embedded in six key sectors, with intelligent terminals and AI agents reaching a 70 per cent penetration rate. By 2030, this figure should surpass 90 per cent, driving high-quality growth across the economy and AI take-up across all sectors. By 2035, China aims to fully transition to an AI-powered economy and society, providing a foundation for socialist modernisation.
While the directive stops short of pursuing artificial general intelligence – where AI surpasses humans in capability – its emphasis on foundational capabilities signals ambitions extending well beyond immediate applications. Building on existing policies and targets, including the State Council’s 2024 and 2025 goals for creating a digital government, the August directive underscores China’s sustained commitment to leveraging AI for economic, social and governance purposes.


Chinese leaders view AI as central to national security and global competitiveness. Beijing first outlined this ambition in its 2017 national AI strategy, which set out steps to become a major AI innovation hub. Following this, President Xi Jinping’s Global Artificial Intelligence Governance Initiative was published in 2023. More recently, Premier Li Qiang announced in July the country’s new Global AI Governance Action Plan, which outlines a 13-point road map for AI-related international cooperation.
Domestically, the August directive carries significant implications. Against a backdrop of slowing growth, rising debt, structural weaknesses in property and traditional manufacturing, and demographic and labour pressures, the directive signals that the Chinese central authorities intend to harness AI to modernise industries, foster innovation and build intelligent industrial ecosystems to address these challenges.
In doing so, Beijing seeks to boost overall productivity and efficiency, strengthen competitiveness in key sectors, support national economic targets and enhance governance outcomes. However, it remains unclear how the use of AI in productivity and efficiency metrics will be evaluated.
There are regional and global implications as well. The AI Plus directive signals China’s ambition to achieve technological self-reliance and global leadership in AI. By investing in AI models, computing power and data infrastructure, Beijing aims to reduce dependence on foreign technology while strengthening domestic innovation capacity.


By offering technical assistance and capacity-building support, for instance, Beijing can expand its international influence and presence. It can also offer participating nations, particularly in the Global South, opportunities to strengthen their digital ecosystems and participate more fully in the AI-driven economy.
At the same time, the initiative positions China in global AI leadership. By promoting the widespread availability of Chinese open-source tools and supporting AI capacity building in Global South countries, Beijing can shape global norms, ethics and infrastructure surrounding AI. These efforts also align closely with China’s “digital silk road”, by which China seeks to advance digital infrastructure projects across participating countries.
More broadly, the directive strengthens China’s ability to compete directly with the United States and other leading powers in AI innovation. Washington, which published its own AI strategy in July, has enacted export controls on semiconductors, chipmaking equipment and AI chips, exposing China’s vulnerabilities in some areas. But this has also accelerated domestic investment in local innovation, underscoring Beijing’s determination to achieve both technological independence and global leadership.
Significant challenges must be overcome, beyond fragmented or low-quality data sets and talent shortage concerns. Chief among the other concerns is that rapid AI deployment and overreliance on platforms could threaten data security and drive up costs, as noted by some Chinese AI experts.


Local experimentation is already under way. In 2023, the Ningxia Hui autonomous region became the first province to deploy a private-domain AI large language model. In 2024, Guangdong published a provincial work plan for long-term AI governance. While these initiatives align with Beijing’s objectives, they also highlight uneven adoption and the potential for gaps in oversight. In response, central authorities could coordinate guidance and standardise pilot evaluation metrics to ensure more consistent progress.
Economic and industrial risks are equally prominent. Soaring costs and even a productivity paradox – where significant AI investments might not yield proportional productivity gains – could result in wasted resources.
The AI Plus directive casts AI as the backbone of China’s next growth model and a catalyst for state modernisation. By embedding AI across the economy and bureaucracy, Beijing aims to accelerate growth, boost productivity and sharpen governance capacity. Yet the same top-down approach that sets clear national targets must also foster flexibility and transparency if AI is to transform governance. How well China manages these concerns will determine whether AI becomes a genuine pillar of economic transformation and administrative reform.


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Opinion

China Opinion

News

China

Science

By embedding AI across the economy and bureaucracy, Beijing aims to accelerate growth, boost productivity and sharpen governance capacity


By embedding AI across the economy and bureaucracy, Beijing aims to accelerate growth, boost productivity and sharpen governance capacity.


China technology

US-China tech war

United States

Xi Jinping

Li Qiang

State Council

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


China is banking on AI as next driver of growth

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}By embedding AI across the economy and bureaucracy, Beijing aims to accelerate growth, boost productivity and sharpen governance capacity

By embedding AI across the economy and bureaucracy, Beijing aims to accelerate growth, boost productivity and sharpen governance capacity