In early 2025, Chinese artificial intelligence (AI) startup DeepSeek made headlines overseas with a model that promised high performance at a fraction of the usual cost. But while the international debate focused on how the company trained its models and managed its computing resources, a different story is unfolding within China.
Algorithms, almost invisible to outsiders, are moving silently from screens to every workshop in the factories of the world's manufacturing powerhouses.
As robots handle much of the work around the clock, factories are increasingly deploying sensors to track steps on assembly lines, feeding data streams into algorithms to adjust workflows and adjust production in real time.
Analysts say the deep integration of AI into China's real economy is beginning to reshape industrial value chains, allowing manufacturers to capture more value beyond low-margin assembly and compete in high-margin areas long dominated by global peers.
change in movement
At the Maextro super factory in eastern China's Hefei, jointly built by automaker JAC Group and tech giant Huawei, dual-tone paint robots move with silent precision, painting car bodies in two colors at once.
Robots are evolving from simple mechanical arms to AI-enabled intelligent systems with enhanced perceptual and decision-making capabilities, reflecting a broader shift from experience-driven production that has long relied on tacit human expertise to precision manufacturing.
“It took six months to train and refine the AI model to achieve this level of precise control,” said factory manager Wei Dawei.
At GAC Aion's manufacturing plant further south in Guangzhou, robotic arms move nearly continuously along an assembly line, producing a vehicle approximately every 53 seconds. This facility is known as a “dark factory,” requiring little lighting.
Across the country, similar “black factories” operate with minimal human oversight. At Yongsheng Rubber Group in east China's Shandong province, automated guided vehicles and robotic arms now manage material transportation and tire production, and more than 95 percent of core equipment is numerically controlled.
Changes like this are happening across the country. According to data from the International Federation of Robotics, China will account for more than half of the world's new industrial robots in 2024, surpassing Japan, the United States, and South Korea.
bots and brains
Industry observers say China's AI development reflects a pragmatic approach, combining global advances in fundamental models with domestic strengths in engineering and cost optimization, backed by a large engineering talent pool and highly integrated industrial systems.
“Supported by the growth of the open source model ecosystem, large-scale modeling technology is increasingly becoming a convenient and widely accessible basic function in China, just like water, electricity, and the Internet,” Xiao Yu, chief economist at Fudan University's School of Business Innovation Center, said in an interview with Xinhua News Agency.
Wei Hongxiu, a researcher at Unbound think tank, said the application of AI in smart manufacturing is creating new opportunities for China's manufacturing industry to upgrade towards greater intelligence and higher value-added production.
Its importance extends beyond just upgrades, Wei points out. “More importantly, we are increasing the efficiency and quality of traditional industries by enabling digitalized, data-driven production, thereby optimizing existing manufacturing capacity.”
Zhu Qigui, deputy director of the China Institute of Finance at Shanghai Jiao Tong University, said that as a major manufacturing country, China has the most comprehensive industrial categories in the world, which provides vast application scenarios for various products and provides a broader stage for the introduction of large-scale language models in industrial settings.
Mr. Zhu pointed to 15 flagship smart factories in the country spanning multiple major industries. “These factories are emerging not only as benchmarks for technology applications, but also as key nodes in the industrial ecosystem, supporting the dissemination of mature solutions to small and medium-sized enterprises along the industrial chain,” Zhu added.
Beyond factories and technology, human capital plays a decisive role. Our large pool of engineers embedded in high-growth fields such as biotechnology, humanoid robotics, and AI applications helps transform innovative technologies into deployable and scalable solutions.
According to a report by the State Council Development Research Center, the number of engineers in China has rapidly increased from about 5.21 million in 2000 to more than 17.65 million in 2020. Their innovation capabilities have supported rapid iteration across the manufacturing industry, from electric cars and drones to consumer electronics, Xiao added, citing companies such as DJI, Huawei, and a new generation of AI and robotics companies as examples.
step by step
Analysts say that given the complexity of the manufacturing subsector and multiple production stages, AI-driven smart manufacturing will necessarily be a step-by-step, step-by-step process.
“Despite rapid progress, smart manufacturing still faces significant challenges and has not yet reached full commercial maturity, limiting the potential for large-scale implementation,” Wei noted. “Progress is generally rolled out sector by sector, phase by phase, rather than through an across-the-board rollout.”
“However, each incremental advance can bring significant efficiency gains, requiring patience and confidence in the long-term potential of intelligent manufacturing,” he added.
The recent Central Economic Work Conference emphasized the deepening and expansion of the national “AI Plus” initiative, reflecting the actions outlined in the recommendation document for the formulation of the 15th Five-Year Plan (2026-2030).
Under the guidance of a clear national strategy, the country's manufacturing industry is moving towards higher-value segments of the global value chain through deep industry integration with digital technologies such as AI, as well as restructuring and upgrading the industrial chain ecosystem, Zhu said.
According to the China Academy of Information and Communication Technology, the size of China's core AI industry is expected to exceed 1.2 trillion yuan (approximately US$170 billion) in 2025, and the broader digital economy, driven by a new generation of smart devices and intelligent systems, is expected to exceed 70 trillion yuan by 2030.
As 2025 draws to a close, AI-driven transformation of the manufacturing sector continues and is likely to drive upstream and downstream industrial chains. “It could create ripple effects and far-reaching economic benefits that could extend beyond the development of large-scale AI models,” Shao added.
