If the conventional wisdom about innovation is that it is best left to individuals and private enterprise — and the best thing a government can do is get out of the way — that is certainly not the thinking in Beijing.
How innovation happens in Beijing offers a snapshot into China’s model in which research universities, start-ups, the market and the state all have a role to play.
The Chinese capital has always had the country’s most important cluster of research universities, with Peking University and Tsinghua leading the list. It is also home to several cutting-edge robotics and AI companies, including Moonshot, which was started by graduates of Tsinghua and made waves over its latest Kimi K3 open-source model.
“A closed loop from project discovery to incubation” is how Yang Xiuling, who as the Director General of the Beijing Municipal Commission of Development and Reform leads the city’s top economic planning body, describes the ecosystem. “Our greatest strength,” she says, “is talent and the concentration of top research universities.”
The challenge that then follows is how to leverage that talent, or, as she puts it, “how to move results out of the lab”. The gap between translating early research into commercially sustainable ventures is known as the “valley of death” for innovation. To cross that valley in Beijing, the state steps in.
Beijing’s Zhongguancun research cluster is at the forefront of tech innovation in China, along with clusters in Shenzhen, Shanghai and Hangzhou. A strong undercurrent of competition underpins the national innovation ecosystem, especially when it comes to attracting and keeping talent.
To deal with the “valley of death”, Beijing set up what it calls “an intelligent platform for results commercialisation” led by a group of tech managers, who, Ms. Yang says, “are a bridge because they understand both the tech and the market”. In 2025, the city’s platform executed 1.04 lakh tech contracts.
“Markets and companies are still at the centre,” Ms. Yang says. “But the way we look at it is that the companies pose questions, and the universities can provide answers. The companies still play a key role in R&D and in taking the lead in collaborative research with institutions”.
The universities provide the foundation from which the rest follows, says Zhang Jihong, who is a Director at the state-run Zhongguancun Science Park. “It’s the universities that have helped incubate a number of high-tech enterprises,” he says. “We have formed a virtuous cycle where the universities produce talent, the talent provides intellectual support for innovation, and innovation again reinforces the growth of universities.”
The state as investor
The state’s role here is twofold. It provides the hard infrastructure, as seen in the science park and a number of incubators littered around Zhongguancun.
More importantly, it also provides capital, not only linking start-ups to private venture capital (VC) but also stepping in with state-backed capital to help bear some of the risk.
The state taking a direct stake in companies is a unique feature of this ecosystem. The upside is it helps bear losses and allows for the longer-term, patient kind of support that VC might not afford. This has played a key role in enabling the speed and scale of innovation in China.
The downside is wasteful spending, if state funds do not do their due diligence, which is often the case. So much so that this has emerged as a growing concern for Chinese regulators, who in June issued new rules to tighten how local governments spend these funds.
The intense competition among different clusters, coupled with the collapse in land sales as a source of revenue for local governments, has led to a splurge in spending at the local level, with each province putting in funds with the hope of finding its national champions, even if they lack the capacity to do the needed due diligence. The new rules have now called for stricter control over how these funds are spent and for more approvals from the Central government.
Humanoids on the factory floor
AI and robotics are the twin peaks of Beijing’s current innovation drive. If Zhongguancun in the north is the home of tech talent, the Yizhuang industrial cluster in the city’s southern suburbs offers a snapshot of how innovation is playing out on the factory floor. Here, a hub-and-spokes model has the state’s Humanoid Robot Innovation Centre at its centre, which funnels talent to a number of robotics companies around its periphery. “The idea,” explains Che Zhengping, who is Head of Embodied AI at the Beijing Humanoid Robot Innovation Centre, “is to build a full supply chain that is ready for mass production”. The current focus in humanoids is to “shift from industrial use scenarios to daily use scenarios”, including healthcare, which is expected to be a major source of demand in an ageing society.
Among the companies in Yizhuang is Lingyi iTech, which in April started production on humanoid robots and is already planning to scale up. “Advancements in technology are making it more affordable” to scale, says Vice President Philip Yang. “As we move from semi automation to full automation,” he estimates, “costs in 2030 will be half of what they are today.”
Lingyi already has production capacity “for the next 5 to 6 years”. By the end of 2027, it will be making 20,000 robots annually. The plan is to scale up to 1 lakh units by 2028 and 5 lakh by 2030 from this Yizhuang facility (the company has four others), by when it hopes to be “one of the world’s top three”.
At the state-run innovation centre next door, researchers pore over unfinished humanoid robots, getting them to perfect a range of delicate movements before the latest model is given the green light.
State subsidies of land, policy and tax support are among the more well-known elements of China’s industrial policy. The state’s enabling of talent and intellectual support are perhaps less well-known, but arguably just as important when it comes to getting innovation right.
