China’s Traditional Industries Transform Under New Plan

As China enters the first year of its 15th Five-Year Plan (2026-2030), traditional industries—which account for over 80% of the country’s manufacturing sector—are undergoing a sweeping transformation driven by technological innovation, digitalization, and green development. A comprehensive Xinhua News investigative report published August 6 documents how established manufacturing sectors across more than ten provinces are being repositioned as the foundation of China’s modern industrial system.

Policy Framework and Strategic Direction

The 15th Five-Year Plan places “Building a Modern Industrial System and Consolidating the Foundation of the Real Economy” as the top strategic task, with a dedicated chapter on optimizing and upgrading traditional industries. The July 30 Politburo meeting further reinforced this direction, calling for the continuous promotion of traditional industry transformation in its deployment of second-half economic work.

President Xi Jinping has emphasized that “the real economy cannot be lost, and the traditional industries within the real economy cannot be lost,” stressing that transformation and upgrading must be achieved through scientific and technological innovation. As part of this effort, the government has allocated 200 billion yuan in ultra-long-term special treasury bonds to support large-scale equipment renewal, according to Sina Finance.

The economic stakes are significant. In the first half of 2026, China’s GDP reached 69.6 trillion yuan, up 4.7% year-on-year, with industry contributing over 35% to economic growth and manufacturing value-added rising to 26.2% of GDP, as reported in a companion Xinhua analysis.

Climbing Toward High-End Manufacturing

China’s shipbuilding industry exemplifies the push toward high-value production. In the first half of 2026, the three core indicators—completed tonnage, new orders, and order backlog—all reached historic highs, maintaining global market leadership. On July 22, Hengli Heavy Industry launched three 306,000 DWT very large crude carriers (VLCCs) and one 325,000 DWT very large ore carrier (VLOC) simultaneously from a single dock, with a construction cycle of just 88 days—the shortest dock period for simultaneous construction of ultra-large vessels in global shipbuilding history, according to Liaoning Daily.

Days later, Hengli signed contracts with three international shipowners for six ultra-large ammonia carriers (VLACs), marking a breakthrough in high-value-added gas carrier construction. The company’s deputy general manager, Wang Lei, noted that AI systems have dramatically improved production planning efficiency—what once took two people over two weeks to schedule can now be largely completed by AI in about 30 minutes, as reported by Beijing Daily.

Similar high-end transformation is visible in Anping County, Hebei Province—known as China’s “Wire Mesh Hometown.” The county now adds more than 20 new products annually, including 500-mesh-plus high-precision stainless steel mesh for semiconductor packaging and high-temperature-resistant vibrating screens for aviation engine components. Deputy County Mayor Zhao Chaoying highlighted that a stainless steel cleaning cloth replacing traditional steel wool balls “can sell for 10 euros each in Europe.” In the first half of 2026, the cluster’s revenue grew 6.9% year-on-year.

Digital-Intelligent Transformation Across Sectors

Digitalization is reshaping even the most traditional industries. In Chongqing’s Fuling District, the pickle industry—a staple of Sichuan cuisine—has been transformed through an “Industry Brain” platform built since 2024. Nearly 20,000 farmers now use smart farming via mobile apps, and the contracted production rate for 2025 green mustard head orders exceeded 80%. “Rich data has become the new engine for industrial upgrading,” said Huang Xiaolin, deputy director of the Fuling District Pickle Industry Development Center.

China has built a four-tier smart factory system, with over 56,000 basic-level, 9,000+ advanced-level, and 500+ excellence-level smart factories, plus 15 leading-level smart factories. More than 30% of above-scale manufacturing enterprises have adopted AI technology applications. The smart manufacturing equipment, industrial software, and system solutions industry now exceeds 4.5 trillion yuan.

Shenyang Blower Group, through digital workshop construction, saves over 1.9 million sheets of drawings annually, achieving green, low-carbon, and cost-reduction benefits. In Shandong, Caoxian Jingrui Machinery Lock Co. increased output by over 30% and reduced production costs by over 15% through comprehensive technological renovation. “Traditional industries do not represent backward productivity,” said General Manager Yue Zongfa, echoing a sentiment shared across surveyed enterprises.

Green Development as Competitive Advantage

Environmental transformation is emerging as a market differentiator. Hesteel Shigang Company, founded in 1957, relocated to Shijiazhuang’s Jingxing Mining District in 2020, abandoning the blast furnace long-process route entirely in favor of full scrap steel electric arc furnace short-process steelmaking. This transition reduces particulate matter, SO2, and NOx emissions by 75% compared to traditional methods, with carbon emissions also reduced by 75%.

Zhang Xiaohui, deputy plant director of Shigang Rolling Mill, recounted how an international bearing industry leader, after searching for green steel suppliers across multiple countries, told him: “I can finally tell my customers that we found a green steel supplier in China that meets low-carbon requirements.” The company’s bearing steel now holds unique carbon footprint competitive advantages in international markets.

In the power sector, the Datang Yuncheng 630C National Power Demonstration Project—the world’s first 630°C ultra-supercritical coal-fired demonstration units—achieved full capacity operation in late July. The two 1-million-kW units consume only 256.28 grams of coal per kWh, reducing carbon emissions by 540,000 tons annually, as reported by CNR. The project broke through the 50% thermal efficiency ceiling for coal-fired power generation, according to Xinhua’s earlier coverage.

Nationally, China has cultivated 451 industrial product green design demonstration enterprises and formed nearly 200 green design product evaluation standards.

Broader Economic Context

The transformation comes amid a broader economic rebalancing. Coal-fired power generation’s share of total electricity fell below 50% for the first time, and unit GDP energy consumption declined 1.9% year-on-year in the first half of 2026. The first-half GDP increment of 3.6 trillion yuan was the largest H1 increase in five years.

As China Daily noted in its coverage of the industry transformation series, the country is simultaneously upgrading traditional industries, strengthening emerging industries, and laying out future industries. This three-pronged approach reflects the understanding that “traditional industries are not synonymous with backward productivity”—through technological upgrading, they can serve as vehicles for developing new quality productive forces.

What to Watch For

As the 15th Five-Year Plan unfolds, several key questions will shape the trajectory of China’s industrial transformation: Will the pace of digital adoption among smaller manufacturers accelerate? Can green steel and other low-carbon products gain further traction in international markets? And how will the balance between traditional industry upgrades and emerging sector growth evolve?

Xin Yongfei, director of the Policy and Economics Research Institute at the China Academy of Information and Communications Technology, told Xinhua that “new momentum supporting and leading economic development remains very strong, and policy effects continue to materialize.” The coming quarters will test whether China’s traditional industries can sustain this momentum of renewal—transforming from the “old economy” into a competitive force in the new economic landscape.