Commentary: Beijing’s Plan to Unlock AI’s Economic Potential

Global investment in artificial intelligence (AI) information technology reached $315.8 billion in 2024 and is expected to grow at a five-year compound annual rate of 32.9% through 2028. Despite this rapid expansion, an MIT survey reported that fewer than 5% of current AI projects have significantly improved productivity or profit margins, suggesting that the anticipated macroeconomic dividends of AI remain largely unrealized for now and are still accumulating[para. 1].

In response to this early phase of AI-driven transformation, China’s State Council issued the “Opinions on Deeply Implementing the ‘AI+’ Action.” This policy framework outlines a comprehensive plan for integrating AI across all sectors of the Chinese economy. The emphasis is on blending technological breakthroughs (“points”) with broad-based industrial applications (“plane”), aiming to foster a structural shift in productivity reminiscent of past technological revolutions such as electricity and the internet. These government-led policies are meant to accelerate the connection between innovation and real-world scenarios, overcoming barriers to widespread adoption, and thereby unlocking AI’s full potential as a driver of new productive forces[para. 2][para. 4].

Currently, the tangible benefits of AI are mostly visible in short-term cost reduction and efficiency, particularly in business process automation such as financial settlement and procurement. Some companies report annual savings of $2 million to $10 million on outsourcing costs. However, while these efficiency gains improve corporate operations, they have not yet translated into broad, systemic increases in macroeconomic productivity. Widespread productivity leaps require overcoming technological and integration barriers and achieving large-scale cross-industry adoption. Presently, only technology and media sectors have begun to demonstrate structural changes, while most industries remain in early-stage or pilot project phases. AI’s overall contribution to GDP is therefore expected to follow an “S-curve”: modest impact in the short term, increasing as adoption broadens, and transformative in the long term as cross-industry connections multiply and reinforce each other[para. 3][para. 4].

A significant challenge identified is the mismatch in AI capital allocation. Currently, 50%-70% of corporate AI budgets are invested in front-end functions such as sales and marketing, which prioritize visible, short-term gains. In contrast, back-office and core operational functions—where AI has the highest potential ROI and long-term impact—are underfunded. This unbalanced distribution weakens total capital efficiency, intensifies productivity disparities between industries (especially between innovative sectors like tech/media and capital-intensive sectors like manufacturing or energy), and undermines the systemic transformation of the economy. Policymakers argue that guiding capital toward under-invested but high-potential sectors is vital for boosting overall productivity[para. 5][para. 6][para. 7][para. 8].

Concerning the labor market, fears of widespread unemployment due to AI are, for now, somewhat overstated. AI’s displacement effects are largely confined to non-core business areas, with layoff rates between 5%-20%. Far more significant is the evolving demand for AI literacy in employees and the shift away from outsourcing, which is changing global labor distribution and necessitating new education and vocational training initiatives. The Chinese government’s policy specifically calls for integrating AI into all educational levels and supporting reskilling and job creation in emerging sectors, ensuring that AI enhances employment quality rather than diminishes it[para. 10][para. 11][para. 12][para. 13][para. 14].

Ultimately, realizing the full promise of “AI+” in China will require persistence, patience, and strong institutional support. The State Council’s Opinions articulate a vision of industrial upgrading and public welfare driven by technological innovation over the next 5-10 years. This process aims to mirror past industrial revolutions and position China as a global leader in smart economic development and AI integration[para. 15].