Digital path to economic transformation
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.