Five Beijing ministries, led by the Ministry of Industry and Information Technology, have identified virtual reality as a key industry for the digital economy under the country's 14th five-year plan.

In the first half of this year, China shipped just over half a million virtual reality and augmented reality devices, research firm IDC said.

The plan also includes a target to increase the total value of the industry to more than 350 billion yuan, which the ministries say provides hardware and software sales.

It added that China will need to nurture 100 core companies and form 10 public service platforms for the industry by 2026.

The China Academy of Information and Communications, a state-backed think tank, published a report on Tuesday saying that China's motivation for the action plan should be seen in the context of the U.S. and South Korea governments having identified virtual reality as an essential industry.