For many years, China’s economic development has been explained by scale, low costs, and manufacturing efficiency. That description no longer applies. What China is building today is more advanced, more strategic, and I’ve had the opportunity to see it firsthand.
As 2026 begins, China is positioning itself to lead what it calls an AI-plus-intelligence economy, one in which artificial intelligence is not a separate sector but a multiplier built into every industry. This change is deliberate and planned, and is already visible in data, businesses, and institutions.
China’s 15th Five-Year Plan is a pivotal step in the country’s “road to modernization” as it aims to become the world’s leading economy and superpower by 2049, with AI-plus at its core. AI plus, in Chinese policy parlance, does not mean adding AI tools to existing processes. This means redesigning entire value chains such as manufacturing, logistics, energy, transportation, healthcare, and services, making intelligence an integrated function of how the economy operates.
This tipping point comes at a critical moment. China’s old growth model, based on price competition and scale, is under strain. From 2019 to 2024, the average operating profit margin of Chinese listed companies declined from 12.4% to 11.2%. Growth is slowing, labor costs are rising, and it is no longer possible to compete on cost alone. In response, there has been a deliberate shift from price to value, with AI as the central vehicle.
One of the clearest examples is China’s strategic push to lead a “low-lying economy,” a priority in the previous five-year plan. This includes drones and autonomous systems for logistics, emergency response, agriculture, inspection, and urban mobility. Rather than treating drones as a niche technology, China is building an entire ecosystem around them, including regulations, manufacturing clusters, data platforms, services, and finance. Analyst firm Drone Industry Insights estimates that by 2024, China will account for 70% to 80% of the world’s commercial drone production and 79% of approved drone patents.
The state is playing a catalytic role through government guidance funds, totaling about 30 billion yuan ($4.3 billion). Operating at the national, regional, and municipal levels, these funds seed and attract private capital to companies at various stages. The goal is speed, scale, and strategic alignment, not permanent state ownership.
Its influence is increasingly global. According to economistOverseas sales of Chinese companies will increase from $1 trillion in 2021 to $2 trillion in 2024, and Chinese companies now invest more abroad than foreign companies invest in China. This expansion spans electric vehicles, AI, cloud services, fashion, retail, food, and consumer brands. More importantly, Chinese companies no longer primarily export low-priced goods. They export integrated systems, platforms and brands.
BYD has overtaken Tesla to become the world’s largest electric car maker by sales, delivering more than 3 million vehicles last year, more than 20% of which were sold outside China. Once known for its affordable smartphones, Xiaomi now makes fully electric, digitally integrated cars that connect seamlessly with your smartphone and smart home. Its flagship model accelerates from zero to 100 km/h in 1.8 seconds.
China positions itself as an economic driver where AI is not a standalone field but a multiplier built into every industry.
Chinese AI models such as DeepSeek and Manus are now being used around the world by developers, companies, and platforms far beyond China.
At the consumer level, Chinese brands are expanding rapidly. Miniso operates more than 6,300 stores worldwide, more than half of which are outside China, while fashion retailer Urban Revivo is expanding into the US, Europe and Southeast Asia through digital-first design and rapid product cycles. Cultural exports are progressing as well. Labubu, the collectible character created by Pop Mart, has become a global cult symbol, generating more than $900 million in revenue for Pop Mart and increasing international sales by more than 40% year over year.
Supporting this transformation are the key elements of human resources and research capabilities. highlighted data new york times Indicates the magnitude of the shift. In the Leiden Ranking of World Research Outcomes, Zhejiang University has overtaken Harvard University and is ranked first in the world. Seven Chinese universities are ranked in the world’s top 10, with Tsinghua University ranked 12th and Peking University ranked 13th.
This conversion is often misunderstood. The debate is usually framed as state versus market, or subsidies versus competition. The more important factor is execution at scale. In China, planning is done centrally, but delivery is done locally. National priorities are reflected in local competition, municipal specialization, and enterprise-level experimentation. Everything is delivered at what locals call “China speed.”
The lesson is clear. China treats AI not as a technology trend but as a development strategy. Aligning planning, finance, people, industry, and execution over decades, pivoting from price to value and embedding intelligence at the core of the economy.
That is the change that the world needs to understand and learn from now.
