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Executive Summary:

• A new action plan for the Internet of Things (IoT) increases the possibility that Chinese-built connected infrastructure in the United States could become a platform for data access, cyber pre-positioning, and attacks on U.S. cyber-physical systems in a prolonged crisis or confrontation.
• The plan, launched jointly by nine ministries, defines IoT as a total cyber-physical environment that links “people, machines, and things” across sensing, networks, platforms, applications, and security, and sets targets for 10 billion terminal connections, more than 50 standards, and deployment across production, consumption, and governance.
• The plan indicates Beijing is moving from connected devices to connected backbone systems. It reinforces the new Five-Year Plan, suggesting that the People’s Republic of China (PRC) wants to supply not only endpoints like sensors, appliances, and vehicles but also the next generation of AI, computing, and space-ground communications infrastructure that will underpin them.

In mid-March, nine central ministries jointly released a new plan for the country’s Internet of Things (IoT) industry over the next three years (Ministry of Industry and Information Technology [MIIT], March 31). The plan clarifies Beijing’s vision of a seamless cyber-physical ecosystem to integrate “people, machines, and things” (人、机、物) through a centralized architecture of networks and platforms. What sets this directive apart is its sheer systemic reach. Beyond the goal of 10 billion terminal connections, the plan fuses IoT with artificial intelligence (AI) and edge computing to modernize the industrial and social backbone of the People’s Republic of China (PRC). This evolution matters because it shifts the frontier, engineering the rules and infrastructure of the next digital age to establish domestic dominance and extend Beijing’s leverage in its managed confrontation with the West.

New Plan Drives Cyber-Physical Integration

Beijing’s new “Action Plan to Promote Innovative Development of the Internet of Things Industry (2026–2028)” (推动物联网产业创新发展行动方案 (2026—2028年)) is a nine-ministry directive led by the Ministry of Industry and Information Technology (MIIT) that defines medium-term goals for creating a national cyber-physical infrastructure (MIIT, March 31). It also shows clear intent to dominate standards, supply chains, and deployable architectures that could later be exported.

The plan aims to “accelerate the comprehensive integration of IoT technology into production, consumption, and social governance” (进一步加速物联网技术全面融入生产、消费和社会治理各领域) and to build a new IoT infrastructure defined by “comprehensive sensing, ubiquitous intelligent connectivity, multi-network integration, and security and trustworthiness” (全域感知、泛在智联、多网融合、安全可信). By 2028, Beijing wants more than 50 new standards; 10 application areas with 100 million connections and 15 with 10 million connections; 10 billion total terminal connections; and a core industry size exceeding renminbi (RMB) 3.5 trillion ($510 billion).

The plan is notable for its definition of IoT as a total cyber-physical environment. It says IoT should “use sensing technologies and communications networks to realize ubiquitous intelligent connections among people, machines, and things, and to connect the digital world and the physical world” (基于感知技术，通过通信网络，实现人、机、物的泛在智能连接，打通数字世界和物理世界), and it defines the industry as being composed of “sensing, networks, platforms, applications, and security” (感知、网络、平台、应用和安全保障). Sectorally, it focuses on production first—industry, agriculture, energy, transport, logistics, construction, resources, and the environment—but also targets consumer and governance domains through smartphones, wearables, smart homes, smart appliances, connected vehicles, robots, remote healthcare, digital education, digital twin cities, urban risk warning systems, and emergency rescue.

Beijing seems to be moving from building lots of connected devices to shaping the rules and infrastructure of the next cyber-physical layer at home and abroad. The plan calls for “optimizing and improving the IoT standards system” (优化完善物联网标准体系), building a map of the “core industrial chain” (核心产业链图谱), strengthening industrial monitoring and supply capability assessment, and promoting technologies such as IPv6, NB-IoT, RedCap, satellite IoT, edge AI, lightweight deployment of large models at the terminal and edge, and integration with quantum communications and next-generation internet. While the document is framed as domestic industrial policy, its scale, targets, standard-setting agenda, and language around multi-network fusion and platform integration point to a broader ambition: to set the rules for a globally exportable cyber-physical ecosystem.

Table 1: Key Targets and Priority Domains in the 2026–2028 IoT Action Plan

(Source: MIIT)

The new action plan is best understood as an implementing document for the 15th Five-Year Plan’s broader push to build a “modernized industrial system” (现代化产业体系) and to develop “new infrastructure” (新型基础设施) that supports industrial upgrading and digital-intelligent transformation. It extends from the five-year plan’s call to “promote the independent iteration of the mobile Internet of Things” (推动移动物联网自主迭代), deepen deployment of 5G/5G-A/6G telecoms infrastructure, build a national integrated computing network (全国一体化算力网), expand satellite internet, and accelerate the digital-intelligent upgrading of transport, energy, and water infrastructure (Xinhua, March 14). The emerging model is a vertically integrated cyber-physical infrastructure in which Beijing supplies the endpoints, networks, compute, data systems, and standards that bind them together.

The IoT action plan and the new five-year plan intentionally reinforce each other. While the former focuses on sensors, modules, platforms, edge computing, applications, and security, the latter’s “new infrastructure” construction framework provides the larger substrate those systems will rely on: a national integrated computing network, satellite internet, upgraded information and communications networks, new data infrastructure, and “low-altitude infrastructure” (低空基础设施) (China Brief, February 17). Read together, the documents indicate that Beijing is also accelerating construction of communications, compute, routing, identity, and data systems to underpin its IoT strategy.

This matters strategically because it points to a much more ambitious objective than simply saturating the market with smart products. Beijing is moving toward a model in which PRC firms and state-backed systems can provide both devices and the backbone. In that sense, Beijing’s push is not just to export IoT devices, but to shape a globally deployable cyber-physical environment in which devices, sensors, vehicles, robots, logistics systems, and urban infrastructure all run on infrastructure layers increasingly defined by PRC standards, platforms, and network architectures.

At the top level, the language used by Chinese leader Xi Jinping and its authorized Party interpretations make clear that the buildout of IoT and adjacent digital infrastructure is part of a larger effort to secure national power by controlling the next infrastructural layer of economic and social life. Xi links “accelerating the development of the Internet of Things” (加快发展物联网) directly to building a “modernized industrial system” (现代化产业体系), optimizing the “layout, structure, functions, and system integration” of infrastructure (优化基础设施布局、结构、功能和系统集成), and constructing a “modernized infrastructure system” (现代化基础设施体系) (Xi Jinping Thought Research Center, December 8, 2023).

Official gloss pushes Xi’s logic even further. A 2023 Party interpretation says digital infrastructure now serves as the “key base” (关键底座) shaping new directions in development, while Xi is quoted as calling for an “intelligent and comprehensive” (智能化综合性) digital information infrastructure that is “high-speed and ubiquitous, space-ground integrated, cloud-network fused, intelligent and agile, green and low-carbon, and secure and controllable” (高速泛在、天地一体、云网融合、智能敏捷、绿色低碳、安全可控) (Cyberspace Administration of China [CAC], April 10, 2023). A 2025 Party School-linked commentary frames the broader trajectory as entry into an era of the intelligent interconnection of everything, built around the “triple fusion of ‘people-machines-things’” (‘人机物’三元融合的万物智能互联时代). It explicitly says that digital-intelligent technologies are becoming a “key force in reorganizing global factor resources, reshaping the global economic structure, and transforming the global competitive landscape” (重组全球要素资源、重塑全球经济结构、改变全球竞争格局的关键力量) (Red Flag Magazine, April 14, 2025). These are all statements of intent to build a cyber-physical system that strengthens domestic control, upgrades industry, and positions the PRC to shape the architecture of future global competition.

Table 2: How the PRC’s New Infrastructure Agenda Reinforces IoT Deployment

(Source: Xinhua; MIIT)

Cyber-Physical Systems as a New Front in U.S.–PRC Competition

In the context of the longer term, Beijing’s current IoT push represents the latest phase of a steadily expanding strategy that has moved from industrial prioritization to systems integration and now toward full-spectrum cyber-physical buildout. The progression began with  the 2009–2011 elevation of IoT as a “strategic emerging industry” (战略性新兴产业) and one of the “commanding heights” (制高点) of industrial competition; evolved with the Made in China 2025 and Internet Plus strategies, which tied smart terminals, industrial software, and connected infrastructure to manufacturing upgrading and international standards influence; and was cemented in the 13th Five-Year Plan and National Informatization Development Strategy, which framed IoT as a “ubiquitous secure Internet of Things” (泛在安全物联网) and part of the race to “seize the initiative, gain advantages, win security, and win the future” (掌握先机、赢得优势、赢得安全、赢得未来) (China Brief, July 25, 2025).

By the early 2020s, policy had shifted from promoting connected devices to building a broader architecture. The 14th Five-Year Plan treated IoT as “new infrastructure”; the 2021–2023 New IoT Infrastructure Action Plan pushed “interconnected heterogeneous products and centralized control” (异构产品互联、集中控制) in homes and buildings; and the 2024 “Intelligent Connection of Everything” notice advanced the move from “the connection of everything” (万物互联) to the “intelligent connection of everything” (万物智联). Against this backdrop, the latest action plan represents a new stage in Beijing’s strategic thinking, focused on control over the standards, platforms, networks, and governance structures of an increasingly global cyber-physical environment.

This new stage of strategy could increase cyber risks precisely because it pushes the PRC’s IoT ecosystem beyond standalone devices and toward deeper integration with AI, cloud, edge computing, advanced telecom networks, and international standards infrastructure. Beijing is aligning telecom infrastructure, protected domestic markets, and tightly managed technical standards behind a system in which everyday devices are increasingly linked to larger digital environments, while PRC security services themselves acknowledge that connected products can contain backdoors enabling remote control or covert data collection (China Brief, August 7, 2025). In practical terms, that means the attack surface grows not only because there are more endpoints, but because those endpoints are becoming more interoperable, more remotely manageable, and more deeply embedded in critical systems. Users now face heightened risks of cyber pre-positioning, persistent access, and the ordinary commercial devices used as pathways into more sensitive networks.

In the context of the broader competition the PRC is preparing for with the United States, these risks matter because IoT is becoming part of a larger architecture of managed confrontation. By engineering a system in which economic planning, technological control, infrastructure buildout, and national security are increasingly fused, Beijing is organizing its economy for long-term rivalry. Its drive to harden supply chains, expand “self-reliance” (自立自强), embed security into development, and build outward-facing transport, digital, and data networks makes the spread of PRC-linked connected systems abroad more than a commercial issue. Instead, it functions as another channel through which Beijing can accumulate leverage, shape dependencies, gather data, and potentially pre-position access inside the very infrastructure that will matter in a prolonged contest with the United States (China Brief, November 3, 2025).

Conclusion

Over the next three years, we should expect Beijing to push beyond rapid device proliferation and toward tighter integration of the full cyber-physical stack. This will involve more aggressive rollout of IoT across production, consumption, and governance; deeper fusion with AI, edge computing, satellite internet, and national computing infrastructure; and continued efforts to harden domestic control while exporting standards, platforms, and turnkey systems abroad. In practice, that likely means faster buildout of PRC-defined architectures in smart homes, logistics, transport, energy, urban management, and low-altitude systems; greater emphasis on standards-setting and industrial-chain mapping; and a more explicit use of connected infrastructure as a tool of strategic leverage in a prolonged contest with the United States.

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