In recent years, China’s emerging "low-altitude economy" has gained momentum under policy support. From drones to general aviation and emergency rescue, diverse industries are positioning to capture this vast potential market.
The appeal of the low-altitude economy lies in its promise not only to stimulate economic growth but also to bring convenience to areas like logistics, tourism, and emergency response. As policy support intensifies, there are high hopes for China’s low-altitude economic ambitions.
Yet, will this low-altitude economy transform into another bubble fueled by overheated capital and policy incentives?
The low-altitude economy encompasses a range of fields including general aviation, drone logistics, tourism, agricultural work, and emergency rescue, focused primarily on airspace below 3,000 meters. This space is distinct from traditional commercial airline routes and strategic military or critical transport airways, creating a unique commercial landscape for development. According to China’s Civil Aviation Administration (CAAC), industries involved include aviation manufacturing, infrastructure development, aviation services, and technology R&D.
Globally, the low-altitude economy has long been in practice in the West. The U.S., for example, began opening low-altitude airspace in the 1980s, and its general aviation industry now contributes over $200 billion annually to GDP. European countries have also seen notable success, especially in drone logistics and tourism.
In contrast, China’s low-altitude economy is a more recent development but with vast growth potential. As of 2023, the Chinese low-altitude economy exceeded 500 billion RMB, with projections to reach 2 trillion RMB by 2030. Deloitte reports that China’s drone market alone grew nearly 60% annually from 2016 to 2021, indicating strong demand.
With low entry barriers, a visible market demand, and gradually liberalized policies, China’s low-altitude economy is poised for substantial growth, particularly in drone logistics, agricultural drones, and urban tourism. Over recent years, China’s share in the global drone industry has risen from 10% to over 30%, positioning the low-altitude economy as a potential new growth engine.
Since 2010, China has piloted low-altitude airspace liberalization. Recent years have seen a flurry of policies to support this sector’s growth. In 2021, the CAAC issued guidelines to promote general aviation, urging companies to accelerate their low-altitude economy plans.
In 2024, low-altitude economy goals were formalized in the government’s work report at China’s annual "Two Sessions," with the Ministry of Industry and Information Technology (MIIT) and other agencies releasing the *2024-2030 General Aviation Equipment Innovation and Application Plan*, aiming to develop a trillion-yuan low-altitude economy by 2030. These policies have sparked a surge in demand and fueled growth in sectors like drones and general aviation infrastructure.
China’s low-altitude economy has attracted a diverse range of players, from logistics giants like SF Express and JD.com to drone manufacturers like DJI, as well as strong support from local governments.
For instance, SF Express has begun piloting drone logistics in regions such as Yunnan and Fujian, exploring the feasibility of low-altitude logistics. DJI, leveraging its leading technology, has expanded into low-altitude logistics and mapping applications.
Local governments have also made notable investments. Cities like Chengdu and Shenzhen have established low-altitude economy pilot zones, creating a synergy between policy support and market demand.
Local governments play a crucial role in the development of the low-altitude economy in China. The Chengdu government, for example, has introduced specific policies to support the low-altitude economy, setting up a “Low-Altitude Economy Pilot Zone” and investing heavily in related infrastructure. Shenzhen launched a drone logistics pilot in 2023, planning to gradually open urban low-altitude routes over the next five years to support drone logistics and other low-altitude economic activities. Jiangxi and Shaanxi provinces are also leveraging local industry advantages to establish low-altitude drone testing zones, promoting applications in agriculture and logistics.
While these policies create a favorable environment, they also reflect local governments’ heavy reliance on the market, hinting at potential risks.
Despite its promising outlook, China’s low-altitude economy faces significant challenges. China’s stringent airspace regulations limit the extent of low-altitude airspace access, with companies often bogged down by lengthy approval processes that slow industry growth.
Infrastructure is another major hurdle. Many low-altitude airports and drone logistics facilities are still in the planning phase, stalling large-scale application. For example, as of 2022, China had fewer than 500 general airports, far below the 5,000 in the U.S., restricting the low-altitude economy’s full potential.
Additionally, coordinating airspace management with local government policies remains a challenge. Drone companies require approvals from the CAAC and local regulatory bodies, causing many to hesitate due to policy uncertainty.
As more drone and aviation companies enter the market, the risk of airspace congestion grows. Some companies face safety issues due to immature technology, with frequent incidents tarnishing the sector’s safety reputation.
Privacy concerns and flight safety have also become key issues, especially in urban low-altitude logistics, where drones may disrupt residents’ daily lives and raise privacy concerns.
The low-altitude economy’s growth is also constrained by weak market demand. Although many companies are venturing into drone logistics and low-altitude tourism, actual demand remains below expectations. Without clear business models, some companies over-rely on policy support, making profitability challenging.
According to iResearch, China’s drone logistics market was worth 3 billion RMB in 2023, yet it remains largely dependent on government subsidies and policies, with a self-sustaining commercial ecosystem still lacking.
China’s low-altitude economy shows signs of overheating capital. Some drone and general aviation companies are overvalued, with significant hype. In 2022, over 200 drone companies were established in China, many lacking core technology and relying on policy advantages to attract large funding.
With an influx of new players and intense competition, there is a risk of “policy-driven, market-undeveloped” growth, where the industry may struggle to sustain long-term vitality.
China’s solar industry faced a similar bubble early on, with local governments’ heavy support leading to rapid expansion and fierce competition, ultimately triggering a price war and overcapacity. The low-altitude economy faces similar risks, especially where policy support and market demand are mismatched. Experts warn that unregulated expansion could lead to “false demand,” with high market enthusiasm that’s hard to sustain.
Over-optimism in capital markets could drive a “short-sighted” development approach, overlooking the actual pace of technological, regulatory, and market demand growth. This phenomenon has emerged in several Chinese industries, and without a long-term plan, the low-altitude economy may repeat this pattern. Experts suggest that a sustainable business model driven by market demand rather than policy incentives is key.
In the future, China’s low-altitude economy may see a period of consolidation. Firms focusing on drone logistics, emergency rescue, and mapping may establish clearer roles to avoid reckless expansion. DJI, for example, has secured market share through technical advantages rather than aggressive diversification, potentially serving as a model for the industry.
Technology innovation is vital for the sustainable growth of the low-altitude economy. With advancements in 5G, AI, and autonomous flight, more applications, such as remote medical assistance, aerial tourism, and agricultural tasks, can be realized. The low-altitude economy is expected to expand beyond logistics to form a more diverse market landscape.
As technologies, applications, and policies mature, China’s low-altitude economy will shape the domestic landscape while increasing its presence in the global value chain. By 2030, the global low-altitude economy is projected to reach trillions of dollars, with China’s technological lead and market scale amplifying its global impact.
In the coming decade, China’s low-altitude economic development may steer the global low-altitude market, contingent on sustained progress in technology, market expansion, and policy support. This emerging industry is not only a strategic focus for China’s technological innovation and industrial upgrading but also an "airborne bridge" to global markets.