Growth and future of digitalization

By Michael Zakkour

A white paper issued by the China Academy of Information and Communications Technology (CAICT) in mid-2022 estimated that China’s digital economy stood at $6.3 trillion in 2021, ranking second only to the United States’ $15-trillion market in the same period.
Information and technology accounts for nearly 40 percent of China’s overall GDP, constituting a doubling of value in the last 10 years.
Digital ubiquity is an astounding and at the same time mundane fact of life in China and its economy. Growing from relative insignificance to 40 percent of GDP in under 20 years is a testament to how rapidly and smartly the country made technological innovation and adoption central to its overall modernization and economic growth
In the mid-2000s, a perfect storm of factors came together to jumpstart China’s rise as a global technology superpower. And ironically, it was not what China had that made the difference; it was what it didn’t have. It was the blank slate that served the country well.
Prior to the year 2000, China had an extremely low rate of personal communication and productivity device penetration, given home phones, home computers and office computers were quite rare at that time, never mind mobile phones.
It had virtually no digital retail and consumer infrastructure or culture. Consumers relied almost entirely on cash for purchases (even bringing bundles of renminbi to buy new cars) and the country did not have a modern banking and credit system in place.
The almost simultaneous introductions of smartphones, e-commerce and digital payments between 2003 and 2008 ushered in what could have been a 20- to 30-year period of incrementally improved tech economy and compressed it into five years of massive adoption and growth.
China’s blank slate proved to be the perfect environment to rewrite the rules of Chinese, and in many cases global, technology, consumption and communication protocols and applications.
From this modest start, by June 2022, China had 1.05 billion Internet users and its Internet penetration rate had reached 74.4 percent.
But digital commerce was just the beginning. It was the launch pad for a technology and data science revolution that would make China’s new infrastructure the envy of much of the world.
The decade that followed marked a time when private, public and hybrid entities marshaled their combined resources to flip the script from “Copycat China” to “China the Creator.”
Since 2010, the government has made further digitization of everyday life and activities a high priority and has focused its energy on indigenous innovation to make China a self-reliant digitally driven economy and to ensure it becomes a net-exporter of tech with world-beating brands, products and systems.
As one example, while 5G has been a disappointment in other parts of the world, China hosts the world’s largest 5G network and has become a global leader in 5G standards and technology, with 1.85 million 5G cell towers and 455 million 5G mobile subscriptions.
Digitally powered economies the world over will continue to grow and the percentage of global GDP driven by digital commerce, communications, and information technology will also grow.
To stay competitive on the global stage in industries as diverse as automotive, manufacturing, finance, real estate and fashion, China must continue to invest in digital leadership.
We have seen over the last five years that China continues to be ahead of the rest of the world in digital commerce, retail, consumer and retail tech and the integration of online and offline supply chains, technology, and content. Companies like fast fashion e-commerce platform Shein, e-commerce giant Alibaba and tech titan Tencent are the leaders others will follow.
China is taking a prominent position in the development of next-generation tech trends like artificial intelligence (AI), the metaverse and digital supply chains.
Duplicating that kind of success across front- and back-end systems in all industries will be critical in the next 10 years.
These developments are the engines of growth and China cannot afford a retreat from them.
The digital economy is playing a key role in China’s competitiveness on the global stage. The government has been actively promoting its development and has implemented policies to support the growth of tech companies.
Additionally, China is looking to expand its digital economy globally through trade and investment initiatives, such as the Belt and Road Initiative, a China-proposed initiative that aims to boost connectivity along and beyond the ancient Silk Road routes.
–The Daily Mail-Beijing
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