​The Digital Economy Becomes China’s Engine of Growth

The internet stands as one of the great technological developments in history that have changed the world beyond comprehension. We should interpret its rise and consequences as akin to the development of agriculture in the Neolithic era, the printing press in the Renaissance, and the Industrial Revolution. It is a testament to the scope and development of the internet that without it, we would feel our lives are barely functional at all.

Not only have web and digital technologies given us access to information, but in rapidly reducing the barriers to cooperation between people, it has also brought many new conveniences to our life through services and activities, transforming the world of business in conjunction.

The name for this growing world of internet transactions and services is increasingly known as the “digital economy,” which includes e-commerce, online services, online payment systems, gaming, advertising revenue, and the significance of major social media companies.

China, owing to its population size and rapid investment in internet and communications infrastructure, has become remarkable for the fact that it now wields the largest digital economy of any country in the world. It has established more than 1.7 million 5G base stations, and its number of 5G users nationwide has hit 500 million.

Likewise, China’s utilization of various applications and services has also been more heavily integrated into everyday life than anywhere else. While the United States dominates the Internet of Things compared to the rest of the world, China is unique in having constructed its own comprehensive internet ecosystem.

If one goes to China, one will quickly observe that cashless payment systems, such as WePay and Alipay, are an everyday norm, as too is the widespread usage of e-commerce apps such as Taobao and T-Mall.

Despite disruptions caused by COVID-19, work organizations tend to be closely knitted together through the use of WeChat, allowing work to be organized effectively and efficiently. The digital economy creates growth by the fact that it facilitates opportunities that did not previously exist, making it a core notion of competitiveness and therefore a key asset in China’s continuing economic development.

It should be no surprise based on the fact that the total value of China’s digital economy has exploded in size over the past decade, increasing from 11 trillion yuan ($1.65 trillion) in 2012 to over 45 trillion yuan in 2021, and as a proportion of China’s GDP it increased from 21.6% to 39.8% in the same period. In conjunction with this as a run-on effect, the value-added output of major electronic information manufacturers rose 15.7% year on year, hitting a record high in a decade. Meanwhile, the revenue from software and information technology services as well as internet and related services also registered double-digit growth.

All of this means China has been successful in developing its internet-based services, but its journey is not finished yet.

The continuing development of China’s digital economy rests on increased access to the internet and infrastructure across the country, continuing research and development of beneficial technologies such as artificial intelligence and cloud computing, as well as exploration of new ways to integrate the processes of the digital economy into the functions and activities of economic sectors, such as energy, medical care, transportation, education, and agriculture.

Ultimately, the digital economy should creatively explore the application of digital technologies to improve and enhance every aspect of our daily lives, and this is the direction China is set to head in the coming years.