• China reports 89.6% of large industrial enterprises have undertaken digital upgrades, with 57.7% of equipment now digitally enabled, though definitions range from basic sensors to advanced AI systems.
• Highest digital adoption is concentrated in strategic export sectors: automotive (94.4%), shipbuilding (94.2%), and electronics (93.9%), strengthening China's manufacturing precision and scalability.
• Beijing's coordinated approach to embedding digital infrastructure across its industrial base represents systems-level competition, requiring Western policymakers to focus on substantive outcomes over reported metrics.

China’s state-backed technology think tank, the China Academy of Information and Communications Technology (CAICT (opens in a new tab)), says the country’s manufacturing sector has entered a “mass adoption stage” of digital transformation. According to its 2025 report, 89.6% of large industrial enterprises have undertaken digital upgrades, and 57.7% of industrial equipment is now considered “digitally enabled.”

Those are large numbers. But what do they actually measure?

How China Defines “Digital Transformation”

The report relies on data from China’s Ministry of Industry and Information Technology (MIIT) platform tracking industrial upgrades. In China’s policy context, “digital transformation” does not necessarily mean fully autonomous smart factories.

It can include:

• Installing industrial internet platforms
• Adding sensor-based monitoring systems
• Upgrading ERP/MES software
• Implementing data collection systems
• Automating segments of production lines

In other words, digital participation can range from partial automation to more advanced AI-driven production control. The 89.6% figure likely captures participation in digital upgrading programs, not comprehensive factory-level AI integration. The 57.7% “digital equipment penetration rate” is more telling. That suggests just over half of industrial equipment is digitally connected or data-enabled — a meaningful but not dominant share.

Sector Concentration: Why Autos, Shipbuilding, Electronics Matter

MIIT data show the highest digital adoption rates in automotive (94.4%), shipbuilding (94.2%), and electronics manufacturing (93.9%).

These are export-heavy, capital-intensive sectors central to EVs, advanced electronics, maritime production, and defense-related supply chains. If digitization in these industries is real and deep — not superficial — it strengthens China’s manufacturing precision, cost efficiency, and production scalability.

That has implications for Western reindustrialization efforts.

Is This Propaganda?

The report originates from state-affiliated institutions and is disseminated through official government channels. That does not automatically make it false — but it does mean the framing is strategic. China has long used industrial metrics to signal policy momentum and technological strength. The phrase “deep-water phase” suggests an effort to convey maturity and inevitability.

Key unknowns remain:

• How is “implementation” audited?
• Are upgrades standardized or symbolic?
• What is the productivity delta from these upgrades?

Independent verification from global manufacturing consultancies would strengthen credibility.

Why This Really Matters

If even half the reported transformation is substantive, China is embedding digital manufacturing infrastructure across its industrial base at scale.

That means:

• Faster production ramp-up in strategic sectors
• Higher process consistency and lower defect rates
• Better data integration across supply chains
• Stronger cost control in capital-intensive industries

For the U.S. and Europe, this is not just about automation. It is about industrial systems competition.

The real takeaway: Beijing is aligning digital infrastructure, industrial policy, and sector prioritization in a coordinated way. Whether fully realized or partly aspirational, the direction is unmistakable — China intends to digitize its manufacturing base faster and broader than competitors.

Investors and policymakers should watch outcomes, not slogans.