In recent years, the development of the metaverse in China has gained significant momentum, with the concept attracting wide attention and investment across various industries. China also has seen a surge in the adoption and development of metaverse technologies, driven by factors including advances in virtual reality (VR), augmented reality (AR), artificial intelligence (AI), cloud computing, and high-speed Internet infrastructure. A key driver of the metaverse in China is the gaming industry.

China has a huge gaming market, and game developers have been exploring the integration of metaverse elements into their products. Companies have been investing in the development of metaverse-related technologies and platforms. Some popular games have already incorporated metaverse elements to enhance user engagement and monetization.

The Chinese government is obviously standing behind all such development, and wants to encourage it further. On August 29, 2023, several ministries at the national level led by the Ministry of Industry and Information Technology (“MIIT”) rolled out the Three-Year Action Plan for Innovative Development of the Metaverse Industry (2023-2025) (“Action Plan”), which substantiates the envisaged support and efforts from Beijing. The Action Plan acknowledges the fact that a new round of scientific and technological transformation is deepening and evolving, the global meta-universe industry is accelerating the development, and countries are continuing to strengthen policy support and resource input. It provides for a fairly comprehensive policy framework with specific measures to better position the country in this global race. Below are some key highlights that may be of interest to international companies.

The Goals

The long-term goal of this Action Plan is to achieve major breakthroughs in key core technologies of the metaverse, and to create a world leading metaverse industrial ecosystem. Rather than a pure consumer economy, the country aims to build a mature industrial meta-universe to create a new growth model for manufacturing, where the virtual and the real are mutually reinforcing. A ubiquitous, universal and seamless meta-universe space is supposed to be built to facilitate a general leap in human production and living styles. At the same time, a safe and efficient meta-universe governance system is to be built to ensure a healthy and sustainable industrial development environment, indicating that metaverse could also become an agenda item on the desk of the country’s legislators.

More specifically, the Action Plan addresses the below short-term goals to be achieved before 2025, namely

• achieve breakthroughs in meta-universe technology, industry, application and governance, with the metaverse becoming an important growth pole of the digital economy. The basic supporting capacity of the industry and technology will be further consolidated so that the comprehensive strength reaches the world advanced level.
• Cultivate three to five ecological enterprises with global influence and a batch of specialized small and medium-sized enterprises, and establish three to five industrial development clusters. In this context, a batch of typical applications, benchmark production lines, factories and parks will be realized, with large-scale application of metaverse products.

On the technology side, the below will become the country’s focus in the coming 2-3 years, namely

• data circulation technology (数据流通技术 in Chinese), which mainly relates to blockchain and privacy computing technologies, and aims to promote a data governance system centered around blockchain and cross-platform data asset circulation, enabling value circulation in the industry and establishing a trustworthy infrastructure for the metaverse;
• content production technology, focusing on the creation of intelligent content production tools suitable for the metaverse;
• digital twin technology to create foundational knowledge libraries such as model repositories and process libraries for specific industries and processes;
• perception and interaction technology, so as to promote the convergence and development of multi-channel perception and interaction based on specific technologies named;
• networking and computing technology, explicitly mentioning new networking technologies such as 5G-A/6G, gigabit optical networks, fiber-to-the-room (FTTR), high-speed wireless LAN, satellite Internet, and cloud-network integration. The plan also emphasizes breakthroughs in high-performance computing, heterogeneous computing, intelligent computing, quantum computing, and neuromorphic computing. The aim is to promote the synergistic development of cloud, network, and computing systems.

Industrial Metaverse

One China-specific feature of the Action Plan is its special focus on the so-called “industrial metaverse”. It states that the metaverse shall be used to empower manufacturing, particularly in the below three areas.

•  Industrial metaverse in production lines: the goal is to facilitate the integration of key elements such as people, machines, and data, and to promote the development of a virtual and physical combined digital twin system for production lines. This includes the creation of virtual assembly spaces within the industrial metaverse and the promotion of the use of zero-component-assisted assembly. It will also focus on enriching contactless sensing methods and utilizing virtual simulation tools for three-dimensional automation and intelligent quality inspection. Additionally, the establishment of a process simulation model library is emphasized to guide standardized production line operations and provide remote collaborative guidance from experts.
• Industrial-metaverse-based factories: the focus is on establishing metaverse platforms at the factory level to create low-latency, high-fidelity digital twin systems with intelligent decision-making capabilities. The integration of various types of industrial software will be promoted, along with the convergence of logistics, capital flow, and information flows. The application of immersive interaction devices will be widely adopted to enable smart inspection and remote collaboration in factories. The aim is to build production and operations monitoring systems that enable comprehensive perception and real-time feedback of information at every stage of factory production.
• Industrial metaverse plus industrial parks: the goal is to break through the traditional boundaries of time and space, promote the aggregation of virtual spaces, and develop a new model of industrial park construction that combines virtual and physical elements. Here, the focuses are on establishing technology innovation and investment attraction platforms based on the industrial metaverse, as well as innovating the industrial park service models.

The above plan will bring about improvements in efficiency, decision-making, and collaboration in China’s manufacturing competence through virtualization, simulation, and real-time data utilization. No doubt this is part of China’s overall plan to further position itself as the world’s manufacturing center in the future.

Outlook

As far as the international business community is concerned, the positive signal under this Action Plan is that the ambition does not appear to be purely a closed-door game. At the end of the paper, it is stated that the country will deeply participate in the formulation of international governance rules and standards for the metaverse, and will promote the establishment of a multilateral, democratic and transparent international metaverse governance system by combining our country's ideas on governance. More international exchanges are expected as the plan also stresses the need to bridge international metaverse governance rules with domestic ones, and to make Chinese metaverse companies “more international”. In this regard, China is still looking to strengthen exchange and cooperation with the outside world to get more innovative resources and talents including the market. We foresee more opportunities will arise in those fields where foreign companies have its strength like technology and business applications, which may emerge not only in B2C industries like gaming, entertainment, retail, education, healthcare, and tourism, but also in the industrial sector, as highlighted in this Action Plan. Key trends include integration with artificial intelligence (AI), VR hardware development, and the emergence of digital assets and virtual economies.

On the other hand, the complicated regulatory environment in China will become another challenge that foreign companies need to consider before planning their China metaverse adventure. Although regulatory related concerns are not the focus of the Action Plan, existing hot topics such as privacy, data export restrictions and regulation of artificial intelligence will also become relevant and need to be carefully assessed.