This study examines whether China’s Industrial Internet pilot policy (2017–2023) enhances firm innovation and explores the underlying mechanisms. Exploiting the staggered rollout of the policy across provinces as a quasi-natural experiment, we find that Industrial Internet adoption significantly increases firms’ innovation output. Mechanism tests show that the policy promotes knowledge accumulation, strengthens innovation persistence, and improves human capital allocation. We also document positive economic consequences, as treated firms earn higher returns to innovation. The effects are stronger for capital-intensive firms, those located in regions with advanced digital infrastructure, and firms undertaking joint or substantive innovation activities. Overall, the evidence highlights the Industrial Internet as an effective catalyst for firm innovation by deepening R&D capability and facilitating cross-industry knowledge flows.

The improvement of production efficiency and changes in business models brought about by the deep integration of the digital economy and the real economy have become an important driving force for industrial transformation and upgrading. This paper expounds the necessity of digital transformation of manufacturing industry and its path selection. The important role of industrial Internet and Internet platforms is pointed out, and the characteristics of industrial Internet platforms such as Midea Group and Siemens MindSphere and their effects on industrial transformation are analyzed. Enterprises should vigorously promote the deep integration of big data, the Internet, cloud computing, the Internet of Things, artificial intelligence, blockchain and the real economy, accelerate the digital transformation of the manufacturing industry, and inject new impetus into the high-quality development of the manufacturing industry.