At the beginning of 2026, China’s AI industry reached a pivotal inflection point: transitioning from technological exploration to the threshold of large-scale commercialization. The policy approach shifted from “framework guidance” to “scenario empowerment,” while industry penetration deepened in manufacturing, end-user devices, and other fields. The AI application sector on the A-share market saw explosive growth right at the year’s start, with the edge AI market size projected to reach the trillion-yuan (RMB) level. This article, drawing on authoritative sources such as Securities Daily, Global Times, and China Daily, dissects the development logic and core highlights of China’s AI industry.

I. Policy Direction: From “Safety Baseline” to “Scenario Empowerment,” Building a Comprehensive Governance System

The steady development of China’s AI industry is inseparable from clear policy guidance and a governance framework. In early 2026, multiple key policies were intensively implemented, delineating both the “safety red lines” for development and the “empowerment direction” for integration, forming a distinct characteristic of “prioritizing both development and security.”

1. Upgraded Top-Level Design: “AI+” Framework Leads Industrial Restructuring

Unlike the traditional “+AI” approach which treats technology as an auxiliary tool, China has explicitly proposed an “AI+” development framework, promoting the restructuring of the entire industrial system around AI’s long-term capabilities. This framework fundamentally changes the positioning of AI, making it a core engine driving transformation across various industries, rather than a simple add-on function.

At the implementation level, on January 13, the Ministry of Industry and Information Technology (MIIT) released the *Action Plan for Promoting High-Quality Development of Industrial Internet Platforms (2026-2028)*. It clearly outlined the implementation of an action plan to integrate and empower industrial internet with AI, promoting the penetration of AI technology throughout the entire industrial chain—promoting discriminative AI applications in scenarios such as production control and risk identification, and exploring generative AI practices in complex scenarios like process optimization and solution design. Prior to this, a joint document issued by MIIT and seven other ministries, the Implementation Opinions on the Special Action for “Artificial Intelligence + Manufacturing,” focused more directly on the two-way empowerment of AI and manufacturing, accelerating the intelligent transformation of manufacturing.

2. Improved Governance System: Defining Legal Boundaries, Balancing Innovation and Safety

The rapid development of AI technology comes with potential risks. China is fortifying the safety baseline by improving its legal and regulatory framework. At the World Internet Conference Wuzhen Summit, Li Mingzheng, Vice Minister of Justice, explicitly stated the need to precisely define the legal “red lines and high standards” for AI development, actively prevent and mitigate potential risks while promoting technological innovation breakthroughs, and ensure the safe and controllable development of AI.

Yang Jianwen, Deputy Director of the Cyberspace Administration of China (CAC), also emphasized that in response to new issues brought by AI such as data security, algorithmic bias, and deepfakes, there is a need to continuously improve the legal and policy framework, refine ethical guidelines, accelerate the formulation of technical standards in key areas, and strengthen law enforcement against illegal misuse of AI. This aims to build a collaborative governance system involving the government, industry, academia, and other stakeholders. This “baseline thinking + dynamic adjustment” governance model avoids stifling innovation with over-regulation while effectively preventing the risks of disorderly technological development.

II. Industry Explosion: Accelerated Commercialization, Edge Computing and Manufacturing Become Core Engines

The release of policy dividends and technological maturity are propelling China’s AI industry into a period of commercial realization in 2026. Both the increased penetration in the consumer end-device sector and scenario implementation in industrial manufacturing show significant characteristics of “large-scale and high-growth.”

1. Impressive Market Data: Edge AI Market Aims for Trillion-Yuan Scale, Sector Leads Gains

The capital market has been the first to perceive the explosive potential of the AI industry. According to Securities Daily data, as of January 15, 2026, the A-share AI application sector index had accumulated a gain of 18.30% since the start of the year, reflecting strong market confidence in the prospects of AI commercialization.

The core growth driver comes from penetration in the end-device market. Calculations from China Securities indicate that in 2026, the AI penetration rate for smartphones and PCs is expected to reach 45% and 62%, respectively, leading to leapfrog growth in the edge AI market size—from 321.9 billion yuan in 2025 to 1.22 trillion yuan in 2029, with a compound annual growth rate of 40%. A research report from Sinolink Securities further points out that 2026 is a crucial year for AI applications to transition from technical validation to large-scale commercial promotion. Large models, serving as both a traffic entry point and a hub for commercialization, have fully validated their core logic.

2. Focus on Implementation Scenarios: Breakthroughs in Vertical Sectors Addressing Core Industry Pain Points

The realization of AI’s value ultimately manifests in its application within specific scenarios. Guo Tao, Deputy Director of the China E-commerce Expert Service Center, stated that when current domestic leading enterprises deploy AI, they all target vertical scenarios with clear demand pain points, ensuring that technology integration directly solves practical problems.

In the manufacturing sector, AI is already widely used in industrial quality inspection, process optimization, and other areas—improving product defect detection accuracy through computer vision technology and optimizing production processes with generative AI, thereby reducing enterprise costs while enhancing production efficiency. In the enterprise services sector, AI-powered e-commerce tools have enabled functions like precise user profile analysis and efficient intelligent customer service response. In the computing power sector, domestic enterprises are accelerating the layout of hardware component production like AI chips and servers, solidifying the foundational support for industrial development.

III. Underlying Logic: The Unique Advantages and Future Direction of China’s AI Development

The rapid rise of China’s AI industry is not the result of a single factor but the product of multiple superimposed advantages, including policy guidance, infrastructure support, and scenario richness. This development model also provides an important reference for global AI governance.

1. Core Advantages: Policy Synergy + Infrastructure Support + Scenario Dividends

Lin Xianping, Executive Deputy Secretary-General of the China City Expert Think Tank Committee, pointed out that policy-side measures such as procurement preferences for vertical-sector AI products and supporting incentives effectively reduce the cost pressure for enterprises during the initial commercialization phase. Simultaneously, the rapid advancement of intelligent computing infrastructure provides ample underlying computing power for AI applications, further lowering the hardware threshold for technological implementation. Furthermore, China’s vast manufacturing system and rich consumption scenarios provide a “testing ground” and “application field” for AI technology, forming a virtuous cycle of “technological iteration—scenario validation—commercial monetization.”

2. Future Direction: Deepening Integration + Participation in Global Governance

Looking at development trends, “AI+” will further extend into more industries. Beyond manufacturing, AI applications in healthcare, logistics, finance, and other fields will gradually scale up. At the technological level, the lightweight and edge-device orientation of large models will become key breakthrough directions to better adapt to various end-devices and vertical scenarios.

Globally, China’s AI development experience is attracting international attention. Singaporean media noted that China alleviates the “fragmentation” issue in AI governance through centralized coordination and achieves dynamic policy adjustment through its five-year plan system. This model provides important insights for addressing global AI governance challenges—the real competition in the AI field is not merely about technology, but about institutions and governance capabilities. In the future, China will continue to participate in global AI governance, promoting the establishment of fair, reasonable, inclusive, and open international rules, so that AI technology can better serve all of humanity.

Conclusion: AI Restructures New Drivers for China’s Economic Growth

A series of signals at the beginning of 2026 indicate that China’s AI industry has moved beyond the exploratory phase of “wild growth” into a high-quality development stage characterized by “policy regulation + commercial maturity.” The implementation of the “AI+” framework is not only restructuring traditional industries like manufacturing and consumer electronics but also cultivating new economic growth points.

Compared to the singular focus on technological competition seen in some countries, China’s AI development path, which “prioritizes both development and security, and integrates technology with industry,” demonstrates greater sustainability. As commercialization continues to deepen and the governance system不断完善 (constantly improves), AI will become a core driver promoting high-quality economic development in China and will occupy a more important position in the global AI landscape.