Digital path to eco­nomic trans­for­ma­tion

China Daily (Hong Kong) - - VIEWS -

Thanks to its rapid de­vel­op­ment over the past few years, the digital econ­omy has be­come a new driver for China’s eco­nomic trans­for­ma­tion and up­grad­ing. For in­stance, the pro­por­tion of the ser­vice sec­tor in GDP crossed 50 per­cent in 2015 and jumped to 54.1 per­cent in the first half of 2016, con­tribut­ing 59.7 per­cent to eco­nomic growth.

Digital econ­omy is also fa­cil­i­tat­ing the trans­for­ma­tion and up­grad­ing of China’s tra­di­tional in­dus­tries. The ap­pli­ca­tion of new equip­ment and new tech­nolo­gies such as in­dus­trial ro­bots, 3D print­ers, drones and other ar­ti­fi­cial in­tel­li­gence is gain­ing mo­men­tum, and the ap­pli­ca­tion of big data, cloud com­put­ing and in­ter­net of things con­tin­ues to ex­pand.

Many Chi­nese com­pa­nies such as Huawei and Gree have climbed up to the mid or high levels of the global in­dus­trial chain while seven, in­clud­ing Ten­cent, Alibaba and Baidu, are among the world’s top 20 in­ter­net en­ter­prises.

Digital econ­omy in China is likely to keep grow­ing at a fast pace in the com­ing years, and will thus have a pro­found im­pact on the coun­try’s eco­nomic trans­for­ma­tion and growth.

The size of digital econ­omy will ex­pand fur­ther, as China’s to­tal in­for­ma­tion con­sump­tion is ex­pected to reach 12 tril­lion yuan ($1.74 tril­lion) by 2025, and the to­tal vol­ume of e-com­merce trans­ac­tions will reach 67 tril­lion yuan. In terms of re­mold­ing tra­di­tional in­dus­tries into digital econ­omy, the use of cloud com­put­ing, big data, in­ter­net of things and ar­ti­fi­cial in­tel­li­gence will see a sig­nif­i­cant in­crease. And big data, like those on land and la­bor, will be­come an im­por­tant fac­tor of pro­duc­tion.

Smart man­u­fac­tur­ing is lead­ing a new in­dus­trial rev­o­lu­tion: dig­i­ti­za­tion, vir­tu­al­iza­tion and in­tel­li­gent tech­nol­ogy will run through a prod­uct’s life cy­cle; flex­i­ble, in­ter­net-based, ser­vice­ori­ented and per­son­al­ized pro­duc­tion will be­come the new trend of man­u­fac­tur­ing; and glob­al­iza­tion, ser­vice-ori­en­ta­tion and plat­form-based busi­nesses will be­come a new way of in­dus- trial or­ga­ni­za­tion.

Be­sides, the digital di­vide be­tween ur­ban and ru­ral ar­eas will grad­u­ally nar­row, as China’s in­fra­struc­ture for the de­vel­op­ment of digital econ­omy is ex­pected to fur­ther im­prove in the next few years. The in­fra­struc­ture for digital econ­omy’s rapid de­vel­op­ment is al­ready in place, as fixed broad­band net­work cov­ers all of China’s town­ships and 95 per­cent of the ad­min­is­tra­tive vil­lages, and 100-megabytes op­ti­cal fiber ba­si­cally cov­ers both ur­ban and ru­ral ar­eas.

Im­proved in­fra­struc­ture for digital econ­omy will also cre­ate more op­por­tu­ni­ties for res­i­dents in ru­ral and less-de­vel­oped ar­eas to par­tic­i­pate in the de­vel­op­ment of digital econ­omy. By the end of 2015, a to­tal of 780 vil­lages had met the en­try con­di­tions for sell­ing prod­ucts on­line on Taobao, the big­gest busi­ness-to-con­sumer e-com­merce plat­form in China. A grow­ing num­ber of farm­ers are al­ready sell­ing their prod­ucts and promoting ru­ral tours via e-com­merce plat­forms, while an in­creas­ing num­ber of mi­grant work­ers and col­lege grad­u­ates are re­turn­ing to their home­towns to start their own busi­nesses.

Digital econ­omy is also helping pro­mote glob­al­iza­tion. China sup­ports free trade and in­clu­sive trade ar­range­ments. While promoting trade lib­er­al­iza­tion, China will fa­cil­i­tate shared global eco­nomic de­vel­op­ment by us­ing digital eco­nomic de­vel­op­ment as an im­por­tant ele­ment. China is not only de­vel­op­ing an “In­ter­net Plus” econ­omy do­mes­ti­cally, but also re­mains com­mit­ted to fur­ther open­ing up its digital mar­ket, so as to ex­pe­dite the in­te­gra­tion of do­mes­tic and global mar­kets to the ben­e­fit of all economies.

Dur­ing this year’s Sin­gles Day shop­ping car­ni­val on Nov 11, Alibaba, the par­ent com­pany of Taobao, launched an in­ter­na­tional ver­sion of Taobao, with about 6.21 mil­lion on­line buyers from Rus­sia, Spain, the United States, France and other coun­tries and re­gions plac­ing $35.78 mil­lion worth of or­ders through the plat­form.

And while promoting the Belt and Road Ini­tia­tive (the Silk Road Eco­nomic Belt and 21st Cen­tury Mar­itime Silk Road), China will work with 65 coun­tries along the routes. With co­op­er­a­tion in de­vel­op­ing digital econ­omy as an en­try point, and with cross-bor­der e-com­merce as an in­stru­ment, China is promoting re­gional and global trade, in­vest­ment, ca­pac­ity and con­sump­tion co­op­er­a­tion; ex­pe­dit­ing the open­ing-up of digital ser­vice trade; and helping build a Belt and Road free trade area net­work.

The au­thor is pres­i­dent of the China In­sti­tute of Re­form and De­vel­op­ment.

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