Drawing Increments from "Both Ends": China's Largest Economic Province Redraws the "Smile Curve"

The 2026 National Two Sessions are currently taking place in Beijing. Two thousand kilometers away, on the southern land of Guangdong, spring waters are warming, and the pulse of new productive forces beats ever stronger.

This year’s government work report makes a series of deployments, including “developing new productive forces according to local conditions,” “seizing the historic opportunity of a new round of technological revolution and industrial transformation to comprehensively enhance independent innovation capabilities and provide technological support for high-quality development,” and “deepening pilot programs for the integration of advanced manufacturing and modern service industries.”

“New productive forces” remains one of the keywords hotly discussed by representatives and committee members. On the afternoon of March 6, the Guangdong delegation held an open group meeting during the Fourth Session of the 14th National People’s Congress. From technological innovation to a million talents, the buzzwords behind Guangdong’s open day clearly outline a new logic for the growth of the economy, the leading province.

By 2025, Guangdong’s regional GDP will have reached 14.58 trillion yuan, maintaining the top spot in the country for 37 consecutive years. More noteworthy than the total volume is the qualitative change in structure and the transformation of driving forces.

While the outside world is still discussing the depth of “manufacturing dominance,” Guangdong has quietly completed a transformation of its driving forces: shifting from relying on “the world’s factory” scale manufacturing to activating new productive forces at both ends of the “smile curve.” This curve, moving toward the top of the global value chain, is demonstrating a completely new economic development model in Guangdong.

In the first year of the 14th Five-Year Plan, Guangdong, as the “largest economic province,” has been entrusted with the important task of “leading, demonstrating, and taking the lead.” Every step of Guangdong’s transformation will influence the national economic pulse. This year’s “First Spring Meeting” in Guangdong focuses on the coordinated development of manufacturing and services, elevating the service sector to a position equal to manufacturing, signaling a strong push for industry transformation through deep integration of the two sectors. This is a major practice of Guangdong activating the value at both ends of the “smile curve.” Moving from scale leadership to value leadership, Guangdong is crossing a new threshold.

Source: Xinhua News Agency

Reconstructing a New Development Logic

Inside the Guangzhou Pazhou Laboratory, brainwave-controlled wheelchairs help paralyzed patients move independently; in Nanshan, Shenzhen, DJI engineers are debugging obstacle avoidance algorithms for the next-generation drones, which will be equipped with independently developed laser radars and AI chips; at the China Spallation Neutron Source park in Dongguan, researchers have used the country’s first pulsed spallation neutron source to achieve several times higher experimental efficiency…

Behind these vivid scenes, Guangdong’s economy continues to enhance its “new content.” By 2025, the added value of Guangdong’s new economy will account for over a quarter of the province’s total GDP, growing 2.2 percentage points faster than the overall GDP growth; R&D investment intensity will rise to 3.60%, with regional innovation capacity ranking first nationwide for nine consecutive years.

Looking back at the reform and opening-up process, Guangdong’s economy has experienced the era of processing trade “three imports and one processing,” and once topped the “world’s factory” with its strong manufacturing base. At that time, Guangdong was at the bottom of the “smile curve,” winning through scale.

Now, standing at the forefront of a new round of technological revolution and industrial transformation, Guangdong has entered a critical third phase—centered on new productive forces, reshaping the industrial value chain. The new logic of Guangdong’s economic development involves increasing value at both ends of the “smile curve”: one end for innovation, R&D, and technological breakthroughs; the other for design, branding, and services.

On the left end of the “smile curve,” innovation-driven R&D is the core engine for generating new productive forces. Guangdong is promoting a “dual-strength” approach of industry and technology mutually reinforcing, building a full-chain innovation ecosystem of “basic research + technological breakthroughs + results transformation,” making technological innovation the true source of industrial upgrading.

From the world’s first mass-produced flying car line, to the approximately 25.2 billion yuan Yuexin Semiconductor Phase IV project, and to the world’s first large-scale G8.6 generation printed OLED production line—since last year, Guangdong’s series of world-class production lines have focused on key industry components.

Over the years, whether producing new energy vehicles, developing autonomous driving technology, manufacturing humanoid robots, or exploring flying cars, Xpeng Motors has always chosen to develop in Guangdong. During the National Two Sessions, Xpeng’s Chairman and CEO He Xiaopeng explained: Guangdong’s core advantage lies in its precise insight into the industrial and technological landscape. Complex disciplines and high-end manufacturing are fundamentally about the high coupling of technology chains, industrial chains, talent chains, and capital chains—testing the comprehensive capabilities of the region.

As demonstrated by a neutron beam, a robot, and an autonomous vehicle, Guangdong’s innovation is shifting from point breakthroughs to systemic emergence. As a major economic province, Guangdong no longer relies solely on capacity scale but emphasizes strengthening innovation levels, originating from the source, to reshape the division of labor in the global value chain.

As the manufacturing foundation becomes more solid, Guangdong’s manufacturing is also moving toward higher levels—integrating aesthetics into the entire manufacturing chain, with manufacturing aesthetics as a core competitive advantage, opening a new exploration from “making products” to “creating beauty.”

On the right side of the “smile curve,” Guangdong’s close connection to terminal consumer goods and markets has long given it advantages in branding and services. DJI’s agile technology, Huawei’s simple and convenient smart devices, GAC’s green and eco-friendly new energy vehicles, and Mousse’s personalized sleep solutions using smart algorithms and flexible production—all these Guangdong-made products tell stories of “technology + aesthetics” through the fusion of technological innovation and design aesthetics.

Recently, Guangdong’s vigorous “Guang Goods Going Global” brand promotion campaign indicates that once the brand strength of traditional manufacturing clusters is fully activated and unleashed, Guangdong will open new growth space on the right end of the “smile curve,” further building another engine for economic growth.

Professor Lin Jiang from Lingnan College, Sun Yat-sen University, said that from “three imports and one processing” to innovation-driven growth, and from scale to value leadership, Guangdong’s development logic has been reconstructed. The efforts at both ends of the “smile curve” are gradually transforming Guangdong from a participant in the global industrial chain into a leader in the global innovation chain.

A New Ecosystem of “Two Industries” Collaboration

At a critical juncture of global industrial chain restructuring, how can Guangdong continue to exert effort at both ends of the “smile curve”?

Recent high-quality development conferences in Guangdong reveal a clear evolution: 2023’s “Recreating a New Guangdong,” 2024’s “Mutual Reinforcement of Industry and Technology,” 2025’s “Building a Modern Industrial System,” and by 2026, the theme is anchored in “collaborative development of manufacturing and services.”

This year’s government work report mentions expanding capacity and improving quality in the service sector, deepening pilot programs for the integration of advanced manufacturing and modern services. “Two industries” collaboration remains a key focus for Guangdong this year. During the “First Spring Meeting,” Guangdong proposed to leverage manufacturing strength to drive service excellence, and vice versa, opening new avenues for industrial development through the deep integration of the two sectors.

Guangdong’s manufacturing scale is large, and its service industry is equally substantial. Last year, the added value of services reached 8.5 trillion yuan, accounting for more than one-tenth of the national total, maintaining the top position in service industry added value among all provinces for 41 consecutive years. The integration and extension of manufacturing and services are fundamental trends in industrial development.

At the GAC Aion Smart Ecosystem Factory’s assembly line, industrial robots work alongside workers; in Foshan, Midea Group is empowering over 2,000 enterprises with digital transformation experience through “Meyun Zhishu”; in Dongguan, Huawei’s Songshan Lake Laboratory is exporting industrial internet solutions to manufacturing giants… Guangdong is promoting more enterprises to become comprehensive solution providers based on manufacturing capacity or resource integration.

Guangdong’s NPC deputy and Guangdong Federation of Industry and Commerce Chairman, Chen Zhilei, told Southern Finance that as a manufacturing powerhouse, Guangdong must embed services into manufacturing and use technology to enhance and strengthen services to move up the value chain.

This is not merely an industrial overlay but a profound paradigm shift. Guangdong recognizes that upgrading a single manufacturing sector has reached a ceiling; it must break the block between “manufacturing” and “services.” This combination of new momentum is clearly outlined in specific strategies.

Song Xiangqing, Vice Dean of the Government Management Institute at Beijing Normal University and Vice President of the China Business Economics Society, believes Guangdong should focus on breaking through bottlenecks in “manufacturing demand—service supply—innovation transformation,” truly building a deeply embedded, symbiotic “two industries” ecosystem.

Guangdong has all 31 major manufacturing categories, and its above-scale industrial enterprises rank first nationwide in revenue, providing the broadest application scenarios for services. With the advent of artificial intelligence, Guangdong is implementing the “AI + Manufacturing” special initiative, promoting AI applications across R&D, design, production, branding, and services, further highlighting the “intelligent gene” of new productive forces.

Chen Zhilei believes that from the manufacturing side, industrial AI is the future direction of Guangdong’s “two industries” collaboration. The application of AI across various vertical industries is a crucial engine. From the service side, large-scale AI application is key—enabling more small and medium-sized enterprises to dare to use, use well, and benefit from AI, pushing AI’s role in productive services.

With the continued implementation of these strategies, Guangdong’s initial results in generating new productive forces at both ends of the “smile curve” are emerging. When manufacturing’s “hard” strength and services’ “soft” strength empower each other, Guangdong’s “smile curve” will not only rise further but also nurture towering modern industrial systems. This is not only a self-transcendence for a major economic province but also a source of upward growth for China’s economy.