China Strives for High-Quality Development with 5G Technology

Fifth-generation mobile technology, abbreviated 5G, is the new wireless standard after 1G, 2G, 3G and 4G networks. Characterized by better bandwidth, faster speed, reduced error rates and lower latency, the technological upgrade offers enormous potential for improving efficiency and productivity across various industries. As recent studies show, 5G, a key enabler of the Fourth Industrial Revolution, ushers in an era of new opportunities for the global economy. For instance, a PwC report titled “The global economic impact of 5G” estimates that 5G technology will add $1.3 trillion to global GDP by 2030.

In China, home of the world’s largest 5G network, the story is no different. In fact, 5G technology has become increasingly indispensable to the country’s transition from high-speed growth to high-quality development.

Since the reform and opening up in 1978, China, for more than three decades, has witnessed rapid economic expansion that is driven mainly by low-cost manufacturing and investments. From 1979 to 2012 and 2013 to 2022, the Chinese economy grew at an average annual rate of 9.9% and 6.2%, respectively. During these periods, China’s high-speed growth lifted millions of people from poverty and contributed to the building of a moderately prosperous society in all respects by 2021, successfully accomplishing the first centenary goal. Presently, faced with an array of new issues, including rising labor cost and increasing international competition, China has embarked on a new journey to achieve high-quality development as it pursues the second centenary goal: to build a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious by the middle of 21st century.

To accomplish this daunting task, China is transitioning from traditional economic growth models and pathways to high-quality development characterized by economic resilience and sustainable endogenous growth that is mainly driven by science and technological innovation. Benefiting from upgrades to information and communications technology (ICT) infrastructure, China, which currently leads the world in integrating 5G applications in the real economy, has so far made significant progress by leveraging its prowess in digital technology, particularly 5G. Namely, this progress includes the reformatting of productive capacities and improving efficiency in various industries including transportation, manufacturing, mining, agriculture, education and healthcare – shifting the Chinese economy from low-productivity and labor-intensive activities to high productivity, capital and skill-intensive activities. Since the issuance of 5G commercial licenses in June 2019, 5G commercialization in China has directly and indirectly driven approximately 5.6 trillion yuan (around $787.53 billion) and 14 trillion yuan (around $1.97 trillion) respectively in economic output over the past five years, as reported by the Ministry of Industry and Information Technology.

China now hosts more than 3.7 million 5G base stations and over 800 million 5G mobile phone users, accounting for more than 52% of the global total. Over the past five years, the country has integrated 5G applications within 71 of the country’s 97 key economic categories. Embracing 5G technology has not only supported structural transformation but also accelerated China’s digital transformation.

During the 14th Five-Year Plan Period (2021-2025) China has sought to build 10,000 5G factories as the country continues to leverage widespread 5G adoption to transform and upgrade its traditional industrial base, building adequate infrastructure to support emerging industries including smart manufacturing and autonomous vehicles.

By rapidly expanding 5G network coverage across the entire country and integrating 5G applications into key sectors of the economy, China is making headway in generating additional economic value that is crucial for fostering job creation and inclusive growth. A recent GSMA report (2024) forecasts that more than 50% of Chinese mobile connections, over 1 billion total connections, will be 5G by the end of 2024. 5G’s contribution to the country’s GDP is expected to reach approximately $260 billion in 2030, representing 23% of the overall annual economic impact of mobile in the country. The report further indicates that by 2030 5G connections in China will account for almost a third of the global total with 5G adoption in the country reaching nearly 90%.

With the annual economic contribution from China’s mobile sector forecasted to exceed $1 trillion by the end of the decade, it is expected that rapid 5G expansion, coupled with China’s recent strides in the evolution of 5G to 5G Advanced (5G-A) or 5.5G, will ultimately create new value across industries and society. In fact, the rapid 5G development and expansion over the last few years depicts continuous innovation at the heart of Chinese modernization drive. Home to about 42% of the world’s standard essential patents issued for 5G technology , Beijing’s commitment to nurturing new quality productive forces in order to inject new energy into the country’s high-quality development is on track.

Alexander Ayertey Odonkor is a global economist with keen interest in the social, environmental and economic landscape of developed countries, emerging markets and developing economies particularly in Asia-Pacific, Africa, Europe and North America.