In recent years, digital economy has been growing at a fast speed, becoming a major driving force behind high-quality economic development. According to the Digital Economy Development Report in China (2020) recently released by the Cyberspace Administration of China (“CAC”), China is ranked second in the world in terms of aggregate of digital economy, becoming an important source of world-leading innovations in digital economy. In 2020, the core sectors of China’s digital economy contributed an added value that accounted for 7.8% of the country’s GDP. Digital economy has become a new powerhouse for economic growth. How does it promote economic and social development? What opportunities can it bring to regional economic development?

01 New business forms emerge one after another

The deliveryman picks up the take-away and puts it on the UAV at the take-off point; the UAV then flies to the automated airport at the community, and delivers the take-away to the self-service cabinet. But this time, instead of a call from the deliveryman, the user will receive a QR code for picking up the take-away from the cabinet... Recently, the World Artificial Intelligence Conference jointly sponsored by the National Development and Reform Commission and the Ministry of Industry and Information Technology (“MIIT”) took place in Shanghai. At the event, Meituan showed its “muscles”, presenting a scenario of unmanned delivery throughout a low-altitude urban logistics network that integrates UAVs, automatic airports, and a UAV dispatch system, as enabled by its self-developed technologies including aircraft, navigation control, AI algorithm, air route management, and communications system. It is known that, as of this June, Meituan UAVs had completed over 200,000 flight tests and served more than 2,500 real orders. To date, they have been able to provide standard delivery service covering a distance of 3 kilometers in 15 minutes.

New business forms and modes of digital economy, such as online education, online medical services, telecommuting, digital governance, live-streaming e-commerce, and online tourism are emerging and thriving, bringing consumers even more diverse experiences. According to statistics released by the World Artificial Intelligence Conference, the scale of China’s digital economy has reached RMB 41 trillion.

Along with the quick pace of network development, the emerging market of digital economy is constantly expanding, becoming a new powerhouse for economic and social development. As pointed out in the Digital Economy Development Report in China (2020) (hereinafter, the “Report”), the total revenue of data center, cloud computing, big data, and IoT business in China increased by 22.2%, 85.8%, 35.2%, and 17.7% respectively in 2020 as compared with the previous year.

02 Integrating into real economy, digital economy provides new momentum for economic transformation

The Outline of the 14th Five-Year Plan features a special chapter on guiding the development of digital economy in seven key sectors, i.e. cloud computing, big data, IoT, industrial internet, blockchain, artificial intelligence, virtual reality, and augmented reality. In return, these sectors will be tasked of increasing the ratio of the added value of the core sectors of digital economy to the national GDP from 7.8% in 2020 to more than 10% in 2025.

As the goal for digital economy has been clear, how can we turn the blueprint into reality? According to Bai Jinfu, Dean of Digital Economy Research Institute, Beijing Technology and Business University, the in-depth integration of digital economy and real economy requires restructuring the industrial system, deepening industry chain cooperation, effectively integrating online and offline resources, developing digital economy cluster advantages, fully exploiting the advantages of massive data and diverse application scenarios, and fostering new business forms and services.

Besides, various ministries and commissions of the State have voiced ambition to speed up digital economy distribution and improve top-level design. The MIIT has explicitly required that efforts should be focused on the seven key sectors of digital economy to promote application-driven development of the big data, artificial intelligence, blockchain and other sectors, foster an open source ecology, and build a digital industry cluster with international competitiveness. Besides, the CAC has required speeding up the optimization and upgrading of information infrastructure, accelerating the deployment of 5G networks on a large scale, proactively laying out 6G network technology reserves, and promoting the extensive deployment of IPv6 (Internet Protocol Version 6) applications. This will lead to improvements in novel infrastructure and consolidate the foundation for the development of digital economy.

In addition, a large number of brick-and-mortar projects are well underway. In Sichuan Province, 34 new infrastructure projects such as 5G base stations and big data centers have been kicked off. In Xiong’an New Area, Hebei Province, the first intelligent ecological monitoring project based on 5G application has been unveiled. In Guizhou Province, the construction of the Demonstrative Base of China Southern Data Center has been accelerated, and 23 key data centers have been put into operation or under construction...

03 Digital economy breaks barriers and brings opportunities for regional development

As different regions vie to get on the new track of digital economy, foster new economic powerhouses, and develop new edges in digital economy, they are marching forward along the path of developing digital economy with regional characteristics based on their own industrial endowments. Zhejiang Province has set the goals for 2025 of increasing the proportion of the added value of digital economy to its GDP to about 60% and forming a globally competitive industry chain and digital industry cluster bearing the hallmarks of digital economy, such as digital security, integrated circuits, and high-end software. Hebei Province has pledged to step up efforts to run “5G+”, “AI+” and “Blockchain+” pilots and demonstrative projects. Sichuan Province aims to expand the scale of digital economy to RMB 2 trillion by 2022, accounting for 40% of the country's GDP...

China’s digital economy has all the hallmarks of regional clustering. As pointed out in the Report, in the Beijing-Tianjin-Hebei region, Beijing boasts a strong comprehensive strength in research innovation as well as digital transformation of the service industry; along the Yangtze River Economic Belt, Shanghai has sped up the construction of the Yangtze River Delta Sci-tech Innovation Community; Hubei Province focuses on incubating a number of leading enterprises specialized in segmented fields such as integrated circuits, novel display, optical communications, new energy, and intelligent connected vehicles; Guangdong-Hong Kong-Macao Greater Bay Area is engaged in forming a spatial layout of “dual core, one corridor, and two districts”, aiming to build itself into a global digital industry center; the Chengdu-Chongqing region is endeavoring to digitalize, network, and intelligentize its traditional industries.

According to Fan Hengshan, advisor at the Chinese Association for Regional Economics, promoting coordinated regional development entails seizing new opportunities and applying new elements; besides, it is necessary to increase digital support for regional development, and enable different regions to break through their geographical and historical limits through the application of digital technology, so as to expand the economic capacity.

In the future, along with the construction and popularization of novel digital infrastructure, digital economy will further break through geographical constraints, gradually change the modes of economic development and resources allocation, and provide new momentum for narrowing the gap in regional development.