Digitalization of the economy and society in China
For some time past, ORIENT has many times addressed the topic of digitalization in Turkmenistan and cooperation in this area with other countries, in particular with China. As it turned out, it finds a keen response in foreign media. We would introduce an article by Lilia Tomaychuk, Associate professor of the Department of International Relations of the Russian Presidential Academy of National Economy and Public Administration, an employee of the North-West Management Institute of St. Petersburg (Russian Federation), on digitalization processes in China. The article is published in the author’s edition.
In China, information and communication technologies have grown rapidly over the decades, from microelectronics in the 1980s to the introduction of the internet and smart phones in the 1990s and 2000s. Now, as blockchain, artificial intelligence, and robotics emerge, fast-evolving technologies are creating new sectors, including e-commerce, fintech, big data.
China ranks 50th out of 131 countries based on the World Bank digital adoption index. China’s overall digitalization is in the middle of the range globally. Based on the OECD framework, the narrow definition puts the size of China’s digital economy at 6 percent of GDP, compared to 8-10 percent in South Korea and Japan.
In this new digital economy, China is becoming a global leader in some sectors, particularly e-commerce of trade and services and financial technologies (e-payments). According to the IMF, China leads the world in e-commerce. More than 40 percent of the world’s e-commerce transactions currently take place in China, and 15 percent – of total e-retail, compared to 10 percent in the US. Alibaba Group (Ali Group Corporation), one of the Chinese tech giants, is connected to buyers and sellers from 200 countries. In addition, China is the leader in terms of mobile payments applications. China mobile payment giants are Alipay and WeChat Pay. Transaction volume reached 200 trillion yuan ($31.2 trillion) in 2018.
In 2017, at the 19th CPC National Congress, President Xi Jinping’s historical report pointed out that the “the digital economy and other new industries have developed rapidly ... In the coming years, efforts will provide powerful support for building China’s strength in science and technology, product quality, aerospace, cyberspace, and transportation; and for building a digital China and a smart society.”
As per 13th five-year Socio-Economic Development Plan of the PRC for 2016-2020, the goal is to “all-round build a middle-income class prosperous society”, one of the sub-objectives is to decrease the country’s reliance on foreign technology to 30 percent, and to put Chinese scientists in the TOP 5 on patent registration and scientific discoveries.
The following factors contribute to the development of digitalization in China.
Political. High government spending to the education and research, political will to solve social problems and megatrends (urbanization, environment protection, modernization of agriculture), which requires new digital technologies.
Socio-economic. The population (over 1.4 billion) and market size give China tremendous domestic purchasing power. China has seized the opportunity provided by the Internet and undergone digital economy changes. The number of Chinese netizens reached 700 million, while more than 280 million netizens are under 25 years old, and there are 4.54 million websites, compared to 420 million netizens in India (population is about 1.36 billion),
According to China Daily, China provides itself with the means electronic devices. In 2017, China produced 97 million smart TVs, 130 thousand industrial robots. The goal of the government is to ensure the transition from production to innovation (from “Made in China” initiative to the “Invented and Developed in China”). China has one of the most active digital-investment and start-up ecosystems in the world. Three listed companies, namely Tencent, Alibaba, and Baidu, that are among the world’s top 10 Internet companies, have created eco-system to provide electronic access to goods and services to millions of consumers.
Meanwhile, the booming e-commerce sector and the sharing economy have driven a new engine of job creation. Alibaba’s platform has almost 11 million SMEs, which have created over 30 million jobs over the past decade. The Didi taxi platform (China’s equivalent of Uber) is connected to 13 million drivers. IT offers 1.4 million jobs for highly qualified professionals.
Global. China, as a world power, aims to overcome technological lag and be among developed countries. Along with promotion the global “One Belt, One Way” initiative, the Chinese leader uses international platforms to highlight the growing role of digital technology in the country’s economy. The agenda of the BRICS Summit held in the Chinese city of Xiamen in 2017, addressed the issues of global trade, digital economy, e-commerce, and cyber security. The organizers used the VR code technology at the summit to present the participants.
Today, for China, it is important to find a middle ground between the regulatory system for digital technology and the implementation of global standards for the digital economy.
