The Impact of Artificial Intelligence on the New Quality Transformation of Chinese Manufacturing

Abstract

Leveraging artificial intelligence (AI)―a cutting-edge technological tool―to drive the new quality transformation of Chinese manufacturing is a crucial foundation for China’s steady advancement of the new real economy, as well as an inevitable requirement for China to align with contemporary economic and technological trends. This study constructs a multi-sectoral equilibrium model to theoretically analyze the focal points of the new quality transformation in Chinese manufacturing and the impact AI has on it, followed by corresponding empirical tests. The results indicate that (1) AI has a positive impact on the qualitative transformation of China’s manufacturing sector; a one-unit increase in a firm’s AI level leads to a 0.171-unit increase in the sector’s qualitative transformation level. (2) This impact exhibits heterogeneity at the firm, industry, and regional levels. At the firm level, the impact varies depending on firm size, digitalization level, operational performance, internal control strength, and governance quality. At the industry level, the impact varies depending on technology intensity, industrial structure, strategic importance, and green development level. At the regional level, heterogeneity is reflected in geographical location, natural resource endowments, and the degree of urban agglomeration. (3) Artificial intelligence promotes the new quality transformation of Chinese manufacturing through the following mechanisms: reducing time lag costs and transaction costs in market penetration mechanisms; enhancing the quality of cutting-edge factor combinations and key core technologies in advanced innovation mechanisms; and improving resource utilization and operational management efficiency in lean production mechanisms.