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Digital Economy: A New Variable in Transition and Growth of China

Submit Time:11-01-2017 | Zoom In | Zoom Out

Author:Zhang Xinhong | Source:Economic Daily

Abstract:

Editor’s note  The modern information technology revolution represented by computer, network and communication has given birth to digital economy. At present, digital technology is being extensively applied in modern economic activities, and it has increased economic efficiency and promoted the transition of economic structure, becoming an important driving force in the global economic recovery. For China, digital economy is a new variable in economic transition and growth, and also a new blue ocean to improve quality and increase efficiency for economy. We should grasp the new opportunity in history, foster new kinetics with informatization, promote new development with new kinetics, make the digital economy bigger and more powerful, and expand a new space for economic development.  

It is of important significance to develop digital economy 

After the international financial crisis, global economy came to a new period of in-depth adjustment. The picture of new and old economy alternation is magnificent yet thrilling: on the one hand, traditional economy remains depressed, and on the other hand, digital economy is rising suddenly as a new force. The practice in China has verified this process, and made this picture visible more clearly. In the grand background that the global informatization has come to a new period of all-round penetration, cross-field integration, accelerated innovation and leading the development, digital economy in China has achieved substantial development, becoming a powerful momentum in innovating the economic development pattern, and also continually accumulating experience for the global economic recovery and social progress.  

First, developing digital economy is a concentrated embodiment of the main development ideas to promote “innovative, coordinated, green, open, and shared development”. Digital economy itself is the product of new technological revolution, and a new economic pattern and new form of resource allocation, embodying the intrinsic requirements of innovation in a concentrated manner. Digital economy has reduced barriers to information circulation, speeded up the flow of resources elements, increased the supply and demand matching efficiency, and can help realize the coordinated development between urban and rural areas and between regions. Digital economy can greatly increase the resource utilization rate, as the best embodiment of green development. The greatest feature of digital economy is Internet-based, and the characteristics of the Internet are opening and sharing. Digital economy has also created more opportunities for people in backward regions and with low income to participate in economic activities and share development results.  

Second, developing digital economy is an important means to push forward supply-side structural reform. The intelligent manufacturing pattern characterized by the in-depth merging of new generation of the information technology with the manufacturing technology is giving rise to a new round of transformation in manufacturing industry, the digitalized, virtualized and intelligent technologies are applied throughout the whole life cycle of products, flexible, networked and personalized production will become the new trend of manufacturing pattern, and globalization, service-orientation and platform will become the new forms of industrial organization. Digital economy is also leading agricultural modernization, the new agricultural development patterns such as digital agriculture and smart agriculture are the realization and application of digital economy in the agricultural field. In the service sector, the effect and role of digital economy have been well reflected, and e-commerce, Internet finance, online education, tele-medicine and online entertainment have greatly changed the work and life of the people.  

Third, digital economy is the best testing ground to carry out the innovation-driven development strategy and push forward “popular entrepreneurship and innovation”. In the present stage, digital economy can best reflect the requirements of information technology innovation, business pattern innovation and institutional innovation. The development of digital economy has bred a large number of Internet enterprises with great potential of development, becoming the driving force to inspire innovation and entrepreneurship. The sharing economy patterns such as crowd innovation, crowd sourcing, crowd support and crow funding are important components of digital economy.  

Fourth, digital economy is an important leading force in building up the new national competitive advantages in the information era. In the process of information revolution triggering the restructuring of world economic map, the development of digital economy will play a critical role. The core competence in the information era will be increasingly demonstrated by digital capacity, information capacity and network capacity of a country or a region.  

China has prominent advantages in developing digital economy 

At present, China has its unique advantages and favorable conditions in developing digital economy. It has started fast with a good momentum, and is in the situation of competing on the same platform and leading at the same pace with some leading countries in most areas, and has the great potential of leading the development in more areas in the future.  

First, the high-speed and ubiquitous information infrastructures have been basically formed. We have completed the broadband communication network with the largest scale in the world. By June 2016, China had 470 million fixed broadband access subscribers, covering all cities, towns and 95% administrative villages of the whole country. The cyber capacity has been continually upgraded. Full-optic network cities have been fully popularized, and 100M optical fiber has been basically connected to all households in cities. The superiority in the number of netizens has created the huge potential in the digital economy of China. By June 2016, China had 710 million netizens, and the Internet popularizing rate had reached 51.7%.  

Second, digital economy has penetrated into all areas of work and life. On the one hand, digital economy is leading the transition and upgrading of traditional industries. Taking the manufacturing industry as an example, the application of new equipment and technologies such as industrial robots and 3D printers has  apparently speeded up in the core manufacturing industry areas of China, mainly in Yangtze River Delta and Pearl River Delta areas, and large-scale application has been started for new associated technologies and ways of production such as big data, cloud computation and IOT. On the other hand, digital economy has started to merge with the life of urban and rural residents. According to relevant reports, the gradual completion of cyber environment and the quick popularization of mobile phone network surfing have continuously stimulated demands for the application of mobile Internet. In 2015, personal applications such as basic applications, commercial transaction, cyber finance, online entertainment and public services became daily rich, among which, the growth of online payment with mobile phone was all the more rapid, and online payment with offline service kept on rising. The number of subscribers increased for all types of Internet public service applications. Furthermore, digital economy is changing the governance system, forcing traditional supervision systems and industrial policies to speed up the pace of innovation.  

Third, digital economy promotes the emerging of new forms of businesses and new patterns. China has become one of the pacemakers of global digital economy in many areas. In recent years, China has achieved outstanding results as “individual champions” in many fields such as e-commerce and electronic information product manufacturing, and some information technology enterprises and Internet enterprises have ranked in the front of the world. The sharing economy of China is becoming the vanguard in the global development of digital economy. Reports show that in 2015, the market size of sharing economy in China was about 1956 billion yuan, mainly concentrated in 6 areas of traffic, short-term rental of houses, finance, life service, knowledge and skill and production capacity. In the sharing economy field, there were about 50 million service providers, accounting for about 5.5% of the total number of laboring population. The e-commerce of China has maintained a good momentum of rapid growth. In 2015, the e-commerce of China maintained a momentum of rapid growth, with transaction amount of 20.8 trillion yuan, a year-on-year increase of about 27%; the online retail amount reached 3.88 trillion yuan, a year-on-year increase of 33.3%.  

Steering the broad prospects of digital economy 

In a fairly long period of time to come, information revolution will face an overall metamorphosis from 1 to N. According to the strategic deployment, the digital economy of China will have a great window of opportunities, to provide powerful material guarantee for China to accelerate the completion of industrialization and build up new advantages in international competition, and also to make greater contributions to global economic transition and development.  

First, the 3D national information infrastructure system covering land, sea and air will become further completed. The leading deployment of the construction of national information infrastructure system is an offensive move to consolidate the foundation for the digital economy development in China and leading the global tide of digital economy development. It is purposed in the Outline of National Informatization Development Strategy that, by 2020, the household popularization rate of fixed broadband will reach the level of moderately developed countries, the 3G and 4G mobile communication networks will cover all urban and rural areas, and breakthrough progress will be made in the technological research and development and standard for the 5G mobile communication. The Internet international output bandwidth will reach 20 Tbps, we will support the implementation of the “Belt and Road” construction, realize network and information interconnection with neighboring countries, complete the China – ASEAN information port, initially complete the online Silk Road, and the international competitiveness of information communication technologies, products and Internet service will be substantially enhanced. By 2025, the new generation of information communication technology will be promptly put to application, the fixed broadband household popularization rate will approach the advanced international level, and we will complete the world leading mobile communication network and realize seamless coverage of broadband networks. By the mid of the century, informatization will support in all aspects the construction of a rich, strong, democratic, civilized and harmonious modern socialist country, China’s position as a powerful cyber country will be daily consolidated, and China will contribute more in leading global informatization development.  

Second, digital transition in economic development will become a main point. The group breakthrough of technologies represented by information technology is the source of motive force in building a modern technological industrial system and leading the digital transition of economy. The advanced information productive force will push the economy of China to advance towards the digital economy phase with a more advanced form, a more optimized division of work and a more rational structure. As required by relevant strategies, by 2020, some areas of our core and critical technologies will reach the advanced international level, the international competitiveness of information technology will be substantially upgraded, marked progress will be made in digitalization, networking and intelligentizing in major sectors, the networked synergic innovation system will have been fully formed, the total amount of information consumption will reach 6 trillion yuan, and the e-commerce transaction scale will reach 38 trillion yuan. The international competitiveness of information industry will be greatly upgraded, the digital dividend be fully released, the position as a big manufacturing country be further consolidated, the informatization level in manufacturing industry be substantially raised, and the agricultural informatization be markedly raised, to push the smooth completion of digital transition of economic development pattern.  

Third, sharing economy will become the biggest light spot in digital economy. Having experienced the periods of sprouting, starting and rapid growth, sharing economy will soon come to a new period of overall innovation and development, becoming a big light spot in digital economy. According to the prediction by the State Information Center, in the coming five years, the annual average growth rate of sharing economy will be about 40%, and by 2020, the proportion of sharing economy in GDP will be over 10%. In the coming decade, it is expected that 5 to 10 giant platform enterprises will appear in the sharing economy field of China. The development of sharing economy will show some new features: the first one is more participation. With the popularization of Internet applications among the mid-aged and aged people, especially the diversified application software developed for the aged people and services such as family care and emergency help, more and more mid-aged and aged people will enjoy the benefit from the development of sharing economy. With the increased popularization of Internet and development of sharing practice in rural areas, rural residents will become important participators in sharing economy. The second one is more extensive sharing. Everything can be covered in the scope of sharing economy, from intangible to tangible products, from consumer goods to production elements, and from individual resources to enterprise resources. In addition to the idle capital, time and skill of individuals that can be shared, idle production elements of enterprises will also be covered in the scope of sharing, including office areas, production buildings, equipment, warehouse bases and other real estate laid idle, and also including research and development teams, invention patents and professional personnel of enterprises, injecting more vigor into the development of sharing economy. The third one is deeper penetration. Sharing economy will deeply penetrate into all sectors, not only active in the service areas of transport, housing, education, medical service, housekeeping and finance that are closely linked with the life of people, but also quickly penetrating into productive fields of infrastructure, energy, agriculture and manufacturing industry. In the future, more and more traditional manufacturing enterprises will actively embrace sharing economy. The fourth one is more active innovation. In the future, the sharing economy in China will come to the concentrated bursting period with localized innovation, and enterprises of sharing economy will accelerate their qualitative leap forward from imitation to creation, from follow-up to leading, and from local growth to global development.  

(Author’s work unit: State Information Center) 


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