Digital economy leaves imprint despite turbulence
Nation launches various measures to bridge online divide, spur growth
China’s digital economy has emerged as a bright spot for both the industry as well as people’s livelihoods, at a time when an economic slowdown and impeded globalization have stunted growth worldwide.
The world has become more digitalized than ever, experts said, be it working from home, remote schooling or industrial transformation. However, the digital divide between leading economies and emerging markets has widened further, they said.
So, how does one narrow the gap to promote common prosperity around the globe?
China, the experts said, offers a glimpse by placing the development of a digital economy at the top of the agenda and launching various measures to bridge the digital divide.
In December, the National Development and Reform Commission and the National Data Administration jointly launched an implementation plan to facilitate common prosperity by developing a better and greater digital economy.
According to the plan, more efforts will be made to drive the in-depth integration of digital technologies and the real economy, as well as solve the problem of unbalanced and inadequate development through digital means.
To achieve the goal, accelerated steps will be made to drive coordinated regional development through digital economy, advance digital development in rural areas, enhance the digital competence of the public for better employment, and facilitate the inclusive supply of social services through digital means, according to the plan.
High-speed development
China’s digital economy has accelerated over the past few years.
According to the Asia Digital Economy Report launched by the Boao Forum for Asia and the China Academy of Information and Communications Technology, a government think tank, its pace has been “far ahead” of other Asian economies.
Last year, the market scale of China’s digital economy hit $7.47 trillion, topping other major Asian economies. Japan followed with $2.37 trillion, while South Korea ranked third at $952.3 billion, the report said.
Li Baodong, secretary-general of the Boao Forum for Asia, said: “With digital economy, emerging economies in Asia grew at a faster pace, demonstrating strong economic resilience and development potential. To some extent, digital economy has effectively promoted the sustained recovery of the global economy.”
The report found that the digital economies of 14 Asian economies expanded 3.5 percent year-on-year in nominal terms last year, which was 3.3 percentage points higher than the nominal GDP growth rate over the same period.
Helen Han, founder and chief executive officer of IMT Management Tech Consultancy, said: “China aims to have an ‘olive-shaped’ society with the bulk of GDP growth benefiting more groups; therefore, common prosperity becomes a very important goal. Investments in modernizing rural agriculture, ecocultural tourism and the digitalization of infrastructure will further boost the rural township economy.”
Han said that entrepreneurship, cultural development and vitalization, beautiful villages, green mountains and emerald waters will further boost the quality of rural vitalization in China, and a bigger middle-income group will emerge from the efforts.
Meanwhile, China is accelerating digitization in all sectors and every economic aspect, particularly smart manufacturing and artificial intelligence in manufacturing, embracing the internet of things, AI, blockchain, cloud, data and 5G.
“New technologies and digital economy are also boosting agriculture and county-level economic development by improving output, reducing costs and commanding higher prices based on brand value as well as improving overall management efficiency,” Han said.
China is arguably making the world’s biggest push to reduce the digital divide between rural and urban households. Chinese telecommunications carriers are pouring more resources into ensuring that a greater number of the population can access fast, affordable mobile communication and broadband network services.
Xiong Yulan, 34, from Yunnan province, said one of her enduring childhood memories is that of fierce explosions from the use of gunpowder that once served as a communication means to summon villagers for rallies.
In the early 1990s, gunpowder was the most efficient way to send messages in Xiong’s hometown, Dulongjiang town in Gongshan county, Yunnan province, since no phones were available in that area, which is near the Derung River.
It was not until years ago that Xiong and other residents started to see changes in the availability of 5G services as China Mobile, the nation’s largest mobile telecom operator, set up a 5G station in the distant township.
Xiong said she was thrilled when she tried 5G mobile services and some frontier 5G-enabled technology gadgets.
Using a pair of 5G-enabled virtual reality glasses, she was happy to see Kunming, Yunnan’s provincial capital, about 900 kilometers away, in real time.
Overcoming barriers
These developments highlight China’s broader efforts to overcome geographical barriers to expand network construction, which, according to industry experts, will greatly drive common prosperity and lessen the gap between the eastern and western regions of the country.
The plan launched in December also pointed out that by 2025, positive progress shall be made in closing the gaps between regions, urban and rural areas, different population groups as well as in basic public services through the development of digital economy.
By 2030, substantial progress will be achieved in promoting common prosperity through the digital economy, with a set of innovative practices on the collaboration between eastern and western regions ready to be replicated and promoted nationwide, it said.
Viewed from a business perspective, China’s small and medium-sized enterprises are also reaping several benefits from the ongoing efforts of driving common prosperity through digital economy development.
The global tech industry downturn has deepened amid rising geopolitical tensions, and the smartphone market has been declining for several quarters, posing unprecedented challenges to Chinese supply chain providers.
For instance, Yihong Precision Technology Co Ltd, a type-C adapter maker from Guangzhou, South China’s Guangdong province, has been benefiting from its digitalization drive. The small factory of 45 skilled workers recently decided to leverage WeCom, the communication platform for enterprises developed by Tencent’s social media platform WeChat, to digitalize its production processes and management support.
Hua Jiansheng, deputy general manager of Yihong Precision, said: “With such a simple move, repetitive paperwork and communication with external factories have been eliminated from the company’s wholesale production processes. It has resulted in a significant reduction in workload for employees, which has also allowed them to focus more on production to improve product quality.”
The most direct indicator of such a digitalization effort has been that the company has gained a 1 percent improvement in product yield rates, which refer to the proportion of products that meet quality standards and are considered usable or salable, out of the total number of products manufactured or processed.
“Don’t underestimate the 1 percent increase in yield rates. With this 1 percent, we, an SME, are no longer incurring losses. The gross profit margin of the adapter industry is only around 5 to 10 percent, which leaves little room for profit,” Hua explained.
Huo Jinjie, president of market research firm International Data Corp China, said in a previous interview that digital resilience will determine whether or not companies worldwide, including those in China, can respond quickly to business disruptions and restore market confidence amid rising economic uncertainties.
Li Baodong from BFA added that amid the ongoing global changes and historic transformation, the world today is increasingly strained by an economic downturn, which has posed multiple challenges to global development.
“China and other Asian economies need to enhance their cooperation in the field of digital economy and align their development strategies in a joint effort to create an open, inclusive, trusted and collaborative digital economy ecosystem that seeks common development, wealth and prosperity for all.”