Will China’s innovation systems drive the next growth cycle?

For years, China’s growth story was defined by scale: the world’s largest manufacturing base, one of the largest consumer markets and some of the fastest-growing digital platforms. This remains true, yet China’s next phase of growth is shifting from scale itself to the innovation systems that turn scale into speed and capability.

China’s 15th Five-Year Plan centres the next growth cycle on new quality productive forces – a model driven by innovation and advanced production rather than traditional labour or investment. Under this new model, the decisive question shifts from what China can invent to how fast those inventions can scale.

While the country's size and industrial depth create unique advantages, its experience also highlights the challenges of translating technological advances into sustained productivity gains, workforce adaptation and long-term economic value.

Success will be measured by how quickly technologies move from lab to deployment, from pilots to commercial scale, and from breakthroughs to industry-wide adoption.

Advanced manufacturing remains the foundation of this shift. Its importance is no longer only about output or production capacity, but also about the operating environment it creates for applied innovation. China’s dense networks of suppliers, factories, logistics systems, engineers, digital platforms and end markets give new technologies a place to be tested, refined and scaled against real industrial constraints.

This aligns closely with the World Economic Forum’s Global Lighthouse Network, which shows how leading manufacturers are using AI, automation, industrial data and production models to achieve measurable gains in productivity, resilience, sustainability and customer centricity. The next frontier of manufacturing extends into biomanufacturing, which uses renewable biological inputs instead of fossil-based feedstocks to produce chemicals, advanced materials, medicines, fuels and consumer goods. As biological technologies become increasingly integrated into industrial production, biomanufacturing is emerging as a new production paradigm alongside digital and physical technologies, with the potential to reduce emissions, improve resource efficiency and create new value chains across industry, agriculture and services.

Through the Forum’s Commercial Bioeconomy Initiative, a key focus is enabling biological innovation to scale from laboratory breakthroughs to commercial deployment. China’s biomanufacturing sector has already reached nearly RMB 1 trillion in scale and is projected to grow to approximately RMB 1.8 trillion by 2030, positioning the country as a critical arena for translating biological innovation into industrial competitiveness, supply-chain resilience and long-term economic growth.

AI is becoming the intelligent layer across China’s next phase of transformation, even if like other economies, the country faces questions around implementation, governance, talent development and the measurement of real economic impact.

AI's significance lies not only in model development, but also in application at scale. China’s rich industrial scenarios, large digital user base, dense supply chains and fast-moving enterprise ecosystems give AI a broad set of real-world environments in which to be tested and refined. With more than 6,000 AI enterprises and a core AI industry expected to exceed RMB 1.2 trillion, China’s “AI Plus” direction reflects the 15th Five-Year Plan’s broader shift from digitalization to intelligentization across the real economy.

The next question is outcomes. As AI moves from pilots into core operations, public systems and everyday organizational workflows, usage alone is no longer a sufficient measure of progress. The next phase requires systematic transformation that delivers tangible results. Large-scale adoption does not automatically translate into productivity gains or broader value unless organizations can redesign processes, strengthen data foundations and equip people to work effectively with AI.

Addressing these challenges requires clearer evidence of what works in practice and a stronger understanding of the conditions that enable scaling and impact. MINDS and AI Transformation of Industries contribute by identifying deployable solutions that demonstrate real-world value, while AI-First Enterprises explores the business model and partnership shifts needed as AI becomes embedded in the core of organizations.

For China, the next AI opportunity is to convert application momentum into measurable economic, organizational, societal and environmental gains.

Energy will determine how far China’s next innovation cycle can scale. The next phase of energy innovation is defined by system integration. The convergence of energy and digital technologies is enabling seamless optimization across increasingly complex, multi-vector energy systems. Emerging technologies such as advanced storage, hydrogen, advanced nuclear and digitalized grids are therefore best understood not in isolation, but as enabling components of an integrated, intelligent energy system that enhances efficiency, flexibility and industrial competitiveness.

The 15th Five-Year Plan signals a shift from renewable build-out alone to a more integrated energy system, with greater emphasis on grid flexibility, storage, future energy technologies and compute-energy coordination. As AI deployment, data centres, electrification and intelligent infrastructure expand, reliable, affordable and increasingly cleaner power is becoming a strategic condition for technological competitiveness.

China’s renewable capacity provides a strong foundation, but the harder task is system integration: aligning power generation, grid infrastructure, long-duration storage, computing demand and the material value chains behind batteries, solar, EVs and semiconductors. This also means moving from single-asset expansion to system-level planning, where energy supply, industrial demand, digital infrastructure and resource security are coordinated together. This is where the Forum’s work on industrial cluster transition and future power systems becomes especially relevant.

Both point to the same shift: energy is no longer a background input, but an enabling system for innovation, security resilience and productivity. If AI is becoming the engine of next-generation growth, the power system will determine whether that engine can run securely, efficiently and at scale.

China’s innovation edge also depends on the quality of its human capital and the adaptability of its institutions and society. The 15th Five-Year Plan’s emphasis on investing in people reflects a broader recognition that future competitiveness will be defined by the quality of growth and how it contributes holistically to the well-being of communities and the living environment.

This is dependent not only on physical or digital infrastructure, but also by the ability of individuals, organizations and public systems to continuously learn, adapt and innovate to transform the way we consume and produce amid accelerating technological change. China’s large, highly digital and fast-adopting market gives new technologies access to millions of real-world users, workers and enterprises, accelerating learning through adoption and iteration. This makes talent transformation a system-wide issue that cuts across all of society, not only a corporate training agenda.

As the Forum’s Future of Jobs Report highlights, the next wave of competitiveness will depend increasingly on how effectively economies can redesign skills systems, workforce models and labour markets around AI-driven transformation. Future industry development and growth will depend on whether leaders across sectors and industries can work with AI, redesign roles and build the long-term human capital needed to foster outcomes that are for people and planet.

This is why collaboration matters. Many decisive questions now sit before market competition itself: how to measure the real impact of AI, diffuse advanced technologies across wider industrial systems, align energy and compute planning, and prepare people and institutions for more intelligent forms of work.

These are not challenges any single organization, sector or country can solve alone. They call for shared vision, practical use cases, regular exchange and cross-sector learning across industries and countries. This is where the World Economic Forum contributes: creating a trusted space for stakeholders to discuss what works, compare adoption pathways and translate early lessons into scalable models for responsible transformation.

China’s experience is highly relevant to this global conversation. As one of the world’s largest innovation testbeds, China offers practical lessons on how emerging technologies move from policy signal and pilot application into business models, industrial transformation and broad-based adoption. Its next innovation edge comes not only from invention, but from the ability to connect, operationalize and scale technologies across complex real-economy systems.

For global companies, these lessons can provide useful reference points for accelerating AI adoption, strengthening industrial development efforts, and shaping models of growth that will generate more prosperity and sustainable outcomes for the next era.

The Forum is spotlighting how innovation moves from breakthrough to scale to impact ahead of Summer Davos in China, 23–25 June 2026. Follow the latest.