Fertile testing ground for tech

China has unique advantages in forming an application scenario ecosystem so that technological breakthroughs can be translated into tangible productivity

Driving high-quality development through innovation and accelerating the cultivation of new quality productive forces are high on the agenda of the 2026 two sessions — the annual meetings of China’s National People’s Congress and the Chinese People’s Political Consultative Conference National Committee, which opened in Beijing on March 5 and March 4, respectively.

Application scenarios have emerged as a crucial and scarce resource, serving as an important policy tool to ease market access, optimize the allocation of production factors, and foster the in-depth integration of technological and industrial innovation. This trend is equally prominent in international practice. The United States has launched the National Artificial Intelligence Initiative and developed federal research platforms, focusing on validating new technologies in real-world settings. The European Union has enacted the Artificial Intelligence Act, establishing regulatory sandboxes and building cross-sectoral testing networks to accelerate technological maturity and promote industrial application through open scenarios. Against this backdrop, accelerating the cultivation and openness of new scenarios and enabling their large-scale application are key to ensuring that innovations successfully enter the market and are converted into productive forces.

China possesses unique advantages in scenario development. First, its supersized market provides extensive room for the development of new technologies, products and business models. In the smart home sector, for instance, China is home to one of the world’s largest home appliance manufacturing and consumer markets, with over 400 million urban households. Leveraging this massive user base and ever-upgrading consumer demand, products such as smart appliances, security systems and lighting are iteratively optimized in real-life scenarios, reducing costs and enhancing performance through economies of scale.

In the digital economy, China’s enormous digital consumer market serves as a robust pillar supporting technological innovation and the development of an application ecosystem. In the first half of 2025, its digital consumption reached approximately 9.37 trillion yuan ($1.3 trillion), accounting for nearly half — around 46.5 percent — of total household consumption. Its annual parcel delivery volume also hit a record high, approaching 199 billion items. This expansive online transaction and logistics system offers vast application space for new business models such as the platform economy, express delivery and supply chain management, laying a solid foundation for enterprises to achieve large-scale operations and sustainable business cycles.

Second, China’s strength in abundant scenario resources offers a massive testing ground for new technologies, products and business models. Leveraging its huge new energy vehicle market and complex, diverse urban traffic environments, China is speeding up the construction of 20 pilot cities for vehicle-road-cloud integration. A total of over 35,000 kilometers of test and demonstration roads have been opened nationwide.

Beijing’s cutting-edge autonomous driving demonstration zone now houses more than 1,000 smart intersections. Shanghai has opened 5,238.82 km of test roads across the city, covering about one-third of its municipal area. Cities including Shenzhen, Guangzhou, Wuhan and Chongqing have also established unmanned driving demonstration and operation zones. They continuously validate technologies under full-scenario conditions — from complex urban areas and overpasses to tunnels and ports — greatly facilitating the rapid maturation of intelligent connected vehicle technology and its industrial deployment.

Building on these advantages, national support for scenario development has been continuously strengthened. Top-level design is being refined, and local practices are advancing with active innovation, together forming a virtuous cycle of central-local coordination and systematic advancement.

On Nov 7, 2025, the General Office of the State Council issued implementation guidelines on accelerating the cultivation and openness of scenarios and promoting large-scale application of new scenarios, marking the first systematic nationwide deployment for scenario cultivation, emphasizing the establishment of an open and shared innovation ecosystem, promoting key projects, and clarifying efforts to deepen the integration of new infrastructure, smart manufacturing, the digital economy and social governance. Subsequently, on Jan 7, eight departments including the Ministry of Industry and Information Technology released implementation guidelines for the “AI+manufacturing” plan. The document mentions the word “scenario” 51 times, highlighting practical application as a driving force for deepening the implementation of AI technology in manufacturing.

Meanwhile, various localities are actively exploring scenario development practices tailored to their regional characteristics. For example, Guangzhou has established an industrial internet innovation demonstration zone, collaborating with leading manufacturing enterprises to upgrade digital production lines and optimize intelligent quality management. Hangzhou has upgraded its City Brain 3.0, integrating data across transportation, urban management, emergency response, water resources and other fields to enhance the digital, intelligent and refined management of the city. Jiangsu province is promoting regional agricultural digital scenarios, facilitating the large-scale application of intelligent sensing and precision agriculture technologies in rural revitalization.

This combination of top-level design and local practice is driving deep cross-sectoral industrial integration, upgrading social governance services significantly and consolidating the infrastructural foundation for scenario development.

Currently, scenario cultivation and openness have entered a new phase, shifting from locally initiated explorations to systematically integrated, nationally coordinated advancement. However, challenges persist: insufficient innovation in scenarios involving new factors of production, obstacles in the industrial application of new technologies, and the imperative to refine tiered and categorized regulatory frameworks. Moving forward, efforts can focus on three key aspects.

First, foster an open and shared innovation ecosystem with synergistic stakeholders. Government departments and State-owned institutions should proactively open up real-world application scenarios, cut costs for private enterprises and research institutions to validate and test technologies, and enable their rapid iteration in practice. The authorities for emergency management, water resources, forestry and grassland, among others, should refine technical standards, safety specifications and ethical guidelines to establish clear rules for new scenario applications. Local governments should leverage their existing industrial strengths for differentiated exploration, prioritize high-value niche scenarios and cross-regional applications, and develop replicable and scalable practical models.

Second, implement an action road map for scenario cultivation and innovation. Focusing on industrial frontiers and key technological bottlenecks, authorities and governments at all levels should progressively release lists of application-scenario projects. This will expand scenario supply and infrastructure support, enabling technologies to be continuously optimized and upgraded through real-world use. Enterprises can also publish scenario demand lists, break down macro goals into specific objectives, and attract global innovators through mechanisms such as “challenge-based project selection”. This would leverage healthy market competition to drive the implementation of high-quality results.

Third, establish a practical pathway from pilot incubation to large-scale application. Scenario development should avoid redundant layout and planning by strengthening central-local information sharing and coordinated planning. For cutting-edge fields such as AI and biotechnology, regulatory sandboxes should be established. This allows for product testing and business simulation within a controlled risk environment, backed by fault tolerance, error correction and orderly exit mechanisms. Simultaneously, market-oriented scenario service intermediaries should be promoted to improve the organization and sophistication of open scenario innovation and facilitate the smooth transition from pilot incubation to widespread adoption.

Looking to the 15th Five-Year Plan period (2026-30), cultivating and opening application scenarios is not merely an innovation tool but a crucial lever for optimizing resource allocation and driving industrial upgrading. Only by rapidly establishing an open, shared, collaborative, efficient and scalable scenario ecosystem can technological breakthroughs be translated into tangible productivity within the planning cycle. Such an ecosystem would also transform institutional advantages into developmental strengths and lay a solid foundation for high-quality growth during the period.

The author is the director of the Macroeconomy Research Office at the Economic System and Management Institute at the National Development and Reform Commission.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.