How China promotes high-quality development in push for innovation

China's rapid advancement in artificial intelligence (AI) has once again captured global attention as Jensen Huang, CEO of U.S. tech giant Nvidia, told reporters that "AI is moving very fast in China" during his ongoing visit to Beijing.

Huang's statement is not just a diplomatic gesture. Earlier this year, China's AI startup Deepseek gained widespread attention, overshadowing Nvidia, one of the global leaders in AI, and triggering a sell-off in AI stocks. This surge in Chinese innovation is part of a broader trend, with companies like iFlytek, SenseTime and DJI receiving global recognition for their advances in facial recognition, voice recognition, and drone technologies.

The rise of these Chinese tech companies, particularly in AI, is seen as a powerful engine for the country's high-quality development, which emphasizes a shift from crude to intensive growth, focusing on innovation-driven development.

The new industries, business models and economic formats represented by "Artificial Intelligence+" are accelerating, said Zheng Shanjie, head of the National Development and Reform Commission (NDRC), at a recent press conference.

Zheng noted that the AI-related economy's value-added output in 2024 exceeded 24 trillion yuan (roughly $3.3 trillion), equivalent to the combined GDP of Beijing, Shanghai and Guangdong.

Yuan Da, secretary general of the NDRC, said the innovation has become the main driving force propelling high-quality development in China.

According to Zheng, China's economy grew at an average annual rate of 5.5 percent during the first four years of the 14th Five-Year Plan period (2021-2025), and it is projected to see an economic increment of over 35 trillion yuan by 2025.

Landmark innovations during 14th Five-Year Plan period

The ongoing 14th Five-Year Plan has seen major achievements, with AI standing out as one of the key drivers of China's technological advancements.

At the press conference, Zheng highlighted several landmark "firsts" that underscore China's innovation milestones, such as the Fujian aircraft carrier – the first domestically built aircraft carrier equipped with electromagnetic catapults, the "Aida Magic City" – the first domestically built large cruise ship, and the world's leading large liquefied natural gas transport ships.

Zheng also noted the completion and operation of China's first space station, Tiangong, and the historic Chang'e-6 mission, which successfully returned the first samples from the far side of the Moon.

In addition to those firsts, the following technological innovations are also worth noting: China's 5G technology is leading the world, and Xiaomi EV's super factory (Beijing) achieves a high automation with over 700 robots working in collaboration to produce a new car every 76 seconds.

Innovation capabilities enhanced

The 2024 Global Innovation Index report, released by the World Intellectual Property Organization, confirms China's growing technological prowess. The country now boasts 26 innovation clusters among the global top 100, up from 24 last year, maintaining its top rank for the second consecutive year.

Behind this rapid development is a significant increase in R&D investment. In 2024, China's total R&D expenditure reached 3.6 trillion yuan, ranking second globally, Zheng said, adding that R&D expenditure has surged nearly 50 percent from 2020 to 2024, with R&D intensity hitting 2.68 percent, approaching the average of OECD countries.

Besides, China has optimized its fiscal and taxation policies to further boost technological innovation. Since 1996, the policy of additional deductions for enterprise R&D expenses has been continuously expanded, with the deduction ratio increased and procedures simplified. 

In 2023, enterprises enjoyed cumulative deductions on R&D expenses amounting to 1.85 trillion yuan, demonstrating the success of these policies in encouraging corporate investment in innovation.

Moreover, China is actively cultivating talent in high-demand sectors. Many regions have established AI schools and launched AI talent programs to meet the growing demand for skilled professionals.

As the 14th Five-Year Plan draws to a close, a new development strategy for the next five years will soon be formulated. Huang Qifan, academic advisor to the China Finance 40 Forum, stated in June that China's economy is poised to enter a critical phase of fully promoting the development of new productive forces during the 15th Five-Year Plan (2026-2030).

Wan Zhe, an economic expert and professor at Beijing Normal University, emphasized that strengthening technological innovation capabilities is crucial. He urged China to further enhance its control over core technologies, boosting the technological content and added value of products to stay competitive in the face of global technological and industrial challenges.