President Xi Jinping has moved advanced manufacturing to the centre of China’s economic playbook. He used a high-profile national conference in Beijing to tie factory upgrades, AI and chips directly to growth, supply-chain security and modernisation. This shift signals sustained state backing for strategic industries at a time when China is working to offset slower growth, weak consumption and a prolonged property downturn.
Xi’s Advanced Manufacturing Push
At the National Advanced Manufacturing Conference in Beijing, held over two days, Xi’s instructions were conveyed to senior officials and industry regulators. According to Xinhua coverage, he called for China’s advanced manufacturing sector to become ‘bigger and stronger’. He stressed that industrial chains must be more self-supporting and risk-resilient. He also urged smart, green and integrated development across factories to underpin a modern industrial system with advanced manufacturing as its backbone.
State media reports say Xi wants advanced manufacturing to provide strong support for Chinese modernisation and to improve global competitiveness. The focus includes artificial intelligence, next-generation robotics, integrated circuits and smart factories, alongside upgrades to traditional industries. As a result, the policy message is clear: capital and policy resources will keep shifting towards technology-intensive production and away from old growth engines such as property and low-value manufacturing.
The economic backdrop explains the renewed urgency. Reuters and other outlets highlight that Beijing is grappling with slower GDP growth, weak domestic demand, employment pressures and a persistent property market downturn. Therefore, Xi’s conference remarks position advanced manufacturing as a way to raise productivity, stabilise jobs and build more resilient supply chains in the face of geopolitical tensions and export uncertainty. One analyst summary captures the moment: ‘China is pivoting from bricks to bytes, and advanced manufacturing is now the core transmission belt of that shift.’
What Does the Advanced Manufacturing Drive Mean for Investors?
The directive sits within the emerging 15th Five-Year Plan, which puts a modern industrial system and technological self-reliance near the top of China’s agenda. Policy documents and official briefings point to deeper support for integrated circuits, high-end machinery, industrial software, advanced materials and biomanufacturing. In addition, China’s Ministry of Industry and Information Technology has flagged a nationwide ‘AI plus manufacturing’ campaign to spread new-generation information technology across production lines and accelerate the build-out of smart factories and digital industrial parks.
Recent figures from MIIT and related agencies show early traction. Officials say China has built more than 500 excellence-level smart factories, with further renewals planned for traditional industries during 2026–2030. Meanwhile, State Council briefings and media reports indicate plans to nurture around 1,000 pilot companies in emerging sectors and dozens of smart manufacturing complexes by 2035. Beijing is also rolling out hundreds of AI standards and aims to develop hundreds of zero-carbon factories over the current planning period.
These initiatives sit alongside rising domestic capacity in advanced chips. One recent investment bank forecast expects China to meet roughly two-thirds of its advanced-process wafer demand by 2035 as AI-driven chip production scales. That trajectory has direct implications for equipment suppliers and regional component makers across Asia. This trend connects closely to the broader industrial robotics build-out already under way in China’s gigafactories, where automation investment is accelerating in parallel with Xi’s smart-factory mandate.
For investors, Xi’s latest push confirms that capital will keep flowing towards AI hardware, automation platforms, industrial software and green factory solutions in China and across Asia’s supply chains. Regional manufacturing hubs that plug into Chinese smart-factory ecosystems, or supply equipment and tooling to those upgrades, are likely to see more orders and joint ventures over time. However, the emphasis on self-reliance and ‘autonomous and controllable’ industrial chains also signals more onshore substitution in key components, with implications for foreign suppliers of chips and specialised machinery. The 44% jump in Thai AI investment illustrates how quickly neighbouring economies are repositioning to capture spillover demand from China’s smart-factory drive.
Over the next 12–24 months, institutional investors and policymakers will watch how quickly funding, standards and local government implementation align with Xi’s goals, and which subsectors — from AI chips to zero-carbon plants — emerge as the main winners of China’s new industrial power play.
Quick answers
Xi called for China’s advanced manufacturing sector to become ‘bigger and stronger’, urging smarter, greener and more integrated factory development. He stressed that industrial chains must be more self-supporting and risk-resilient to underpin a modern industrial system.
According to MIIT officials, China has already built more than 500 excellence-level smart factories, with further upgrades planned for traditional industries during 2026–2030 and around 1,000 pilot companies in emerging sectors targeted by 2035.
One recent investment bank forecast expects China to meet roughly two-thirds of its advanced-process wafer demand domestically by 2035, driven by scaling AI-focused chip production capacity.
