getting real about virtual reality

sampling a VR game at CIFTIS in Beijing, September 2022

Beijing backs VR industry—how is this shifting policy?

  • policy guidance for ‘metaverse’ projects issued
  • regulatory guardrails will stay tight, above all for financing and content
  • 2022 FDI industry catalogue invites global players

As a ‘metaverse craze’ infects the market and cities pile into the space with policy support for projects, a first national-level guidance text to foster relevant tech emerged on 1 Nov 2022. Betting on VR/metaverse becoming dominant, Beijing is as ever intent on self-reliance and heading off global competition, adding quasi-military imperatives to growing key capabilities at home.

The 5-year action plan for developing virtual reality (VR) and integrating industry applications features the most all-encompassing policy terms so far, listing essential tasks and goals up until 2026. Despite not directly mentioning ‘metaverse’, the plan prioritises industry applications of VR, augmented reality (AR) and mixed reality (MR) technologies—some of the pillars upon which the metaverse is built.

roadmap for VR development

Activities and investments in VR exploded over 2021-22. The industry reportedly reached over C¥ 100 bn in value in 2021, with a doubling of relevant investments, and over 10,000 firms. Building on this momentum, the action plan sets ambitious near-term targets for 2026, including

  • breakthroughs in 3D and immersive AV tech, with VR integration
  • a new generation of human-friendly VR terminals
  • improving the industry ecosystem
  • applying VR at scale in critical economic and social domains
  • fostering globally competitive firms and clusters
  • balanced growth in tech, products, services and applications

Enabling this, the action plan highlights five main tasks

  • advancing critical technology innovation and development
  • stabilising industry and supply chains
  • speeding up multi-industry and multi-scenario application
  • building industrial public service platforms
  • fostering integrated application standards

real-world imperatives for the virtual

Major tech firms have gained headstarts in VR. Getting off the drawing boards in 2016, Baidu launched the PRC’s first metaverse platform Xirang (希壤 ‘land of hope’), in Dec 2021, designed to assist metaverse projects using the metaverse itself. VR headset maker Pico, whose products directly compete with Meta’s Oculus, was acquired in 2021 by TikTok's parent company ByteDance. The action plan accepts that VR and its applications remain at a stage of exploring and proving their use, requiring help setting up real-world tests. To find meaningful application in industry, three main challenges remain, according to Zhao Gang 赵刚 SaiZhi Industry Research Institute president

  1. improving VR terminals, mainly for comfort and wearability
  2. addressing content creation, not least cost, automation, and scarcity across industries
  3. expanding applications via more immersive experiences

metaverse with Chinese characteristics

Beijing is not warm to everything falling under the ‘metaverse’ umbrella. At the height of a metaverse frenzy in early 2022, Beijing sternly warned against fraud and other malpractice, cracked down on illegal fundraising via cryptocurrency, and held up approvals of metaverse-related trademarks. Digital assets like cryptocurrency and non-fungible tokens (NFTs) are deemed risky. Crypto deals were officially banned in Sep 2021, given the risks of money laundering and capital flight.

Financial aspects of NFTs, too, are looked at askance by Beijing. The uncertain policy outlook for digital assets notably led Wuhan municipality to backtrack on support for NFTs in a recently issued development plan.

Paranoia on content is likely to be the norm for VR, as it is for the media and cyberspace. Since 2021, measures have been put in place to tighten the grip on content in

Novel though it is, Beijing is loath to allow the metaverse to become a Wild West where content creators have free reign. By setting up policy roadmaps in the industry’s infancy, Beijing hopes to shape developments to its specifications.

For global firms, an expanding VR industry in China spells opportunity. The 2022 industry catalogue encouraging FDI includes R&D and manufacturing of VR, AR and MR equipment, development and manufacturing of vision sensors, and vocational and skills training services based on VR/AR devices, among others. As the industry evolves, keeping track of policy can only grow in importance.

who is shifting policy?

Zhao Gang 赵刚 | Saizhi Industry Research Institute president

Zhao Gang 赵刚 | Saizhi Industry Research Institute president

Three factors explain the appearance of the Action Plan


  1. Web3, digital twin and metaverse are the faces of the PRC's new wave of the digital economy; VR is a tech pillar in all cases
  2. global giants like Google and Apple led breakthroughs in VR. To catch up, the PRC must step up innovation and deployment
  3. the current phase of market scenario demos must clear bottlenecks in tech integration and scaling up

Hence an urgent need for VR policy support.

Formerly a senior vice-president at CCDI, a Ministry of Industry and Information Technology (MIIT) controlled company, Zhao is now a senior member of the Chinese Institute of Electronics (CIE) and sits on the Ministry of Science and Technology (MoST)’s project review expert committee. Zhao holds a doctoral degree and is a senior engineer (professor level).

Mao Shijie 毛世杰  | Lenovo Group vice-president

Mao Shijie 毛世杰 | Lenovo Group vice-president

Industry-specific metaverse is essential for digital transformation. Digitising firms demands infrastructure, not least Internet of Things (IoT) and Enterprise Resource Planning (ERP) databases. With these in place, the next step is to explore the metaverse and improve efficiency through simulation and tests in the virtual environment. It is yet to achieve coordinated innovation.

The Lenovo Group is planning metaverse ventures in devices, platforms and solutions. On devices, it is focusing on Artificial Intelligence of Things (AIoT) cameras, extended reality (XR) devices and new robotics. Open platforms will be offered with related tools, algorithms and top-level applications. Solutions will focus on XR applications, general applications and industry-specific metaverse.

Heading Lenovo’s Shanghai Research Institute, senior engineer Mao works on computer vision and XR, deploying these to support smart industries. He holds adjunct professor positions at Beihang University, Southeast University, and Shanghai University of Science and Technology.