whether Beijing backs a drone or blocks it comes down to one test: can it be tracked
Since 2021, the low-altitude economy, with drones as one of its core platforms, has been steadily elevated into a nationally championed strategic industry. Operating civilian drones is, at the same time, ever more strictly regulated. The 2024 ‘Interim regulations on the flight management of unmanned aircraft’, set up real-name registration, operator certification, mandatory liability insurance and flight approval.
Mandatory national standards, taking effect in May 2026, embed these requirements into the hardware itself, obliging drones to broadcast identity, position and status continuously, with identification data stored beyond the operator’s reach. The revised Public Security Administration Penalties Law brings unauthorised flight within the administrative penalty system, and Beijing has designated its entire municipal territory as controlled airspace, regulating even the sale, transport and storage of drones and their core components.
The underlying logic is a re-vetting of who gets to use low-altitude airspace. The state encourages organised flights that can be registered, identified, approved, monitored, dispatched and insured.
The clearest statement of intent is the Implementation plan for innovative applications of general aviation equipment 2024–30, the most operational national policy document in the field, and the reason official media hailed 2024 as year one of the low-altitude economy. It names infrastructure inspection, emergency rescue, forest-fire prevention, logistics, agricultural operations and urban governance as priority scenarios.
By 2027 the plan expects large-scale aerial logistics and emergency rescue, commercial urban air mobility, 20 replicable demonstrations and ten ecosystem-leading champions; by 2030, a passenger network combining short-haul transport with eVTOL (electric vertical take-off and landing) aircraft, a drone delivery network and a market worth more than C¥1tn (US$139bn). The sequencing is explicit too: NDRC (National Development and Reform Commission) prescribes cargo before passengers, segregated before integrated airspace, and outskirts before urban cores. The civil aviation regulator’s gloss on the identification standard is blunt: ‘only what can be controlled can be opened up’. Organised flight embedded in commercial and government workflows is now the growth engine.
policy over market
This vetting is reshaping market structure and profit logic. Local governments open airspace, release application scenarios and disburse subsidies against policy catalogues, and firms package projects around those eligible scenarios: supply follows the catalogue as much as it follows demand. The applications firms pursue overlap almost perfectly with the encouragement lists in policy documents, yet NDRC’s own late-2025 language concedes that only agricultural operations and inspection are relatively mature, while logistics, urban governance and emergency rescue remain at a cultivation stage. Selling low-altitude services has yet, in most scenarios, to produce stable revenue at scale.
Logistics is the most visible case: instant retail, cross-sea routes, island and mountain last-mile delivery, and medical transport. By late 2025, Meituan’s drone unit had opened 65 routes across Shenzhen, Shanghai, Beijing and Guangzhou, expanded to Dubai and Hong Kong, and completed more than 740,000 commercial orders.
Visibility has run ahead of profitability: the China Academy of Information and Communications Technology’s low-altitude industry report states plainly that logistics transport remains at an early exploratory stage with no stable profit model, and Meituan’s own target of building large-scale front-end profitability over the next two to three years implies current operations are still in the scaling and model-validation phase.
one that never needed a subsidy
Agriculture is the clearest case of demand that policy did not have to manufacture. Crop-spraying and monitoring drones fly over open farmland, at low density and away from the airspace-congestion problem that shapes urban scenarios, so the registration, approval and insurance apparatus built for city flight barely applies. The labour-substitution arithmetic is unambiguous rather than marginal: the PRC’s agricultural drone fleet is in the low-to-mid hundreds of thousands and still expanding by 20–25 percent a year, and in leading grain-producing regions, Xinjiang, Heilongjiang and Jiangsu, more than 90 percent of crop area is now managed through full-cycle drone operations. XAG, the global number two behind DJI, turned profitable in 2024 and has filed for an initial public offering in Hong Kong.
Where the other scenarios wait on subsidy catalogues and government contracts, agriculture found a paying customer on its own.
Industrial inspection, covering power lines, pipelines, wind turbines and surveying, is commercially strong, with identifiable customers, enclosed operating environments and computable value: power-line drone inspection alone had passed 4 million kilometres by late 2025. Profit here comes mainly from power inspection and integrated system solutions, which are relatively mature; other inspection fields remain more uneven and project-based.
Urban governance and public services, such as traffic and river patrols, fire reconnaissance, disaster monitoring and emergency response, are strongly policy-endorsed, with revenue running mainly through government procurement and public-service contracts rather than a self-sustaining commercial market. Low-altitude tourism and eVTOL passenger experiences generate ticket revenue from light shows, sightseeing and short-hop shuttles, but mass commuting remains distant.
why it doesn’t pay
Costs often cannot beat ground alternatives. SF Express priced same-city drone delivery in Shenzhen at C¥12 (~US$1.7) per item after subsidy, against a conventional courier price of C¥10 (~US$1.4) with an estimated cost of C¥6.4 (~US$0.9); drones save time, but the cost case is not yet proven. Demand also tends to be novelty-driven rather than essential: consumers try drone delivery or sightseeing once or twice but will not pay a lasting premium unless it solves a genuine problem of distance, urgency or access.
Utilisation compounds both problems, since aircraft, docks, batteries, operators, insurance and maintenance need dense, frequent use, and most routes and scenarios remain too fragmented to spread those fixed costs. The cash-burn cycle then stretches longer than most investors expect: Volocopter, a leading eVTOL developer, was hit by prolonged certification, R&D and financing pressure years before any mass commercial revenue arrived. Agriculture, discussed above, is the counter-case: real, recurring demand and a clear cost advantage over hired labour are enough to clear all four constraints without subsidy.
the state’s fix
Direct subsidies cover the whole supply chain, roughly six types and 40 sub-categories, with scenario subsidies typically taking the form of state purchasing of services. For much of what is booked as service revenue, the state foots the bill. Government is also becoming a consolidated customer in its own right. Chengdu pooled the inspection needs of 12 municipal departments into unified procurement, lifting drone utilisation at participating firms from 30 to 85 percent.
Institutional supply is expanding alongside the money: the July 2026 revised Civil Aviation Law creates tiered rules for airspace below 300 metres, mandatory insurance arrives in 2027, airspace reform has cut flight approval in pilot provinces from 72 hours to one, and Shenzhen’s digital airspace base enables automatic file-and-fly authorisation.
Infrastructure finance is flowing through special-purpose bonds, real estate investment trusts and a C¥20bn (~US$2.8bn) China Development Bank facility. The 2026 Government Work Report duly promoted the sector to ‘emerging pillar industry’, alongside integrated circuits and aerospace.
who profits
If services broadly lose money, the money still flows to manufacturing. Dependable revenue sits in airframes, payloads, systems integration and supporting hardware: the dominant business model of the low-altitude economy remains selling drones. What has changed is the buyer. As hobbyist flying runs into tightening registration, certification, insurance and controlled-airspace rules, manufacturers’ growth has shifted toward government and industry customers, the buyers who can register, get approved and fly at scale within a workflow.
The PRC’s early boom was consumer-driven: personal aerial photography powered DJI’s expansion from around 2013. After 2020 that curve stalled. The consumer market grew from C¥33.5bn (~US$4.7bn) in 2020 to C¥45.8bn (~US$6.4bn) in 2024, a compound rate of about 8 percent, with growth flattening further into 2024. This is the individual-hobbyist segment that the rules are squeezing hardest, and it shows: DJI’s move into robot vacuums, vehicle-mounted drone systems and 3D printing is an admission that consumers can no longer carry growth, partly because the product is maturing, partly because flying one is becoming more of a hassle.
The centre of gravity has shifted to industrial and professional flight, precisely the category the state is vetting for: the industrial drone market grew from C¥25.3bn (~US$3.5bn) to C¥65.1bn (~US$9.0bn) over the same period, a 26.6 percent compound rate. This maps onto scenarios that are approvable, supervisable and procurable, and the competitive question has changed from who can attract consumers to who can enter the workflows of government and industry customers.
Even in agriculture, the one vertical with a genuine paying market, most of the margin still sits with the equipment makers: DJI and XAG together hold more than 75 percent of it, and DJI has spent years compressing prices through scale.
The low-altitude economy’s business model rests on selling drones to whoever the state allows to fly them.
squeezed at home, blocked abroad
At home, the hobbyist is a shrinking constituency; abroad, exports initially cushioned the decline. The PRC has been the world’s largest civilian-drone exporter for years. Customs data show civil drone exports of US$1.94bn in the first 11 months of 2024, up 16.8 percent by value and 24.2 percent by volume. Through 2024, hobbyists overseas were still buying the drones that regulatory friction and a maturing product had already cooled at home.
The United States, the second-largest destination for those exports in the first ten months of 2024, has since largely closed to new PRC-produced drone models. In December 2025, the Federal Communications Commission blocked new foreign-made drone models, consumer drones included, from the equipment authorisation required to enter the US market. Previously approved models remain legal to sell and fly, but the pipeline of new products is closed. Some manufacturers have since been cleared through a case-by-case security review; DJI and Autel have not.
By May 2026, Nikkei Asia was reporting that PRC civilian drone shipments had plummeted under the combined weight of restrictions at home and the American ban, with DJI shifting resources toward cameras and other product lines. Domestic saturation began that diversification; foreign closure has now made it unavoidable.
The United States is the most severe case, though Europe’s consumer market remains open, with most Western governments only restricting use in their own procurement and in critical infrastructure. The consumer drone, the product on which DJI built the industry, is no longer the obvious growth engine: at home, the market is maturing under tighter rules as industrial drones become the main source of growth; its most valuable export market has closed, and the markets that remain open are unlikely to restore it. A more plausible replacement is to extend the professional turn already made at home into farm and industrial workflows to markets where cost, labour substitution and service support matter more than consumer novelty.
Brazil illustrates the opportunity: agricultural drones reportedly rose from around 3,000 units in 2021 to about 35,000 in 2025. DJI Agriculture has built a dense national service network. But the market is not uncontested. In Southeast Asian rice farming, PRC suppliers have the strongest price-scale position, while Japanese incumbents are trying to defend the field: Yamaha has operated unmanned agricultural helicopters since the late 1980s, and Terra Drone signed a 2025 sales partnership with Yanmar Diesel Indonesia to target rice and other field crops.
If the pattern holds, the export future of PRC drone manufacturers will look much like their domestic present: less about selling to consumers than about selling working drones into farms and industrial workflows.
three votes for caution
Wu Renbiao 吴仁彪 | Vice president of Civil Aviation University of China; NPC delegate economy
A senior aviation-safety scholar, Wu Renbiao 吴仁彪 frames low-altitude development as entering an elimination round. The sector has moved beyond policy excitement and technical display, and firms now have to prove safety, operating efficiency and commercial closure. His warning is that low-altitude growth cannot rest on aircraft announcements, city slogans or capital enthusiasm alone: airspace governance, certification, reliability, infrastructure and dispatch must all work before large-scale service markets can form. He is sceptical of supply moving faster than demand, noting that firms are building aircraft and platforms while many downstream scenarios still lack a clear cost advantage. His core test for the industry is whether aircraft can fly safely, be governed continuously, and produce efficiency gains someone is willing to pay for.
Wu is vice president of Civil Aviation University of China, a doctoral supervisor, and discipline leader of the PRC’s first aviation-safety doctoral programme. He holds a National Science Fund for Distinguished Young Scholars award and directs Tianjin’s Key Laboratory of Intelligent Signal and Image Processing. He served on the 11th to 13th National Committees of the Chinese People’s Political Consultative Conference (CPPCC) and is a delegate to the 14th National People’s Congress. His authority rests on aviation safety, radar and signal processing rather than industrial promotion.
Li Xiaojin 李晓津 | Civil Aviation University of China professor
An aviation economist, Li Xiaojin 李晓津, argues that low-altitude growth should begin with cutting costs rather than chasing revenue. Cities that rush to build a low-altitude economy as a new source of cash reverse the sequence, in his view: the first task is using drones to replace or support existing public and industrial functions, build operating habits, and prove savings. He stresses local fit over generic ambition, arguing that a coastal energy city, a mining and steel base, a border province and a congested metropolis need different route maps. His preferred sequence runs information first, cargo second, passengers last, with drones carrying data before goods and goods before people. Low altitude, in this framing, is an efficiency layer added to existing industries.
Li teaches at the School of Economics and Management, Civil Aviation University of China, and directs the university’s Institute of Aviation Economics and Development. His expertise is aviation economics: route economics, transport efficiency, airport and regional development, and the commercialisation of new aviation formats. That grounding makes his commentary a useful economic filter, testing where aircraft cut cost, raise efficiency and fit local demand.
Wan Fujun 万福军 | China National Institute of Standardisation, UAV Standardisation Institute
A standards specialist, Wan Fujun 万福军 treats the low-altitude economy as a standard-setting problem before it becomes a mass market. The question, in his view, is whether new products, infrastructure and services can be governed through common rules. He stresses that drone docks, intelligent communication and navigation systems, urban logistics, emergency rescue, agricultural operations and high-risk industrial work all need coordinated standards; without them, local pilots may multiply while remaining fragmented, unsafe or incompatible. Standardisation, on this view, marks a shift from demonstration to institutionalisation: low-altitude services can scale only once aircraft, infrastructure, operating procedures, data links, safety controls and application scenarios are made mutually legible and enforceable.
Wan is a deputy research fellow at the UAV Standardisation Institute, China National Institute of Standardisation, which carries out standardisation research, technical development and organisational work for UAV general technologies, industry applications, management support and the low-altitude economy. His institutional position matters because low-altitude development is now moving from experimentation to rule-making. His perspective concerns the technical and regulatory grammar needed for drones, infrastructure and scenarios to operate at scale.