Developing the Industrial Internet

At its third plenary session in July 2024, the 20th Central Committee of the Communist Party of China (CPC) stated, “We will promote faster application of next-generation information technology at all stages and in all dimensions, develop the Industrial Internet, and build digital industry clusters with international competitiveness.” The Industrial Internet (II) is a new form of infrastructure, application type, and industrial ecosystem that integrates next-generation information and communication technologies (ICTs) and the industrial economy. It embodies the practical value of, and is a powerful tool for cultivating, new quality productive forces, making it an important technology for the promotion of high-quality economic development.

I. The Industrial Internet

The early 2020s witnessed a wave of innovation in new-generation ICTs, such as 5G, the internet, big data, and artificial intelligence (AI), as well as generational advances in industrial development, leading to a leap in the supply capabilities of digital industrialization. Furthermore, the digitalization of industrial equipment, production lines, workshops, and factories are gathering pace, and demand for industrial digitalization is growing. Under the dual effects of supply-push and demand-pull, the integration of digital technologies with the real economy has expanded from everyday scenarios to the field of production, resulting in explosive growth of industrial big data. The collection, transmission, storage, computation, analysis, and application of huge amounts of industrial data require an intelligent vehicle, which is where II comes in. By comprehensively connecting people, machines, objects, and systems, II provides a new type of manufacturing and service system that encompasses entire industry and value chains. It provides the means to realize digital, networked, and smart development of all types of industries, making it a key driver of the new industrial revolution.

II has many features that are different to the Consumer Internet (CI). II connects equipment, production lines, workshops, factories, enterprises, upstream and downstream elements of industry chains, and ecological partners. Intra- and intercompany collaboration in aspects such as R&D, design, production and manufacturing, operation and management, and operation and maintenance services are increasingly complex, so the volume of data being produced has increased markedly, especially in R&D, design, and manufacturing. Due to the enterprise-specific nature of technology, processes, knowledge, and experiences, the vast majority of data is not shared and is enterprise-specific, so customized network solutions are required. CI, on the other hand, predominantly connects human users, and its primary use is to transfer information between people. As a result, network terminals, data types, and application scenarios are homogeneous, standardized, and reproducible, with personal data highly concentrated on platforms of certain companies.

The 2024 Global Industrial Internet Conference in Shenyang, Liaoning Province, September 13, 2024. The conference opened in Shenyang’s Industrial Museum of China the previous day under the theme of “Industrial Intelligence, A Brand New Look.” CNS / PHOTO BY HUANG JINKUN

II has higher requirements in terms of network speed, latency, and bandwidth than CI. For example, the latency requirements for equipment motion control and product visual inspection are less than 1 millisecond (ms) and 10 ms, respectively; whereas, the data latency requirement of public communication networks is 100 ms. As the data transmission capabilities of II have a direct bearing on production safety, the reliability, stability, and security requirements of its networks are more stringent. Developing an II network makes industrial data elements more valuable and results in more integrated and efficient applications of digital technology.

II applications are used to achieve the digitalized upgrading of enterprises. Stark differences between industries and enterprises, varying levels of digitalization of industrial equipment, protracted industrial software development and adaptation cycles, and a high degree of asset specificity have made formulating a universal development model challenging, so return on investment cycles tend to be longer. The threshold for CI applications, on the other hand, is lower, and it is more replicable. The cultivation of user habits has overturned the traditional consumption model. The CI business model is based on high levels of traffic by large numbers of users, with frontend fees charged to ordinary consumers and back-end fees charged to information or software service enterprises, enabling economies of scale and attracting higher levels of private investment.

The image shows the Metaverse Future Factory, a washing machine and dryer plant operated by the Haier Group in Shanghai, May 19, 2024. At the interconnected factory, which runs on Haier’s industrial IoT platform, COSMOPlat, physical production lines are synchronized with digital ones, enabling staff to monitor and control them through a digital twin interface, which they use for tasks like production scheduling and fault diagnosis. CHINA ACADEMY OF INDUSTRIAL INTERNET

The system architecture of II consists of networks, identifiers, platforms, data, and security. Its content boundaries differ significantly from those of CI. 

II networks comprise the intranet and extranet of workplaces, and they are the key infrastructure for connecting people, machines, devices, and systems. Identifiers consist of ID codes and a name system. Codes are the means of identifying production resources, such as machines, products, and data. The name system provides information such as “who I am,” “where I am” and “what I am doing.” A platform connects to equipment and applications, supporting data aggregation, modeling and analysis, knowledge reuse, and application innovations. Data is a new production factor that can be used to develop new products and services and create value in combination with other production factors. Security refers to the technical and managerial protocols used to prevent the unauthorized access of, or damage and interference to, II systems, devices, and data. 

The goal of II is to improve the competitiveness of industries and enterprises through digital empowerment. These improvements include reduced costs, greater efficiency, higher quality, better environmental credentials, and enhanced security. 

The development of II applications is a gradual process, from single applications in each link of research, production, supply, marketing, and service provision, to whole-process comprehensive integration and extension, requiring the development of typical application models for platform design, intelligent production, network collaboration, customization, service expansion, digital management, and so on. 

II applications require collaborative development, extending from leading enterprises to entities both up and down industry chains, with large enterprises driving II development in small enterprises, downstream enterprises driving development in upstream enterprises, and emerging industries driving development in traditional industries. This enables the digital transformation of processes from prototype to product.

II. Accelerating development of the Industrial Internet

The CPC Central Committee’s decisions to implement in-depth II innovation and development strategy and accelerate development of II reflect its keen understanding of advances in the new round of scientific and technological revolution and industrial transformation, while being based on the stage, environment, and conditions of development in China and with a continued focus on achieving high-quality economic development. 

During the 1990s, the internet and other information technologies underwent large-scale commercialization, ushering in the new CI era. With the continued popularization of mobile internet, new business functions, such as mobile payments as well as online travel booking, grocery shopping, and medical care, have proliferated, leading to a thriving digital economy. 

In recent years, the numbers of internet users and cell phone users in China have both exceeded 1 billion, but CI development has plateaued. Developing the digital economy further will require expansion into new growth areas. 

II has resulted in network connections between factors and resources, greater elasticity in supplies of services, and the efficient distribution of platforms, leading to profound changes in the modes of production, business models, and forms of enterprises in the manufacturing sector. This has accelerated the development of new drivers of economic growth. The wide range of industries, long value chains, and multiple innovation stages involved in production activities provide ample scope for applications of new-generation ICTs. Nevertheless, challenges such as significant differences between industries, a low degree of standardization, and insufficient scale effects, mean that II cannot simply copy the development path of CI but requires a deeper understanding of its underlying laws in order to forge its own path. The period from inception to gradual maturity and then widespread CI adoption in China took approximately 30 years. The II development cycle may be even longer, and it will require strategic determination and sustained efforts.

Digitalization is becoming a key force in reorganizing production factors and resources, reshaping economic structures, and restructuring the competitive landscape around the world. Most major countries are using emerging technologies such as II to promote the digital transformation of the manufacturing industry and cultivate industrial competitive advantages. Although the strategies and policies employed vary by country, their essential objectives are to achieve integrated applications of new-generation ICTs, encourage data resource utilization, boost the transformation and upgrading of the manufacturing industry, and make industries more competitive on the global stage. 

The US, for example, is continuing to implement its national strategy of reindustrialization, with its focus on promoting advanced manufacturing. This strategy seeks to maximize the use of IT and industry advantages to promote the digital transformation of the manufacturing industry and solidify the leading position of the United States. 

Germany has developed its “Industry 4.0” policy, which aims to achieve real-time connectivity, mutual identification, and effective communication among people, equipment, and products as well as to build a highly flexible and personalized smart manufacturing model based on the construction of smart factories and smart production lines.

The EU formulated the “Industry 5.0” policy to create human-centric, sustainable, and resilient industries in Europe through digital transformation.

Japan, meanwhile, devised its strategy of “connected industries,” which aims to increase the use of new technologies such as the Internet of Things (IoT) and AI to improve the connectivity of key industries and key links.

China is a major global player in both manufacturing and the internet, offering great potential for the growth of domestic II. China boasts 41 major industrial categories, 207 intermediate industrial categories, and 666 small industrial categories, making it the only country in the world to possess all the industrial categories in the United Nations' International Standard Industrial Classification of All Economic Activities. China’s manufacturing value added has been the highest of any country in the world for 14 consecutive years, providing a wealth of application scenarios for II development. China has first-mover advantages in key areas of new-generation ICTs and has built world-leading information and communication networks. As of September 2024, China had some 4.09 million 5G base stations, more than 60% of the global total, and has achieved its goals of ensuring every county has gigabit optical fiber services, every township has 5G coverage, and every village has broadband connectivity. China ranks second in the world for computing power and is home to the world’s leading ICT enterprises, providing the strong technical services and infrastructure required for II development.

III. Progress in developing the Industrial Internet in China

In 2017, China issued the Guidelines for Advancing the Development of the Industrial Internet Through Internet Plus Advanced Manufacturing. The document set out the objectives, tasks, and measures for II development. 

In 2020, the Ministry of Industry and Information Technology issued the Notice on Promoting the Accelerated Development of the Industrial Internet, which listed 20 measures in the following six areas: construction of new infrastructure, expansion of integrated and innovative applications, development of a sound security system, strengthening of innovation and development driving forces, improvements to the industrial ecology, and increased policy support.

Visitors at the China Mobile exhibition area at the China Internet Conference, Beijing, July 10, 2024. Under the theme of 30 Years of Qualitative Changes in China’s Internet Development, the conference opened in the China National Convention Center on July 9, with a focus on hot topics such as artificial intelligence, the Industrial Internet, data as production factors, and computing power. CNS / PHOTO BY CHEN XIAOGEN

Thanks to the joint efforts of the government, industry, academia, research institutions, and users, remarkable achievements have been made in II innovation and development in China, and a new stage of high-quality development and large-scale promotion of II is underway. 

In 2023, II applications in China had been integrated into 49 major categories of the national economy, and the added value of the core II industry reached 1.35 trillion yuan. It is estimated that every 1 unit of growth in the value added of the core II industry causes the value added of other industries to grow by approximately 4 units, producing a strong spillover effect on economic growth. 

New digital infrastructure is constantly being constructed

High-speed, low-latency, and reliable II extranets cover our major cities nationwide, and new network technologies, such as 5G, are enabling the speeding up of corporate intranets. By November 2024, more than 45,000 5G virtual private networks for industry and 700 high-level “5G factories” had been developed. An II identity resolution system has also been developed, which plays an important role in supply chain management, quality management, and product traceability. 

II platforms are being developed rapidly, and the number of valuable industrial equipment devices being connected to networks is increasing. China has also built a national II big data center, and work is progressing on the construction of several regional sub-centers in major industrial provinces. A security monitoring and service system for II that is coordinated at the national, provincial, and enterprise levels has started to take shape, strengthening situational awareness, risk warning, and resource convergence capabilities.

New technological breakthroughs are accelerating 

Major improvements have taken place to industrial-grade 5G chips, modules, and gateways, with the cost of industrial-grade 5G modules dropping by 90% compared to their initial commercial release, enabling the high-speed and stable transmission of data between industrial equipment and the evolution of equipment terminals toward intelligence. Industrial Ethernet switches, edge gateways, and other new industrial networking equipment are also developing rapidly. Network slicing has supported the creation of on-demand networks in industrial settings and enabled the flexible allocation of network resources, thereby facilitating the low-cost and convenient transformation and development of factory intranets. Cloud-based programmable logic controllers (PLCs) can decouple industrial hardware and control software, allowing an II platform to control multiple items of equipment of various types. This offers a feasible approach for overcoming traditional dependence on the PLC technologies of others. 

Applications of artificial general intelligence (AGI) in industry are increasing, with some industrial models possessing question and answer, code generation, and equipment control capabilities, which can offer solutions for technological breakthroughs, product innovations, and changes to production methods.

Integration with new ecosystems is continuing 

II applications have expanded into all 41 major industrial categories. They have penetrated every link of manufacturing, including research, production, supply, marketing, and service provision, promoting the intelligent and digital transformation as well as network connectivity of industry. They are supporting the development of advanced hardware, enabling green and low-carbon development, upgrading consumption, and ensuring safe production.

By June 2024, the numerical control rate of key processes and the penetration rate of digital R&D design tools in large industrial enterprises had reached 64.9% and 83.1%, respectively, and 421 national intelligent manufacturing demonstration factories had been established.

By September 2024, there were more than 15,000 “5G Plus Industrial Internet” projects in operation in China, covering key industries including mining, equipment production as well as electronic equipment manufacturing, and with typical applications including machine-vision quality inspection, equipment predictive maintenance, and factory smart logistics. 

Explorations are also progressing into the integration of AI and II in areas such as product design, pilot-scale testing, process optimization, and quality inspection, producing new forms of digital design, human-machine collaborative manufacturing, and lean operations management. 

IV. Promoting further development of the Industrial Internet

II is a strategic infrastructure for achieving new industrialization as well as a major driver of the development of new quality productive forces. The rapid development of II and the digital transformation of the manufacturing industry will advance the construction of a modern industrial system and boost all aspects of high-quality economic development. 

We must strengthen the industrial foundations of the Industrial Internet

We will implement thoroughly II innovation and development projects, scale up core industries, and develop the five major functional systems of networks, identification, platforms, data, and security. We will cultivate new quality productive forces by integrating scientific and technological innovations with industrial innovations. We shall accelerate breakthroughs in key II technologies and their industrial applications. We will overcome technical bottlenecks preventing widespread applications of II as well as promote the development, and expand the adoption of, a system of standards for II. We shall cultivate diversified, better quality, and more specialized solutions to enhance the supply capabilities of the II industry. We will deepen “5G Plus Industrial Internet” integration and innovations, steadily develop a pilot project on developing industrial independent 5G private networks, expand the coverage of industrial sensor networks, and build up access capacity for Massive IoT systems. We will also strengthen the integration of II with AI and other new technologies, quickly create competitive large AGI models, foster industry-specific models for manufacturing scenarios, and develop AI products for industry.

We must accelerate the evolution and upgrading of digitalization in manufacturing

We will advance efforts according to various subdivisions of industries and grades but also synergistically, focus on leading local industries, move ahead with replacing industrial manufacturing equipment with AGI and the construction of smart factories, and create benchmarks for the digital transformation of the manufacturing industry. We shall strive to promote “AI Plus” in manufacturing and encourage enterprises to explore applications of large models in scenarios including product development, equipment interaction, and production control. We shall improve the national II big data center system, encourage the construction of a digital supply chain platform for the equipment manufacturing industry, and develop an industrial data asset registration platform. We will create trustworthy industrial dataspaces, strengthen the convergence and applications of data elements, and provide data-driven momentum for digitalization. We will thoroughly integrate II with green manufacturing, develop an industrial digital carbon management service platform, and enhance the digital management of energy, resources, and the environment. We shall accelerate the construction of pilot cities for “5G Plus Industrial Internet” and continue to integrate II in the activities of industrial parks. We will leverage the role of leading enterprises, encourage both upstream and downstream enterprises in industry chains to integrate II, and facilitate the digitalization of small and medium-sized enterprises (SMEs) by generating orders, disseminating technologies, and sharing resources.

We must ensure the security of the Industrial Internet 

We will strengthen the top-level design of II security, improve the security policies and system of standards of II, and enhance security management systems and mechanisms. We will thoroughly promote classified and multi-tiered management of II and strive to better publicize and implement policies, conduct security simulations, train talent, and develop resource pools. In the key areas of network security of industrial control systems and mobile apps, we shall enhance industrial security levels by strengthening risk warnings and protection for sharing vulnerable information. We will organize collaborative technical research on II security monitoring and service capabilities involving entities at the national, provincial, and enterprise levels, and systematically improve monitoring and early warning, emergency response, testing and evaluation, and functional testing capabilities. We shall strive to increase the supply capacity of the II security industry. We will develop security for industrial control systems, equipment, networks, platforms, data, identity resolution systems, and other key technologies. We will also strengthen R&D on security products, such as attack protection, vulnerability mining, and situational awareness tools.

We must optimize the development environment of the Industrial Internet 

We will develop new R&D institutions, enterprise innovation consortiums, and other entities that promote innovation; encourage the cross-boundary integration of industrial, platform, and integrated service enterprises; and lend impetus to integrated industrial applications of digital technologies. We shall improve the systems that financially support innovation, encourage localities to set up special funds, and strengthen the assessment of advanced and core technologies. We will guide nongovernmental capital toward innovative enterprises in areas such as II, as well as encourage financial institutions to offer innovative financial products that rely on II. We will support the development of specialist subjects and disciplines in the field of II, a community for promoting integration between industry and education, and a batch of practical training bases. We shall create long-term mechanisms for cultivating highly qualified, versatile, and skilled digital workers. We will continue to promote high-standard opening up, fully utilize bilateral and multilateral mechanisms, and strengthen international exchanges and cooperation in II, so as to create an open and shared business ecosystem.

Lu Chuncong is President of the China Academy of Industrial Internet.

(Originally appeared in Qiushi Journal, Chinese edition, No. 23, 2024)