China Taxation News: From World Factory to Global Smart Manufacturing Hub — Dongguan's AI Industry Needs Multi-Dimensional Support

In May this year the Dongguan municipal government released an overall plan for building a global smart manufacturing center covering 2026 to 2030, aiming to move from world factory to global smart manufacturing hub and proposing a special action program for AI plus manufacturing. The author recently visited the front lines of the AI industry and examined its momentum alongside tax data. Dongguan's AI industry now has more than 10,000 registered taxpaying entities. Tax data shows sales revenue for the sector grew about 6.8% year-on-year in 2025 and about 2.3% in the first half of 2026; from 2023 to 2025 the number of leading firms with sales above 1 billion yuan rose from 23 to 28. Computing services and data services are booming while smart terminals grow steadily. In 2025 Dongguan produced nearly 600,000 servers, with the related supply chain worth close to 100 billion yuan and nearly 300 related enterprises clustered locally. According to the Dongguan statistics bureau, in the first half of 2026 output of integrated circuits, industrial robots and mobile phones grew 37.0%, 35.0% and 17.7% year-on-year respectively. Tax data shows AI industry exports rose 21.5% year-on-year in the first half of 2026, with algorithm-model firms' exports up 115.1% and double-digit growth in computing services, data services and smart terminals. During this rapid expansion, firms mainly benefited from VAT credit refunds, high-tech enterprise income tax relief, the advanced manufacturing VAT additional deduction and the R&D expense super-deduction, forming a virtuous cycle between tax support and R&D innovation. Dongguan has 34 industrial categories and 240,000 industrial enterprises, quickly converting AI technology demand into manufacturing orders. For example Shengyi Technology, the world's second-largest copper-clad laminate supplier, posted first-half 2026 revenue of 19.026 billion yuan, up 50.05% year-on-year; Dongguan Yuzhou Circuit Board Equipment independently developed vacuum etching plus two-fluid technology and saw order value rise 79.13% in the first half; in the liquid cooling track, 20 above-scale manufacturers in Qingxi town together grew first-half revenue 35% year-on-year. During the visits the author also saw shortcomings: the local supporting rate for key hardware and software is not high enough, procurement of advanced AI chips and core industrial software remains externally oriented, and local manufacturers still face gaps in moving toward higher value-added segments such as R&D design and system integration, while IT industry support, public data openness and composite high-end talent supply all need improvement. The article recommends stronger support across four dimensions — scenarios, technology, talent and ecosystem — and suggests tax authorities use tax big data to profile AI firms precisely, improve the policy-finds-the-firm mechanism, deepen the use of tax payment credit evaluations and bank-tax interaction to ease financing for AI startups and small firms, and compile targeted guidance for complex scenarios such as mixed sales and cross-project R&D while strengthening risk warning alerts.