Beyond ‘Made in China’: Inside the innovation revolution transforming China’s economy
A factory manufacturing industrial robots and intelligent systems in Nanjing, east China’s Jiangsu Province, April 7, 2025. /VCG
The sun rises over the factory floor. Conveyor belts begin to move. Robotic arms glide through the air with millimeter precision, picking up screws and fastening them onto robot chassis moving down the production line. Here, unlike the bustling factories once lined with rows of workers, robots are now assembling key components for the next generation of intelligent machines.
The scene, once confined to science fiction, is becoming an everyday reality at some of China’s most advanced manufacturing hubs in the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area.
For decades, China earned its place in the global economy as the “world’s factory,” powered by scale and low-cost production. Today, however, the country’s competitive edge is increasingly being redefined.
As China accelerates its transition from a manufacturing powerhouse to an innovation-driven economy, some Western narratives have attributed its industrial competitiveness primarily to government subsidies. Yet a closer look at China’s industrial evolution suggests a clearer picture – one in which long-term investment in technology, talent, infrastructure and industrial coordination has become the key engine of growth.
The upgrading of the industrial ecosystem
Over the past decade, China has become the world’s largest industrial robot market. By 2025, the country’s installed base accounted for more than half of the global total, according to the Ministry of Industry and Information Technology (MIIT), while industry reports reveal that China has led the world in the growth of shipments of service robots and cutting-edge humanoid robots, underscoring the rapid expansion of its intelligent robotics sector.
Behind these numbers lies a deeper transformation. China has established a core technological foundation for humanoid robot mega-factories, creating a scalable production system capable of delivering products at lower costs and with relatively higher performance, said Qiao Hong, an academician of the Chinese Academy of Sciences.
In these factories, not only are robots building robots, but domestic substitution rates for core components, including precision reducers, servo systems and controllers, have also risen substantially. Meanwhile, Chinese firms are making breakthroughs in frontier technologies such as 3D vision perception and embodied AI with multimodal large models, building resilience across the entire industrial chain.
Engineers at a pilot-scale test platform for humanoid robots test and debug robots in Beijing, China’s capital, March 20, 2026. /VCG
This competitiveness is anchored in a strong industrial system with well-established supporting facilities. China remains the world’s only country with all industrial categories in the United Nations industrial classification system, spanning 41 major industrial sectors, 207 industrial categories and 666 industrial subcategories.
This also enables companies to move rapidly from research and development to commercialization while lowering production costs through full-chain coordination. The progress has been driven by market competition and the continuous expansion of real-world applications rather than by short-term policy support.
Innovation powered by talent, institutions and the market
Besides its unique industrial foundation, China is also home to the world’s largest cohort of R&D personnel. With more than 270 million people having received higher education and a higher education enrollment rate exceeding 60%, the country is increasingly turning its large population into a talent dividend.
This talent base is further amplified by a distinctive institutional framework, where state-led investment focuses on fundamental research, major scientific facilities and strategic technologies, laying the foundation for future innovation. At the same time, companies drive the crucial “last kilometer” of market application.
Businesses have become the principal engine of innovation. Chinese enterprises now account for more than 77% of the country’s total research and development expenditure. This market-driven momentum is reinforced by innovation ecosystems that foster close collaboration among industry, academia and research institutions. In Beijing’s Zhongguancun alone, more than 20,000 high-tech enterprises operate alongside world-class universities, leading research institutes and venture capital firms, creating one of the world’s most dynamic innovation hubs.
Passengers ride in a self-driving vehicle in Beijing E-Town’s autonomous driving demonstration zone, May 8, 2026. /VCG
The results are increasingly visible across emerging industries. China’s core artificial intelligence (AI) industry exceeded 1.2 trillion yuan (about $167 billion) in 2025, with more than 6,200 enterprises operating across the sector. Innovation clusters such as Beijing E-Town’s autonomous driving demonstration zone and Shanghai’s Zhangjiang AI Island have become important testbeds for next-generation technologies, demonstrating how scientific research is translated into products and industries at scale.
Opportunities shared globally
China’s innovation is increasingly being shared globally. As of March 2026, Beijing hosted 332 foreign-funded R&D centers, with 55 newly established this year, while Shanghai had 647 such centers, including 15 new additions this year, according to data from the Ministry of Commerce. Multinational companies are no longer simply manufacturing in China; they are innovating here.
The trend is also reflected in investment flows. In the first quarter of 2026, actual foreign direct investment in China’s high-tech industries reached 102.73 billion yuan ($15.05 billion), up 30.7% from a year earlier and accounting for 41.2% of the country’s total FDI, according to ministry data.
At the 2026 Summer Davos Forum in Dalian, participants widely agreed that China’s progress in areas such as green energy, the digital economy and advanced manufacturing is helping inject greater certainty into an increasingly uncertain global economy.
China’s progress in applying AI across industries offers useful lessons for developing economies, according to Stephan Mergenthaler, managing director and chief technology officer of the World Economic Forum. He said countries could draw on China’s experience to cultivate their own competitive strengths and better position themselves within the global AI value chain.
Source: CGTN. This article was originally published by CGTN and is republished with permission.
