This paper explores China's strategic embrace of extended reality (XR) technologies within its digital economy policy framework. Through a content analysis of 45 Chinese government documents, we show how China has positioned XR—which encompasses augmented reality (AR), virtual reality (VR) and mixed reality (MR)—within the nation's innovation for economic growth strategy. Our findings reveal that China's policy agenda for XR is strikingly ambitious, with expected applications across a range of sectors, from medicine to manufacturing. Understanding China's policy agenda for XR broadens current knowledge of the global XR economy, which has, in Western scholarship, predominantly focused on the activities, interests and governance of large US firms. Our analysis also elucidates what is arguably an under‐appreciated aspect of China's digital sovereignty agenda, with important implications for the future of digital geopolitics and a variety of stakeholders—from policymakers to end‐users.