In the context of a long-standing stagnation in the real estate sector, weakening growth in traditional economy, and insufficient domestic demand, the Chinese Communist Party is elevating artificial intelligence (AI) to a strategic height in the national economy. It aims to build “AI+” as a new engine of economic growth and calls for comprehensive penetration of AI into various sectors of the economy and society.
However, the Chinese AI industry still faces challenges such as difficulty in matching supply and demand and the absence of a complete application loop, posing obstacles to implementation. Analysts believe that AI in China itself faces numerous challenges and may struggle to become a new engine for the Chinese economy.
The real estate sector in China was once considered the “strongest growth engine,” with founders of top real estate companies taking turns at the top of the richest list. However, with a series of deleveraging measures imposed by the Chinese government in 2020, which forcefully cut off the financing channels of real estate companies, the real estate industry suffered a systemic collapse. The era of booming real estate came to an end with the sentencing of Xu Jiayin, the founder of Evergrande Group, to life imprisonment in August 2026.
In recent years, the Chinese Communist Party has continually emphasized the development of AI, aiming to elevate AI from a mere technical tool to a crucial driving force for economic growth. Premier Li Keqiang proposed in the 2026 Government Work Report the idea of “creating a new form of intelligent economy,” and in late April, a political bureau meeting suggested implementing the action of “comprehensively carrying out ‘AI+’ to develop a new form of intelligent economy.”
China expert Mike Li analyzed that the CCP’s “AI+” strategy aims to build a new economic development model based on AI to replace the economic growth model of the past twenty years driven by the real estate sector and spanning hundreds of upstream and downstream industries, thus completely transforming the economic structure.
Previously, in August 2025, the CCP put forward the “AI+” action, aiming for broad and deep integration of AI with various sectors of the economy and society, including science and technology, industry development, quality improvement in consumption, welfare enhancement, governance capability, and global cooperation. It also stated that by 2030, the “smart economy will become an important growth pole” for the country.
Mike Li views this as a core-driven model based on AI, consisting of semiconductors, new energy, industrial robots, electric vehicles, and AI, also known as an “AI technology + manufacturing” strategy. The CCP’s 15th Five-Year Plan (2026-2030) elevates “AI+” to a more strategic position.
Unlike single AI companies such as “ChatGPT” in the United States, the CCP requires AI to “broadly and deeply integrate into various sectors of the economy and society,” positioning “AI+” as a new strategic direction for future economic and social development.
However, the official recognition acknowledges that AI+ faces several challenges. An article in the CCP’s State Council Development Research Center July publication revealed significant structural contradictions in the current Chinese AI industry, stating that there is a widespread issue of “many demonstrations, but difficulties in scaling up.”
In January 2026, the Ministry of Industry and Information Technology and seven other departments issued the “Implementation Opinions on the Special Action of ‘AI+ Manufacturing’,” with the main policy goal of promoting 3-5 large-scale models deeply into the manufacturing industry, 1,000 high-level industrial intelligence bodies, 500 typical application scenarios, by 2027.
But if AI has already naturally evolved into a large-scale productivity force, does the CCP government need to further promote deployment with “1,000 benchmark enterprises” and “500 application scenarios”? Sun Guoxiang, a professor in the Department of International Affairs and Enterprise at South China University, pointed out to Epoch Times that the “AI+” plan can only “partially transform into a super factory” and may struggle to upgrade the entire Chinese manufacturing industry into super factories.
Sun Guoxiang emphasized that while the CCP sees AI as a core tool for reshaping the economy and demands deep integration of AI into industries, many small and medium-sized enterprises may not be able to afford the transformation costs. Furthermore, while AI can enhance supply efficiency, it cannot automatically solve issues such as weak domestic demand, overcapacity, real estate debt, and restricted external markets in China.
He stressed that while China may see a batch of highly automated, AI-driven “model super factories,” the question remains whether they can reshape the entire economy and offset macroeconomic weaknesses, with the answer leaning towards a negative outlook.
Moreover, the practical application of the “AI+” plan remains insufficient. An article in the CCP’s party media “Ban Yue Tan” reported in June an imbalance in the calculation capacity market in China, with “shortage and idle coexisting.” Two smart computing centers built in districts of an eastern city, respectively focusing on biomedicine research and industrial Internet, had less than 10 actual occupying enterprises, indicating low equipment utilization. The CCP admitted that “AI+ manufacturing” is still in the stage of scaling deployment challenges.
On July 3rd, an interview with Yang Chao, director of the Second Research Room of the Development Research Center of the State Council, titled “Breaking through the ‘difficulties in landing’ and enabling artificial intelligence to deeply cultivate the real economy,” was published in the Development Research Center of the State Council.
Yang Chao believes that the issue lies not in the capabilities of large models themselves but in the disparity between industrial data, reliability, fragmented scenarios, and economic requirements, and the capabilities of AI large models. Consequently, numerous projects have difficulty in scaling up. In an interview on May 20th, Yang Chao expressed a similar view, stating that the complete application loop of AI in China has yet to be achieved.
Mike Li believes that the “AI+ ‘landing difficulties” issue is evident from the listing situation of the first humanoid robot stock in the A-share market, Yushu Technology.
Yushu Technology, known as the A-share “first stock of humanoid robots,” officially went public in mid-August, but within only nine days of trading, the stock price plummeted nearly half from the opening price of 1100 Yuan on the first day of listing, evaporating a total market value of over 210 billion Yuan.
The new quality productivity first mentioned by Xi Jinping during his inspection in Heilongjiang in September 2023 is officially defined as “changing traditional economic growth methods, production development paths, featuring high technology, high efficiency, and high quality,” etc. An article in People’s Daily in March 2026 stated, “AI is accelerating into a core engine and representative technology of new quality productivity.”
“Chinese artificial intelligence is at a crossroads,” wrote researchers Scott Singer and Matt Sheehan from the Carnegie Endowment for International Peace in a joint article in July 2025.
The article indicates that the CCP aims to apply the “AI+” plan in the real economy to drive economic growth but faces unprecedented challenges in balancing control and growth amidst economic fragility.
Sun Guoxiang believes that “AI+” has become an important tool in Xi Jinping’s new economic model but is not an all-powerful engine.
Mike Li also believes that “AI+” replacing the economic model driven by real estate, completely transforming the economic structure and becoming a new engine for economic growth, is premature.
(To be continued)