Smart Device Empire: Beijing’s Expansion Through Everyday Digital Infrastructure

Executive Summary:

• The PRC is exporting an integrated system of smart devices, data infrastructure, and governance standards. Through industrial policy, state-backed overproduction, and strategic data asymmetry, Beijing is building a global IoT architecture designed to embed PRC standards, influence, and governance into the connected environments of other countries.
• By dominating core components like cellular IoT modules and steering global standards through initiatives like China Standards 2035, Beijing is creating long-term supply chain dependencies and rewriting the rules of digital interoperability.
• Devices manufactured by PRC firms often carry embedded risks: unpatched vulnerabilities, mandated government access under China’s Data Security Law, and use in cyber operations like Volt Typhoon and LapDogs.
• Expansion into emerging markets is fueled by Digital Silk Road diplomacy, subsidized financing, and turnkey infrastructure deals—seen in Huawei’s smart city platforms and Haier’s bundled appliance systems deployed across Asia, Africa, and Latin America.
• Looking ahead, the global spread of China’s IoT platforms signals a deeper push to shape the foundations of digital infrastructure—where influence over connected devices gradually extends to norms, data flows, and governance models.

The People’s Republic of China (PRC) dominates the smart home technologies sector, serving as a powerful illustration of its broader strategy to dominate the global Internet of Things (IoT) ecosystem. Smart home devices—ranging from voice-activated assistants and connected appliances to security cameras and thermostats—have flooded international markets in recent years. Chinese manufacturers like Haier, TCL, and Hisense capturing significant market shares through aggressive pricing and rapid innovation (Telecom Review, April 12, 2024; ITIF, September 16, 2024). By the end of 2025, the PRC’s smart home market is projected to reach approximately $37 billion in value domestically, with an expected compound annual growth rate (CAGR) of 11 percent through 2030 (Statista, 2025 [accessed July 21]). Meanwhile, exports from PRC firms may account for 20–30 percent of global shipments within the next three years (Omdia, November 18, 2024). This export surge is part trade phenomenon, part strategic maneuver, as domestic overproduction—fueled by subsidies—creates excess capacity that undercuts competitors abroad, raising concerns of dumping in markets like the United States and Europe (MERICS, April 1).

PRC companies’ market dominance in smart homes is underpinned by state-orchestrated policies that blend industrial upgrading with geopolitical ambitions. These include cascading industrial strategies that have poured resources into IoT components, domestic industry support that indirectly promotes exports through cost efficiencies, and nonreciprocal data flows and low margins that augment the more domestically-oriented policies and allow firms to dominate global supply chains and standards.

PRC Smart Home Devices Pose Security Risks

PRC smart home devices constitute an underappreciated risk. In foreign markets, these affordable products promise convenience but embed vulnerabilities, including backdoors for data exfiltration under laws like the Data Security Law, which mandates access for state security services (Hoover Institution, April 18, 2023). This nonreciprocal model allows Beijing to harvest user data for training artificial intelligence (AI) models, economic intelligence, or geopolitical leverage, while restricting outflows from the PRC.

Broader risks stemming from the PRC’s IoT dominance include economic coercion, cybersecurity threats, and geopolitical influence that could reshape global tech landscapes through leveraging connectivity. This is because devices generate real-time data on user behaviors, locations, and habits, potentially feeding into surveillance ecosystems or enabling state-engineered disruptions (House Select Committee on the CCP, August 8, 2023). Vulnerabilities like firmware backdoors in CIMs could facilitate espionage or sabotage in critical infrastructure (CGTN, September 12, 2024).

PRC-manufactured IoT devices are already serving as attack vectors infiltrating critical infrastructure across the United States, Europe, Japan, and allied nations (Council on Geostrategy, March 19, 2024; Chertoff Group, October 18, 2024). The “LapDogs” espionage campaign, identified by SecurityScorecard, hijacked over 1,000 routers and IoT devices across the United States, Japan, South Korea, Taiwan, and Hong Kong, turning them into operational relay boxes with custom backdoors like “ShortLeash” to maintain stealthy, persistent access and facilitate downstream infiltration into corporate networks (SecurityWeek, June 24). British intelligence officials have raised alarms over Chinese cellular IoT modules embedded in traffic systems, electric vehicles, financial terminals, and smart grids, warning that these modules could allow Beijing to freeze traffic lights, immobilize vehicles, or cut power remotely (Coalition on Securing Technology, March 2024; The Times, May 14). In the United States, Volt Typhoon, Flax Typhoon, and other PRC government-linked APT groups have leveraged unpatched IoT endpoints, successfully compromising networks like Massachusetts water utilities and Guam infrastructure, even if persistence was ultimately disrupted (Department of Justice, September 18, 2024; CISA, February 7; TechRadar, July 16).

Power in the IoT age will be increasingly “implied in the structures” of networks rather than just military might. (MERICS, June 24, 2021). By shaping those structures, the PRC envisions a future in which it enjoys both economic prosperity and strategic security, with the smart home and connected device boom serving as a crucial stepping stone toward those ends.

Table 1: PRC IoT Industrial Buildout From Strategic Industry to Global Expansion (2009–2025)

Engineering Inevitability: The Strategic Logic Behind Beijing’s IoT Push

The PRC’s drive to dominate the global Internet of Things (IoT) landscape is rooted in a long-term strategy to become the world’s leading manufacturer of the cyber-physical systems that increasingly underpin modern life. These systems blur the line between the digital and physical worlds, embedding connectivity into homes, factories, transportation networks, and utilities. Chinese Communist Party (CCP) leaders view mastery of such systems not merely as an economic priority, but as a form of structural power—enabling control over the technological environments in which individuals, organizations, and entire societies operate. Control over IoT ecosystems allows states to set standards, shape data flows, and embed influence across borders. For the People’s Republic of China (PRC), this control is a stepping stone toward its broader ambition of becoming a manufacturing and technological superpower—a national objective described by Xi Jinping and other senior officials as securing the “commanding heights” (制高点) of innovation (see Xinhua, October 25, 2019; Qiushi, March 15, 2021).

Beijing’s ambition to dominate the Internet of Things (IoT) ecosystem—and, by extension, the connected devices that shape daily life—has deep roots in national strategy. Party leaders began publicly articulating this vision over a decade ago. In 2009, then-Premier Wen Jiabao (温家宝) visited the Chinese Academy of Sciences’ (CAS) IoT sensor research and development (R&D) headquarters in Wuxi and later delivered a speech identifying the Internet of Things as one of five “emerging strategic industries” (新兴战略性产业) for the country (CAS, March 16, 2010). In Wen’s government work report delivered the following year, development of a national IoT industry was elevated to the level of a national development strategy backed by a projected RMB 3.9 trillion ($540 billion) in investment over the subsequent decade (Xinhua, March 15, 2010). In an early signal that connected devices were viewed as central to the PRC’s future competitiveness, the report urged accelerated deployment and application of IoT technologies.

In the years that followed, Beijing rolled out a flurry of national plans and directives to promote IoT development. A 2011 joint policy directive (关于加快推进信息化与工业化深度融合的若干意见) issued by five central ministries laid a foundational framework for integrating digital technologies, including IoT, across the PRC’s industrial ecosystem (Xinhua, March 31, 2011). [1] It explicitly identified IoT, cloud computing, and intelligent manufacturing as critical enablers of a “modern production system” (现代生产体系), emphasizing their role in digitalizing and networking industrial products, equipment, and processes. The document called for IoT application demonstrations in infrastructure, logistics, and industrial control systems, and promoted the R&D and industrialization of smart terminals, sensors, radio-frequency identification (RFID), and supporting systems. This signaled the state’s long-term commitment to embedding IoT across strategic sectors. By positioning IoT at the core of its broader development plan for integrating informatization industrialization strategy (信息化和工业化深度融合发展规划), the PRC laid the groundwork for its current efforts to dominate global connected device supply chains and standards.

Later that same year, MIIT issued the country’s first five-year plan (2011–2015) for IoT (物联网 ‘十二五’ 发展规划), marking a strategic elevation of IoT to a national priority by framing it as one of the “commanding heights”—i.e. a strategic influence and control point—in global economic and technological competition (MIIT November 28, 2011). The plan aimed to secure supply chain dominance by developing core technologies (e.g. sensors, chips, and short-range communications), building industrial clusters, and accelerating domestic standard-setting to shape global norms. It also embedded data governance and security into the IoT agenda, requiring lifecycle risk assessments and state-led oversight. Demonstration zones in cities like Wuxi and Hangzhou served not only to scale domestic applications but to export the PRC’s ecosystem designs abroad. This laid the foundation for the country’s long-term strategy: using IoT as both a pillar of industrial modernization and a vehicle for geopolitical and data leverage.

Building on this foundational strategy, Beijing continued to institutionalize and expand its IoT ambitions through a series of successive policies and plans. These planning documents not only reinforced the centrality of IoT to national development but also signaled a deeper integration of connected devices into the PRC’s industrial policy, cybersecurity regime, and global technology standards push.

• 12th Five-Year Plan for the Development of National Strategic Emerging Industries (‘十二五’ 国家战略性新兴产业发展规划): This plan embedded the Internet of Things within the PRC’s national industrial strategy as a critical technology for seizing the “commanding heights” of global competition. IoT was identified as a “new generation information technology” (新一代信息技术) and foundational infrastructure for smart homes, cities, logistics, and industrial automation. The plan aimed to build a complete domestic IoT ecosystem—from low-power sensors and RFID to core chips, cloud computing, and intelligent terminal integration—backed by centralized standard-setting, targeted funding, industrial clusters, and state-led demonstration zones. Strategic goals included upgrading the PRC’s position in global supply chains, scaling domestic innovation capacity, and embedding Chinese technical standards internationally (State Council General Office, July 9, 2012).
• National New Urbanization Plan (2014–2020) (国家新型城镇化规划(2014–2020年)): Under this plan, smart city construction was positioned as a key deployment channel for national IoT strategy. It promoted the integration of IoT, cloud computing, and big data into urban infrastructure, governance, and public services to optimize resource use, improve cross-sector coordination, and modernize city management. This included building out core infrastructure, such as networks and data centers, to enable cross-departmental data sharing and developing intelligent systems for transportation, utilities, and public safety (Xinhua, March 16, 2014).
• Made in China 2025 (中国制造2025): This plan positioned intelligent manufacturing—and by extension, IoT—as central to the PRC’s strategy for industrial transformation and global competitiveness. It identified smart terminal products such as smart home appliances, wearables, and connected vehicles as key areas of expansion, linking them to broader industrial goals of personalization, lifecycle management, and responsive manufacturing. The plan called for accelerating IoT applications in intelligent monitoring, remote diagnostics, and full-chain traceability, emphasizing the development of secure, independent operating systems and industrial software to support these functions. Internationally, it encouraged global integration via open industrial ecosystems and expanded cloud and big data platforms, laying groundwork for Chinese IoT standards and platforms to gain international market share while reducing reliance on foreign technologies (State Council, May 8, 2015).
• Guiding Opinions on Actively Promoting the ‘Internet Plus’ Action ( 关于积极推进 ‘互联网+’ 行动的指导意见): This document positioned IoT as a foundational pillar in the country’s effort to restructure its economy through digital integration and global competitiveness. It called for “deep integration of the Internet with various fields of the economy and society” (把互联网的创新成果与经济社会各领域深度融合) to reshape productivity and enable a “new economic form” (新经济形态) centered on intelligent services and connected infrastructure. In the smart home domain, it advanced the standardization of “smart instruments, smart homes, and Internet of Vehicles” (智能仪表、智能家居、车联网), laying groundwork for interoperable ecosystems. Internationally, the document urged the enhancement of the PRC’s voice in global standards bodies like ISO, IEC, and ITU—seeking to “simultaneously promote international and domestic standardization work” (同步推进国际国内标准化工作) and expand the PRC’s global influence over emerging IoT norms and technologies (State Council, July 4, 2015).
• Framework of the 13th Five-Year Plan for National Economic and Social Development (中华人民共和国国民经济和社会发展第十三个五年规划纲要): This document embedded IoT into multiple layers of national development strategy, viewing IoT as both foundational infrastructure and as a lever for future competitiveness. The plan called for building a “ubiquitous secure Internet of Things” (泛在安全物联网), integrating IoT with cloud platforms, big data, smart cities, and agricultural modernization. It directed key firms to open platform resources and pushed for a national “Internet+” standard system to strengthen the PRC’s influence in international rulemaking. Strategic industries were to include IoT as part of a forward-looking “information network” (信息网络) agenda, while smart city development was explicitly tied to the expansion of IoT-enabled infrastructure (Xinhua, March 17, 2016).
• Framework of the National Informatization Development Strategy (国家信息化发展战略纲要): This framework places IoT at the heart of the PRC’s informatization drive. It states that whoever occupies the commanding heights in informatization will be able to “seize the initiative, gain advantages, win security, and win the future” (够掌握先机、赢得优势、赢得安全、赢得未来). It also mandates a systematic approach to overcoming “weak links” (薄弱环节)—especially in areas like integrated circuits, basic software, and core components—and explicitly identifies IoT, alongside mobile Internet, cloud computing, and big data, as a field in which the PRC must “strive to build comparative advantages” (着力构筑 … 比较优势) and “consolidate global leadership” (巩固 … 全球领先地位) in next-generation infrastructure (SCIO, July 28, 2016).
• Framework of the 14th Five-Year Plan for National Economic and Social Development and 2035 Long-Range Goals (中华人民共和国国民经济和社会发展第十四个五年规划和2035年远景目标纲要): This consecrated IoT as a core pillar of national modernization, positioning it alongside 5G, AI, and big data as part of an integrated digital infrastructure strategy. The plan called for the “comprehensive development” (全面发展) of IoT, enabling ubiquitous sensing and intelligent coordination across sectors like transportation, energy, and municipal services. Internationally, Beijing aimed to “expand the interconnection nodes of the backbone network” (扩容骨干网互联节点) and build “new international communication gateways” (新设一批国际通信出入口), signaling ambitions to extend IoT-linked infrastructure beyond PRC borders (Xinhua, March 13, 2021).
• Three-Year Action Plan for the Construction of New IoT Infrastructure (2021–2023) (物联网新型基础设施建设三年行动计划 (2021–2023年)): This plan marked a turning point in the country’s strategy to scale IoT domestically while positioning itself as a global standard-setter. It directly backed the rollout of smart home systems, alongside wearable health devices, smart appliances, and cross-sector IoT deployments in elderly care, sports, and health. Specifically, it called for smart home systems with “interconnected heterogeneous products and centralized control” (异构产品互联、集中控制的智慧家庭) in homes, buildings, and communities. At the same time, the plan aimed to entrench the PRC’s global leadership in technical standards, platform development, and industrial coordination, with support for “open source communities” (开源社区), international standard-setting, and expansion through the One Belt One Road initiative and Regional Comprehensive Economic Partnership (RCEP). Key goals included reaching over 2 billion IoT connections by 2023, integration with AI, 5G, and cloud computing, and the development of a secure, high-performance domestic supply chain. The vision was not only to embed IoT across sectors domestically but also to shape future international ecosystems, anchoring them in Chinese technologies, architectures, and governance norms (MIIT, September 10, 2021).
• Notice of the MIIT General Office on Promoting the Development of the Mobile IoT  ‘Intelligent Connection of Everything’ (工业和信息化部办公厅关于推进移动物联网 ‘万物智联’ 发展的通知): Most recently, this MIIT regulations frames mobile IoT as a core pillar of the PRC’s digital infrastructure and as a strategic enabler of national industrial transformation. It outlines an ambitious buildout of 4G/5G-based IoT networks, aiming for over 3.6 billion terminal connections and national coverage of NB-IoT and NR-Light (RedCap) technologies by 2027 (these are technologies designed for low-power, wide-area IoT applications). The plan supports widespread deployment across sectors—including manufacturing, logistics, energy, healthcare, smart cities—and emphasizes intelligent integration with AI, big data, and cloud platforms. It promotes international standards-setting, industrial clustering, and cross-sector collaboration, while calling for platform openness, security safeguards, and talent training. The overarching goal is to shift from “connection of everything” (万物互联) to “intelligent connection of everything” (万物智联) reinforcing the PRC’s strategic control over next-generation IoT ecosystems and embedding them into the fabric of economic governance and societal management (MIIT, August 29, 2024).

Conclusion

Beijing’s dominance in the global smart home and IoT sectors is not accidental—it is the product of a coordinated, long-term strategy that fuses industrial planning, global market saturation, and geopolitical ambition. By embedding connected devices into homes, cities, and critical systems worldwide, the PRC has positioned itself not only as a manufacturing superpower, but as a potential gatekeeper of data, infrastructure, and the digital rules that govern daily life. This bid for industrial-structural power is already reshaping global markets, security norms, and technological sovereignty in Beijing’s favor. The expansion of PRC-made IoT systems into foreign markets enables Beijing to shape global technology standards, influence data flows, and embed infrastructure that may be subject to Party-state oversight. This raises long-term risks of technological dependence, data capture, and potential exposure to surveillance or disruption in critical connected environments.

Looking ahead, the PRC’s trajectory suggests that smart homes are only the entry point to a much larger strategic architecture—one that will increasingly fuse AI, 5G, cloud, and edge computing into a globalized digital nervous system with Party characteristics. As its domestic IoT infrastructure nears full-stack deployment and global reach accelerates, the next arenas of competition will include leadership in international data governance, influence over embedded technical standards, and the security implications of a world increasingly wired through PRC-controlled platforms.

 Notes

[1] The five ministries include MIIT, MOST, MOF, MOFCOM, and SASAC.