China’s Whole-of-Nation Promotion of AI Technology
Just nine weeks after the unveiling of the 15th Five-Year Plan (FYP), Chinese authorities are moving to bring local efforts in alignment with national priorities. On 16 May, the city of Hangzhou, famous for its concentration of world-class AI companies, established China’s first-ever National Pilot Base for Embodied Intelligence Applications. The Pilot Base will function as a public service platform providing computing power support, open data, modeling services, and scenario validation to Chinese companies in the AI and robotics fields.
Approved by the National People’s Congress on 12 March 2026, the 15th FYP encourages investments in six “future industries”: embodied intelligence (integrating AI with robotics), quantum technology, biomanufacturing, hydrogen- and nuclear fusion energy, brain-computer interfaces, and sixth-generation mobile communications. It emphasizes AI’s central role in China’s strategic industries, with particular focus on developing and supporting AI personnel, ensuring the secure operation of industrial and dual-use AI on Chinese equipment, and facilitating the distribution of AI capabilities across sectors.
To achieve these goals, the FYP encourages the continued reconfiguration of China’s national-scale information technology infrastructure, including the “Eastern Data and Western Computing” (EDWC) project. The EDWC is a strategy that aims to move most of China’s data processing centers away from the densely populated eastern coast to the energy-rich, underdeveloped western provinces. The Chinese government hopes that the initiative will facilitate efficient AI development by limiting energy and affordability constraints.
The 15th FYP also encourages the development of both general-purpose large-scale AI models and industry-specific models. There will likely be an increase in the deployment of “intelligent terminals and intelligent agents” across Chinese industries. In response, Chinese companies will be incentivized to employ locally developed AI capabilities, resulting in a built-in market for China’s domestic AI ecosystem.
The integration of AI with industries is critical to China’s investment in embodied AI. The Chinese government recognizes the importance of large language models, but it also hopes to boost its economy through embodied AI, which if implemented effectively could address labor shortages and production scaling challenges.
The 15th FYP also emphasizes supply chain security’s importance to the development and protection of China’s digital technology and economy, particularly its integrated circuit supply chain. In this vein, the Chinese government is promoting indigenous innovation efforts with the intent to replace foreign suppliers with Chinese firms. Already, the Chinese government has pressured Chinese companies against buying advanced Nvidia chips. Chinese companies will likely face growing pressure to turn away from foreign vendors in favor of indigenous suppliers.
Looking into the future, foreign companies with China exposure will face growing regulatory challenges, downward pressure on export pricing, and rising incidence of unauthorized IP acquisition. Just as importantly, they can expect greater competition from state-subsidized Chinese firms.
