China is placing artificial intelligence at the heart of its next wave of economic transformation. This year’s government work report calls for creating new forms of “smart economy,” signaling a shift from simply applying AI to individual sectors toward a broader transformation of the economy. At the same time, China has set a target for the digital economy to account for 12.5 percent of GDP by 2030, up from 10.5 percent last year. What do all these tell us about the direction of China’s economic transformation? Could the smart economy become the country’s next major engine of growth — and what new opportunities might come with it?