7156707

Home -

Economic Watch: Turning the GEAR: How China drives global supply chains upgrading

Xinhua
| June 25, 2026
2026-06-25

BEIJING, June 25 (Xinhua) -- Gears are among humanity's oldest inventions. One turns, the next follows. If any single gear jams, the whole machine stops. Global supply chains work the same way. They are woven together, and smooth operation depends on each link meshing with the next.

China has long been both a participant and a contributor to global supply chains -- building green infrastructure, opening wider, deploying AI across industries, and strengthening resilience. These four dimensions add up to one acronym: "GEAR": Green, Ecosystem, AI, Resilience.

The ongoing fourth China International Supply Chain Expo (CISCE) held in Beijing is the world's first national-level expo dedicated exclusively to supply chains. More than 1,200 exhibitors from 85 countries, regions and international organizations are taking part, with foreign firms accounting for over 36 percent of the total. This is where companies don't just showcase products, but entire value chains, and where partners and solutions are found.

GREEN

China's total installed power generation capacity reached 4.01 billion kilowatts by the end of May 2026, putting China at the top of the world. Non-fossil energy has emerged as a major driver of the growth, accounting for 62 percent of total installed capacity, up from 25 percent in 2010.

It has also engaged in green energy project cooperation with more than 100 countries and regions. Over the past decade, China has helped reduce the global average cost of wind and solar power projects by more than 60 percent and 80 percent, respectively, making a substantial contribution to the green transformation of global supply chains.

Walk through the clean energy chain zone at the expo, and the story unfolds in tangible ways.

Ming Yang Smart Energy's booth showcases its wind, solar, smart electric and energy storage innovations, with operations in over 60 countries across Asia, Europe, Africa and the Americas. "China's complete industrial chain, mature supply chain and cost advantages make our products highly sought after," said a booth representative, adding that the company hopes to export more Chinese technology to stabilize global clean energy chains and support green development worldwide.

In the smart vehicle chain zone, more than 80 upstream and downstream companies span the entire automotive value chain -- from lithium battery materials to intelligent connectivity, charging infrastructure and battery recycling. Raw material suppliers like Baowu Steel, core component makers like CATL and BOSCH, and automakers including Volvo, XPENG and Tesla all share the same space, demonstrating how vehicle manufacturers and suppliers collaborate on innovation.

John Grimes, chief executive of the Renewable Energy Council Asia Pacific, told Xinhua, "China has invested into energy transition with foresight, working with other countries to bring cost curve way down, and I think we should build on those areas of natural strength that is really a gift to the world."

ECOSYSTEM

Unlike traditional trade fairs focusing on goods or services, CISCE pioneers a unique "chain-centric" model that visualizes end-to-end industrial collaboration. In each exhibition hall, upstream, midstream and downstream companies cluster in adjacent booths, visually demonstrating their interdependence and synergy.

Honeywell, a four-time exhibitor, built its largest-ever booth and, for the first time, brought nearly 100 local supply chain partners to exhibit together. The innovations in hardware systems and software on display were developed by Chinese teams and their partners, tailored to local market needs. "The expo is not just a stage for showcasing innovation; it is a vital link for us to deeply integrate into China's innovation and value chains," said Yu Feng, president of Honeywell China.

At last year's expo, McDonald's China, Syngenta Group and McCain, all in the same green agriculture chain zone, deepened their discussions. This year, they signed a formal MoU at the expo to launch a potato supply chain pilot project. "The expo turned us from exhibitors into partners in sustainable agriculture and global procurement, turning intra-chain collaboration into cross-chain cooperation for win-win outcomes," Gu Lei, chief impact officer of McDonald's China noted.

China is evolving from a critical production node into an orchestrator of industrial ecosystems -- not only bridging supply and demand, but also driving global industrial chains toward greater efficiency, stronger resilience and broader inclusiveness through technological innovation, market opening and connectivity, said Liu Ying, a professor at the Chongyang Institute for Financial Studies at Renmin University of China.

This shift is underpinned by the country's unwavering opening-up. In 2024, China removed all market access restrictions for foreign investors in the manufacturing sector. During the five-year period, China will expand market access and open up more areas, particularly in the service sector, promote orderly expansion of opening up in telecommunications, the internet, education, culture, medical care, and other sectors, as well as reduce the negative list for foreign investment.

This commitment to openness is embedded in the "Beijing Initiative" issued at the expo's opening ceremony. The document calls for supporting an open, inclusive, and mutually beneficial innovation environment, as well as the deep integration of industrial and technological innovation, so that technological achievements can benefit more countries and enterprises, and a more enabling ecosystem can be fostered for the upgrading and development of industrial and supply chains.

AI

This year's expo established a special artificial intelligence (AI) zone for the first time, bringing together leading Chinese and foreign AI companies such as Alibaba, Intel, Nvidia, and Qualcomm, and presenting the full AI ecosystem, from data collection and smart computing to real-world applications.

Dong Bin, deputy general manager of the Brand Market Center at iFlytek, noted that, by leveraging AI for data interpretation, smart decision-making and operational coordination, supply chains are moving beyond mere connectivity toward greater agility and intelligence.

Behind this upgrade lies the collective rise of China's AI industry. In 2025, the number of AI enterprises in China exceeded 6,000, with core industry scale projected to surpass 1.2 trillion yuan (about 176 billion U.S. dollars), while domestic large models have come to lead the global open-source ecosystem.

Nvidia CEO Jensen Huang said in a video address, "China is one of the world's great centers of technology and industry. The engineers are excellent. Developers move fast, companies build at remarkable scale."

What is more striking is that AI is no longer a standalone "technology island" on display, it has permeated every single industrial chain. For example, in the advanced manufacturing chain, AI drives industrial robots toward higher-precision flexible production. In the green agriculture chain, AI-powered breeding and smart farming are revitalizing traditional agriculture. In the healthy living chain, AI-assisted precision medicine is shortening drug development cycles.

In the future, industrial standing will no longer be determined primarily by resources and labor, but by new production factors such as data, computing power, green electricity and innovation ecosystems, said Professor Liu Ying, adding that China is driving a shift in global value chains to enable more countries to access advanced technologies and industrial opportunities at lower costs.

RESILIENCE

According to the Global Supply Chain Promotion Report 2026 and the Global Supply Chain Resilience Index Matrix released by the China Council for the Promotion of International Trade at the expo, the promotion index, connectivity index, and innovation index reached new highs, while the resilience index has yet to recover to its historical peak.

Amid resurging protectionism, deepening geopolitical rivalries, and increasingly fragmented global industrial and supply chains, the stable and smooth functioning of the supply chains matters more than ever.

Chinese Vice Premier Ding Xuexiang reinforced this point at the expo's opening ceremony, noting that as a responsible major country, China has given full play to its complete industrial system and vast market to facilitate steady global economic operations, and that China's concrete actions have provided solid support for the stability and smooth functioning of global industrial and supply chains.

China, by hosting the expo focused on supply chains for the fourth consecutive year, is demonstrating its steadfast commitment to bolstering supply chain resilience. The growing number of foreign companies attending the expo suggests that, despite mounting geopolitical tensions, businesses remain eager to forge new partnerships, explore fresh opportunities and strengthen the resilience of global supply chains.

Yin Zheng, Schneider Electric's executive vice president for China & East Asia Operations, described China as a "stabilizer and innovation source" for global industrial chains. After 39 years in China, Schneider has built five R&D centers, an AI innovation lab and 30 factories and logistics centers here, making China one of its most critical global supply chain and R&D bases.

"China today presents stability and a trusted partner. As long as we gain this mutual trust and start working together, we know that it will be a long-lasting cooperation, not something that is changing day by day," said Massimiliano Nannini, head of cabinet of the Liguria regional government. Enditem

7156707