A $610 billion output from the digital economy core sector in 2025, accounting for over 35% of GDP, represents a significant milestone for Shenzhen's Longhua District. This achievement reflects a five-year surge in the number of core digital economy enterprises, jumping from 752 to 1,433. This remarkable growth has drawn nearly 200 delegates from close to 30 Asia-Pacific countries and regions to Longhua for the 2026 Asia-Pacific Digital Economy Sustainable Development Innovation Week, held from July 30-31.
As AI-related stocks on the A-share market simultaneously rallied and the National Development and Reform Commission reported over 30% growth in the AI sector for the first half of the year, an international conference co-hosted by the United Nations Development Programme and the World Innovative City Cooperation Organization sent a clear signal. "Digitalization" has become a core variable in the restructuring of global industrial chains, and local practices in China are emerging as an indispensable reference point in this competition. A closer look at the conference reveals the underlying logic of this trillion-dollar industrial transformation.
Why Longhua Achieved a Five-Year Doubling
Inside a smart manufacturing industrial park in Longhua, a mobile phone OEM factory that was purely a processing operation five years ago now has production lines equipped with self-developed AI visual inspection systems, and its product catalog includes new categories like AR smart terminals. This transformation is not an isolated case. Official data shows that the number of core digital economy enterprises in Longhua has nearly doubled, from 752 in 2021 to 1,433 in 2025.
This leap in enterprise numbers is no accident. An expert noted that Shenzhen's digital economy has a deep foundation, combining a strong information technology industry base with the development of artificial intelligence. He cited the case of POSCO in South Korea as a significant example, highlighting its open-source model that breaks down data silos between leading companies, SMEs, governments, and research institutions. This ecosystem thinking is considered crucial for the digital transformation of Shenzhen's manufacturing sector. The expert also pointed out that the Asia-Pacific region includes both developed and emerging economies, so selecting digital transformation cases must consider regional balance, a perspective that offers a differentiated reference for Longhua's experience to be applied across the region.
The confidence for this "reset and restart" comes from Longhua's solid manufacturing base. The district currently has over 20,000 manufacturing enterprises and more than 4,100 national-level high-tech enterprises. A quarter of the nation's 3D printing equipment, one-sixth of its smartwatches, one-fifteenth of its smartphones, and one-twentieth of its industrial robots are produced here. If Longhua once attracted global industrial chains through low land and labor costs, the "Digital Longhua" of today is redefining the "world's factory" with computing power and algorithms.
In this digital restructuring, the vast number of SMEs represent both the primary challenge and the greatest source of growth. An industry leader emphasized that digitalization offers opportunities for SMEs to integrate into Asia-Pacific industrial chains. SMEs should leverage regional mechanisms to explore the Asia-Pacific market and achieve green and international development.
Who Sets the "Traffic Rules" for AI?
If the growth in enterprise numbers represents the "quantitative change" in Longhua's digital transformation, hosting this high-level international conference signals a "qualitative change" in its pursuit of influence over international rules. The conference was co-hosted by the United Nations Development Programme, with guidance from the Shenzhen Municipal Foreign Affairs Office and deep involvement from the Longhua District Government. This "local stage, international performance" model reflects the national priority placed on the right to develop the digital economy.
An official from the China International Center for Economic and Technical Exchanges, under the Ministry of Commerce, stated clearly that the center will continue to leverage multilateral cooperation channels to fully support the Longhua Sustainable Development Innovation Demonstration Project. The goal is to facilitate the United Nations Development Programme in deepening global resource linkages and building a stable, long-term Asia-Pacific digital economy cooperation network. This statement was interpreted by attendees as a central-level strategic endorsement of Longhua as a frontrunner in "digital diplomacy."
An expert involved in promoting the "Top Ten Typical Cases of Digital Industry in Asia-Pacific Cities" acknowledged that Asia-Pacific countries have different national conditions, digital infrastructure, and governance rules. Selecting cases must balance the close integration of the digital and real economies with cross-regional and cross-industry practical experience. This is the nuanced nature of the competition. Developed countries, with their first-mover advantage, control the underlying architecture and standard-setting power for AI, while developing countries seek breakthroughs through their vast markets and rich application scenarios.
A former Indonesian ambassador to China directly pointed out the strategic intent of "China-ASEAN" cooperation, noting that China is strong in technology and R&D, while ASEAN holds a large market, data, and a strategic location. He suggested that establishing a foothold in Asia opens the door to the wider Asia-Pacific and the world. This statement was seen by many international observers as a sign of ASEAN's urgent expectation for the export of China's digital technology solutions.
ASEAN's market demand provides an export channel for China's digital solutions. However, the other end of this channel presents more complex governance challenges. A business development director from the Bay Area Council in the US highlighted the other side of cooperation, pointing out that the World Intellectual Property Organization's 2025 Global Innovation Index ranks the Shenzhen-Hong Kong-Guangzhou cluster first among the top 100 science and technology clusters. He emphasized the significant potential for mutual learning between the two regions. He also noted that challenges like traffic congestion, housing development, and power management require finding consensus among competing administrative regions, using the San Francisco Bay Area as an example.
Beyond macro-level governance challenges, there is direct space for mutual learning in specific applications. The Bay Area Council director cited California's wildfire prevention efforts, where improved early monitoring and warning capabilities have allowed many fires to be detected before any 911 calls are made, enabling faster response. In areas like government services and transportation infrastructure, he believes both regions are exploring practices to prevent fraud, improve transparency, and enhance accountability, which are beneficial to each other.
While the director spoke of mutual learning between the two bay areas, the former Indonesian ambassador's broader expectation was that the deployment of China's digital solutions in the Asia-Pacific must meet the needs of emerging markets with urgent infrastructure demands while also addressing the mature markets' concerns about governance rules and institutional compatibility.
UNDP's Warning and Longhua's SME Answer
In this multi-faceted competition, the United Nations Development Programme plays a unique role as both an advocate for technological dividends and a warning system for potential risks. The UNDP's Chief Economist for the Asia-Pacific region responded to this dual role. He expressed great admiration for Shenzhen as a representative of "China's future" but also voiced deep concern about AI exacerbating global inequality.
Acknowledging China's likely crossing of the World Bank's high-income country threshold in 2026 as a remarkable achievement, the economist cautioned that this is not the finish line, as China's per capita income is still a fraction of that in the US or Germany. He argued that the only path to long-term prosperity is innovation, but innovation must serve development, not the other way around. This concern comes from a quantitative observation of the global "AI divide." The UNDP model shows a dual existence of a "capability gap" and a "vulnerability gap." Developed countries, with stable electricity, advanced infrastructure, and strong social protection systems, are better positioned to both leverage AI's benefits and withstand its impacts on employment, while less developed countries face a double challenge.
He emphasized that 90% of development challenges are essentially about leadership and governance, not economics. This judgment suggests that the success of Longhua's digital transformation is not just about technology adoption but also about the local government's strategic focus and institutional design capabilities. These capabilities have elevated Longhua's practice from simple technological upgrading to institutional innovation.
This concern resonated widely. The UNDP Resident Representative in China stressed in his opening remarks that if inclusivity is lacking in the design phase, digital technology could widen development gaps, leaving marginalized groups further behind in the rapid technological change. The question is whether Longhua can provide a viable model for "inclusive digitalization."
The answer appears to be yes. Longhua's "dual-wheel drive of digitalization and intelligence" is not just a slogan. The UNDP Chief Economist, a long-time observer of China's development, highlighted three key lessons from the Longhua model. First, technology serves the real economy, using AI as a tool to boost manufacturing productivity. Second, there is a special focus on SMEs, using "AI computing vouchers" to lower their R&D costs and prevent them from falling behind in the new technological wave. Third, the government plays a comprehensive enabling role, fostering a favorable environment and removing barriers to innovation. He expressed great excitement about Longhua having over 3,300 innovative SMEs, noting that while they are the most vulnerable to technological shocks, Longhua is turning this potential burden into a driver of innovation through targeted policy support.
This "comprehensive enabling" is not an abstract concept. The Shenzhen (Longhua) International Cooperation Center, launched in 2023, is the largest district-level international cooperation platform in the Greater Bay Area, having provided 553 international services and hosting over 200 industry matchmaking and investment events annually. A Longhua district official publicly stated that the district will continue to open its application scenarios, industrial space, and policy resources in the digital economy, extending an open invitation for cooperation to enterprises, research institutions, and business associations across the Asia-Pacific. This institutional openness is a concrete manifestation of the government's role as both an enabler and a facilitator, as emphasized by the UNDP economist.
Looking back at the five-year trajectory, this transformation was not instantaneous. From 2021 to 2026, Longhua underwent a self-evolution of the "world's factory." The doubling of enterprise numbers and the increase in GDP share are surface manifestations. The underlying industrial policy logic—relying on a strong manufacturing base, breaking data silos with an open ecosystem, competing for rule-setting power through international exchange, and using policy interventions to protect SMEs from the technological divide—forms a complete cycle.
However, the competition is far from over. As Western countries continue to exert pressure in the field of large AI models, and developing countries waver between data sovereignty and technological dependence, Longhua and the Chinese digital power it represents are trying to find a delicate balance between efficiency and fairness, development and security, and expansion and inclusivity. As one industry insider noted, the goal of a trillion-dollar digital economy cluster cannot be achieved through subsidies or investment attraction alone. The ultimate test is the ability to build an ecosystem where large enterprises, small businesses, governments, and international partners are all willing to participate and benefit.
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