The Future Is Here Digital economy is growing rapidly in China, promoting industrial transformation and smart life
Facial recognition, self-driving technology, intelligent voice assistant... These are no longer tools found only in futuristic novels or sci-fi movies, but solutions that exist in real life. On October 11, the China International Digital Economy Expo, organized by the Ministry of Industry and Information Technology (MIIT) and the Hebei Provincial People’s Government, opened in Shijiazhuang, the capital city of north China’s Hebei Province. Numerous smart products presented at the show caught the attention of visitors. These advanced technologies have become a reality thanks to the rapid development of the digital economy.
According to MIIT data, China’s digital economy exceeded 31 trillion yuan ($4.38 trillion) in 2018, accounting for 34.8 percent of its GDP, becoming an important propeller of the country’s high-quality economic development. In March 2017, promoting the development of digital economy was included for the first time in the Report on the Work of the Government delivered by Chinese Premier Li Keqiang to the National People’s Congress, which clearly announced to “promote the growth of the digital economy.” And this year’s work report emphasizes the need to develop “Internet plus” in many areas such as medical care, elderly care, education, culture and sports. The report states that the new technologies and models will help transform and upgrade the traditional industries.
So, how is the integration of digital economy with traditional industries creating new areas of growth? How does this change influence the work and life of ordinary people?
Industrial transformation
According to a report issued by the National Bureau of Statistics (NBS) on July 31, the index for new economic development drivers in China grew by 28.7 percent in 2018 year on year. The continuous development of the digital economy, represented by the Internet economy, has become an important force. According to estimates, the Internet economy development index reached 605.4 in 2018, an increase of 67.2 percent over the previous year. It became the largest contributor to the growth of index for new economic development drivers, with a contribution of 80.8 percent.
With the rapid development of the Internet, especially mobile Internet, the new retail model is booming, characterized by deep online and offline integration and larger scale e-consumption, generating new
momentum in consumption. According to NBS data in 2018, the value of transactions of e-commerce platforms in China reached 31.6 trillion yuan ($4.66 trillion), an increase of 8.5 percent year on year. The sales of offline retail amounted to 9 trillion yuan ($1.27 trillion), an increase of 23.9 percent over the previous year.
“On the consumer side, it’s not unusual to see people spend a lot of money buying a yacht on the Internet,” claimed Chen Yiming, General Manager of the Industrial Market under the Domestic Trade Department of Alibaba, China’s e-commerce giant. “Last year, the value of the largest order on our platform was 106 million yuan ($15 million). Different suppliers made proposals to the buyer and the deal completed within a single day. This kind of transaction is possible only on the e-commerce platform.” Digital solutions have allowed large businesses to connect seamlessly with small businesses, and purchases will also become more efficient, transparent and dispersed, Chen added.
In the wave of the digital economy, traditional businesses are also using digital technology to remodel the industrial ecosystem. At the China International Digital Economy Expo in Shijiazhuang, Xu Ximing, Technical Director of ENN Digital Energy Technology, announced that his company has built a clean energy ecosystem with the help of information technology, with the aim of fostering transformation of the energy sector. Until July 2019, the Internet platform Fanneng, created by the company, has provided services to over 100 industrial parks, more than 500 power generating companies and nearly 60 energy providers in more than 40 cities in the country.
In addition, the level of digitalization in the manufacturing sector has grown rapidly, from 14.2 percent in 2015 to 17.2 percent in 2017. “In the traditional manufacturing sector, the use of intelligent manufacturing technology and industrial Internet has driven an improvement not only in the manufacturing process, but also the entire business process, from R&D to marketing and services,” asserted Sun Pishu, CEO of Inspur Group, one of the leading IT companies in China.
The integration of traditional industries with the Internet has brought convenience and intelligent way of life to the people.
“Due to the development of the digital economy, China has become one of the countries with the most convenient life in the world,” said Zhang Yong, CEO of Alibaba Group, at the expo.
Smart life
As digital technologies such as the Internet of Things, Cloud Computing and Big Data evolve rapidly, smart solutions for driving, education and medical care have profoundly affected people’s daily life.
In June this year, MIIT officially issued 5G commercial licenses to several telecommunications companies. The application of 5G will not only increase the speed of the Internet, but also improve the quality of smart connection.
According to Yin Hao, an academician at the Chinese Academy of Sciences, the rapid development of 5G will promote the use of the Internet as well as the Internet of Things. “The mobile Internet has improved the user’s experience for the general public. The Internet of Things can meet a variety of needs, such as car networking, smart city management, among others,” he told a forum at the exhibition.
“Anyway, 5G promises a bright future for our world and the potential for market development is enormous. But it also faces many challenges, especially since it has just been created,” said Yin. “I hope everyone works together to create an ecosystem where we can evolve as soon as possible,” he concluded at the exhibition. CA
Size of the Digital Economy in China, 2014-19