At the annual CES consumer electronics show in Las Vegas last month, Chinese company Xpeng AeroHT captured the world’s imagination with the international debut of its Land Aircraft Carrier, featuring a six-wheeled vehicle and a compact aircraft.
Critics of China’s centralised governance model claim it stifles innovation and competition, resulting in large-scale innovation but low productivity. Yet in the low-altitude economy, a sector broadly defined as economic activities harnessing airspace below 1,000m – including drones, urban air mobility and aviation services – China is flying ahead.
Home to some of the world’s largest drone manufacturers such as DJI, China has captured more than 70 per cent of the global drone market. It accounts for nearly 80 per cent of unmanned aerial vehicle patent applications and has produced flying car companies such as Ehang, Volant and Xpeng AeroHT.
From drone deliveries to demonstrations of flying cars, progress is certainly visible. But how does this align with national ambitions and how did it take shape under China’s socialist system?
The low-altitude economy is a natural extension of China’s socialist system, where the government retains control over production resources to support national development. Once focused on land and physical infrastructure, this control now extends to digital infrastructure and airspace.
Regulators like the Civil Aviation Administration of China and state-owned enterprises such as the Shenzhen Urban Transportation Planning and Design Research Centre are playing an essential role in developing the key infrastructure underpinning the low-altitude economy.
Here, China’s centralised, permission-driven system of innovation presents an advantage.
“Permissionless” systems allow companies to innovate and compete with minimal regulatory constraints, typically enabling faster progress. While this makes sense for apps, the approach is less suited to the low-altitude economy, which depends on coordinated infrastructure, strict safety standards and integration with national systems.
Reinforced by its leadership in 5G and regulatory sandboxes, China’s approach paves the way to adoption and development in alignment with national priorities. Tight parameters reduce fragmentation and uncertainty, providing the clarity needed for innovators to confidently embark on their pursuits.
In contrast, the US relies on a fragmented model with federal, state and local authorities often competing. This ends up leading to slower implementation and more uncertainty for innovators despite its permissionless system.
The Chinese government’s efforts in encouraging the low-altitude economy reflect its socialist priorities by advancing new productive forces to empower society and the economy.
Suzhou has built an industrial ecosystem for the low-altitude economy, spanning research, manufacturing and applications, while Dalian is developing an ecosystem projected to be worth 4 billion yuan US$550 million by next year. If successful, thousands of jobs could be created.
Integration of the technology can also transform traditional industries. Agricultural drones are supporting the shift from blue-collar to “new collar” jobs. Today, more than 250,000 registered agricultural drones are in operation, improving yields while reducing manual labour, a dramatic rise from just 695 a decade ago.
China’s high-speed rail network connects rural and urban communities; flying cars and unmanned aerial vehicles could connect areas even harder to access. Rural farmers could deliver fresh produce to urban markets faster, opening new revenue streams and reducing spoilage. The technology can also improve access to urban healthcare, education and jobs, bridging the urban-rural divide to foster greater economic inclusion.
Aware of the potential job displacement resulting from productivity gains, the government may align the adoption of these technologies with policies to mitigate the impact. For example, initiatives could focus on attracting talent to advance the new productive forces agenda. Others could be guided towards roles in primary production sectors, supporting the nation’s drive for self-sufficiency.
Rather than increasing the number of traditional farmers, individuals will be trained to build, operate and maintain drones, robots and artificial intelligence to serve these industries. As an incentive, programmes like “dibao”, the rural minimum living standard guarantee, could be modernised by tying universal basic income to technology-enabled primary industry jobs and funding that through a dividend extracted from increased productivity from AI.
At the same time, China’s low-altitude technologies and governance model could soon become a global export. As countries along the Belt and Road Initiative invest in Chinese low-altitude technology for logistics and infrastructure projects, they are also likely to adopt or at least reference Chinese regulatory frameworks. Pakistan, for instance, is one of several countries using Chinese drones.
China has an opportunity to become a key influence in low-altitude technology, standards and regulation. Already, we have seen evidence of it stepping up in shaping international standards, particularly in drone regulation.
Integration of low-altitude technology into the belt and road would mark an evolution in China’s trading strategy. While the connectivity initiative traditionally focused on expanding physical infrastructure such as roads, railways and ports, low-altitude solutions could enable low-carbon multi-modal transport scenarios to address challenges including in last-mile logistics.
In the remote regions of Asia, Africa and the Middle East, such solutions could provide a cost-effective alternative, bypassing terrain that would otherwise require costly construction, as well as help bring the benefits of economic inclusion.
Behind the spectacle of flying cars and drone shows lies a bold economic plan that aligns with China’s national priorities and socialist vision. Within its borders, the low-altitude economy is more than just an innovation, but a strategy with the potential to generate jobs, foster economic inclusion and transform industries. Beyond its borders, it could become an opportunity to export technology and a new model of development, extending the New Silk Road into the skies.
This story first appeared in the South China Morning Post on 18th February 2025.