China Drafts New Smart Manufacturing Policy as AI Moves Deeper Into Factories
The proposed measures would support smart factories, industrial AI models, intelligent equipment and wider adoption of automation across the manufacturing sector.
China is drafting new policy measures to accelerate the integration of artificial intelligence into manufacturing, as Beijing seeks to improve industrial productivity, upgrade factory equipment and strengthen the competitiveness of its manufacturing sector.
The Ministry of Industry and Information Technology (MIIT) outlined the plans at a State Council Information Office press conference on October 20, according to China's State Council Information Office. The proposed measures are intended to bring AI into more stages of industrial activity, from research and development to production, operations and after-sales services.
Wang Weiming, an MIIT chief engineer, said the government would adopt a tiered approach to developing smart factories. Basic and advanced facilities are expected to strengthen their digital infrastructure and expand AI applications, while leading factories will explore new manufacturing architectures and production models.
The policy work also covers industrial equipment. Authorities plan to encourage the development and application of intelligent machine tools, industrial robots, inspection systems and control equipment. These technologies can help manufacturers improve precision, automate repetitive tasks and respond more flexibly to changes in production requirements.
Another priority is the development of industry-specific AI models. Manufacturing companies need systems that can work with technical documentation, equipment data, production records and other specialized information. The ministry is encouraging businesses to build higher-quality industrial datasets and explore the use of industrial AI agents and intelligent operating systems that connect data, software and equipment.
The policy push builds on China's existing industrial digitalization efforts. The MIIT said the country had established more than 13,000 advanced-level smart factories, with over 1,000 application scenarios across 20 industries, including steel, automobiles and pharmaceuticals. These examples illustrate how digital systems are being incorporated into production, quality control and supply-chain management.
Industrial data also points to growing demand for technology-related manufacturing. According to the official account published by the State Council Information Office, China's industrial output grew 5.3% year on year in the first three quarters of 2026. Electronics manufacturing expanded more rapidly, with value-added output rising 15.8% over the same period.
The electronics sector has benefited from demand for AI-related devices, computing infrastructure and other digital products. The ministry said revenue at electronics manufacturing companies reached 12.8 trillion yuan during January-August, an increase of 20.1% from a year earlier. Profits rose sharply over the same period, although individual companies and subsectors may experience different conditions.
For manufacturers, wider AI adoption could improve efficiency by helping detect defects, predict equipment failures, optimize energy use and coordinate production schedules. However, the benefits will depend on data quality, system reliability, workforce training and the cost of integrating new technology with existing machinery.
Smaller manufacturers may face particular challenges because advanced systems require investment in software, connectivity, cybersecurity and employee skills. Government support and shared technology platforms could help reduce barriers, but companies will still need to demonstrate that adoption produces measurable commercial returns.
The emerging policy also reflects China's effort to connect technological innovation with industrial demand. Rather than treating AI as a separate software sector, policymakers want it embedded in the production systems that underpin manufacturing output and exports.
The measures remain under development, and the announcement does not establish a final implementation timetable or specific funding package. Their impact will depend on the eventual policy details and the willingness of manufacturers to adopt the technologies at scale.