The Chinese government is placing large bureaucratic and financial bets on upgrading and digitizing its already dominant manufacturing base. It is attempting to use advances in computer vision, robotics, autonomous vehicles, and 5G to supercharge the efficiency and increase the productivity of factories across the country. Such efforts have coalesced around one key term: the “industrial internet” (工业互联网).
To that end, Beijing has churned out a series of important policy documents over the last three years aimed at fostering the industrial internet. Collectively, these documents attempt to chart a course and provide the policy support for the technological transformation of China’s industrial base, allowing the country to retain its title as world’s manufacturing powerhouse even as wages rise for Chinese workers.
Although the concept of the industrial internet is hardly new, the successful application of it across Chinese industry would prolong and elevate the “Made in China” era, powering China as it moves up value chains, vaults over the middle-income trap, and likely surpasses the United States as the largest and most important global economy over the next decade.
Below I will look first at the central government guidance documents, and then zoom in on one province (Guangdong), one city (Huizhou), and one project (a TCL factory) for a window into the on-the-ground implementation of the industrial internet.
The Policy Matrix
The Chinese government’s technology initiatives are rarely driven by a single authoritative “plan.” Instead, they manifest as an “interlocking matrix” of policy documents issued by central, provincial, and local government bodies and Chinese Communist Party agencies. The central government guidance provides “top-level design”, and local plans follow with details and incentives for concrete implementation.
The bureaucratic push to develop the industrial internet began in November of 2017, when China’s State Council issued its “Guiding Opinion on Deepening the ‘Internet + Advanced Manufacturing’ to Develop the Industrial Internet.” That document signaled the high importance the central government placed on the initiative and laid out targets similar to those stated in China’s national artificial intelligence plan: by 2025 create an “internationally competitive” industrial internet ecosystem, and by 2035 create the world’s leading one.
While these headline priorities trickled down to provinces around the country, the central government continued to drill down. In June 2018, the Ministry of Industry and Information Technology (MIIT) issued a national industrial internet “action plan” for 2018-2020, and it tacked on a special plan for “5G+Industrial Internet” projects in November 2019.
Those efforts received further top-level endorsement in 2020 when Politburo Standing Committee member Wang Yang chaired a symposium on the industrial internet, and President Xi Jinping delivered a congratulatory letter to the inaugural 5G+Industrial Internet Conference that Vice Premier Liu He keynoted.
Just four months after the central guidance was issued, Guangdong’s provincial government issued its own implementation plan (see Table 1). The city government of Huizhou in eastern Guangdong soon followed in the province’s footsteps. It isn’t a surprise that Guangdong wants to lead in this effort, given that it is both the epicenter of China’s manufacturing ecosystem and home to some of China’s tech giants.
Table 1. Central and Guangdong Provincial Government Industrial Internet Plans Note: CPPCC = Chinese People’s Political Consultative Conference.
Both the Guangdong provincial and Huizhou city governments awarded subsidies for pilot projects, with Guangdong offering discounts of at least 30% on use of public cloud platforms for local businesses to “Get on the Cloud, Get on the Platform.” In January, Huizhou pledged 100 million yuan (~$14 million) in subsidies for intelligent manufacturing projects that receive national or provincial recognition, followed in March by allocating an additional 10 million yuan (~$1.4 million) for six industrial internet projects. Guangdong province followed closely behind with its own “5G+Industrial Internet” plan, including naming eight demonstration parks.
Included in both Huizhou and Guangdong’s project lists was a 5G-connected and highly automated LCD factory for TCL, a publicly listed consumer electronics original equipment manufacturer for brands like Roku, Alcatel, and RCA. The factory’s 5G upgrade was a joint venture between four players: TCL, China Mobile, Huawei, and Beijing-based robotics startup ForwardX Robotics.
Together they created the data infrastructure, technology, and equipment needed for the factory’s new features: a mobile edge computing platform for quick access to internal databases, autonomous mobile robots delivering parts throughout the factory, and 5G-powered augmented reality headsets that can remotely guide technicians on the factory floor.
These alleged improvements have been highly touted in local media coverage, with the local government holding up the factory as an example of the kind of efficiency improvements made possible by the industrial internet.
What does all this add up to? The answer is not entirely clear at the moment. Anyone who has spent time on the ground at Chinese businesses knows there can be wide chasms between national policy, demonstration projects, and real-world progress.
But China does have many of the raw ingredients needed to lead the world in the industrial internet: a massive industrial base, armies of experienced industrial and machine learning engineers, and a government willing to spend to accelerate adoption. Given the stakes involved, the successes and boondoggles of China’s industrial internet plans deserve close attention.
Matt Sheehan is a Fellow at MacroPolo. You can find his work on tech policy, AI, and Silicon Valley here.
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