Do government efforts to foster artificial intelligence translate into more efficient innovation by firms? This paper investigates the impact of China’s AI Development Zone program on the innovation efficiency of strategic emerging industry firms, paying particular attention to both proportional and distributional effects. Drawing on a panel of 1,009 A-share listed firms over the period 2013-2024, we employ a stochastic frontier analysis in conjunction with the staggered difference in-differences estimator of Callaway and Sant’Anna (2021). Our results show that AI Development Zone designation increases local firms’ innovation efficiency by approximately 6%. These gains arise immediately following designation, persist over time, and remain robust to alternative specifications and quality-adjusted measures of innovation efficiency. We further document a reduction in within-city efficiency dispersion, driven primarily by convergence among initially less efficient firms rather than improvements at the technological frontier. Beyond this convergence effect, the policy’s impact is largely homogeneous across firm, industry, and city characteristics, suggesting that its benefits are broadly shared rather than concentrated among particular groups of firms.