What are the Hot Spots of the Digital Economy?

By Guo Yan,Yuan Yuan(Intern)

The digital economy has appeared as a phrase in the Government Work Report for 6 consecutive years， and this year there is a separate paragraph describing the digital economy. The 2022 Government Work Report indicated “we shall promote the growth of the digital economy， and improve the overall layout for the construction of Digital China. It is important to build information infrastructure， create a national big data center system， promote the wide application of 5G， advance digital transition of industries， and develop intelligent city and digital countryside”.

At present， a new round of scientific and technological revolution has led human society into the era of digital economy. According to the White Paper on the Development of China’s Digital Economy， the scale of China’s digital economy has exceeded RMB 39.2 trillion in 2020， accounting for 38.6% of GDP. The penetration rates of the digital economy in the service industry， manufacturing industry and agriculture have have reached 40.7%， 21.0% and 8.9% respectively.

The importance of digital economy for the future development of China’s economy is self-evident. So， which will be the focus of the digital economy？ What is the direction of digital transformation？ What are the challenges to the governance of digital economy？

Accelerate developing industrial internet

The 14th Five-Year Plan for the Development of Digital Economy puts forward 11 key construction projects in the areas of infrastructure， data elements， digital industrialization and industrial digitization， and proposes that the added value of China’s core industries of digital economy will account for 10% of GDP by 2025. This year’s Government Work Report proposes to carry out infrastructure investment moderately ahead of schedule based on the major national strategic planning and the 14th FiveYear plan， “improve the innovation and supply capacity of key software and hardware technologies” and “strengthen the construction of digital government and promote government data sharing”.

Zhou Yunjie， deputy to the National People’s Congress， Chairman of the Board of Directors and CEO of Haier Group， suggested that on the one hand， we shall start from the“top-level design” of industrial internet empowering high-quality development of the urban digital economy. “On the other hand， we shall start from promoting the openness and sourceopening of industrial internet and strengthening the foundation for the industrial internet. We should focus on building greater advantages for the development of China’s industrial internet， and using industrial internet to enhance the competitive edge of digital economy，” he mentioned.

Not long ago， at a press conference held by the State Council Information Office the person in charge of the Ministry of Industry and Information Technology said that in 2021， China’s digital economy has been growing fast and made a series of breakthroughs in key technologies. China has been ranking top of the world in areas of big data， cloud computing， blockchain and 5G telecommunication technology， equipment and application. China also leads the world in making smart phones， and has achieved landmark results in integrated circuits and software， which comprise the foundation of the digital economy.

In March 2022， a report submitted to the fifth session of the 13th National People’s Congress for review proposed to implement the project for channeling computing resources from east to west， so as to guide the rich computing demands in the east to the western regions and help data elements flow across regions. With the full launch of the project focusing on channeling computing resources from east to west， as a representative of the new infrastructure， the data center has a long industrial chain， wide coverage and a strong driving effect， which is expected to benefit from the project.

Chen Mingbo， deputy to the National People’s Congress and deputy secretary general of the Shanghai municipal government， said that accelerating the construction of a national inter-connected basic data trading platform and the data element market is the core of the digital economy. He suggested that the whole country shall select regional trading market as the basis， to regulate data resource property rights， transaction circulation， cross-border transmission， information rights and data security protection. It is also important to accelerate the construction of a nationwide interconnected data trading platform network， and build the new data infrastructure for the healthy development of the digital economy.

Blockchain and metaverse industries emerge

The national 14th Five-Year Plan clearly lists seven key digital economy industries： cloud computing， big data， Internet of Things， industrial internet， blockchain， artificial intelligence， virtual reality and augmented reality.

The metaverse features many technologies including blockchain， artificial intelligence， human–machine interaction， cloud computing and information security. It is regarded as new engine of digital economy by Li Ming， Director of Blockchain Research Department of China Electronics Standardization Institute.

Zhang Ying， Delegate of the CPPCC National Committee and Deputy Director of Shieitc， said that as an important platform for the interaction between the virtual world and real society， the metaverse is becoming an important channel to drive development of the global digital economy and digital technology innovation. “We will strengthen development guidance， eliminate the false and preserve the true， and make pragmatic progress. We will promote the quality and efficiency of the real economy through the metaverse， by making breakthroughs in cutting-edge technologies and making forwardlooking layout.”

How to develop the metaverse with farsightedness is an important path to expand and strengthen the digital economy， seize the commanding height of future competition and grasp the initiative of development.

Kong Falong， deputy to the National People’s Congress and Chairman of Jiangxi Rural Credit Cooperatives Federation， proposed to establish a national metaverse R&D center， increase capital， talent and incentive support， and focus on the key underlying technologies of the metaverse， such as chip， blockchain， geospatial data， interactive algorithm， perceptual display， image engine and 3D environment generation， so as to provide solid support for the independent and controllable development of the metaverse. At the same time， he called for speeding up the research and formulation of the metaverse industrial development plan at the national level， establishing industrial standards， regulations and systems， and clarifying the boundaries， red lines and restricted areas of the industry.

“The government is providing guidance for the development of the digital economy. It has injected a large amount of capital into blockchain and other developing emerging industries. This is an important opportunity for companies to grasp，” said Jing Yufeng， partner of New Access Capital.

On March 3， the Beijing Tongzhou District government office released the Notice on Measures to Accelerate the Innovation and Development of the Metaverse in Beijing Municipal Administrative Center， and proposed that the government will build a number of metaverse demonstration application projects and support the construction of a number of metaverse application scenarios in Beijing Municipal Administrative Center. Also， it will use the industry guidance fund to work with other social investors through the “mother fund+direct investment”model， to build a fund that covers the metaverse industry.

In this regard， Cao Shenghu， CEO of Chenghu Technology， said：“with the encouragement of a new round of infrastructure construction by local governments， the metaverse industry will achieve rapid development. As the metaverse hardware continues to mature， a large number of content creators will join in， and the activities of the whole digital economy will focus on content.”

Digital transformation as the key

According to the IDC’s latest forecast， China’s digital transformation expenditure will reach USD 329.1 billion （about RMB 2104.1 billion） in 2022， an increase of 18.6%. Digital transformation is already the core strategy of business enterprises. By 2023， one third of Chinese enterprises will see more than 30% of their revenue coming from digital products and services， while in 2020 less than 1/5 companies would see that happen.

At the two sessions， many delegates believed that on the one hand， we should aim at sensors， quantum information and other strategic fields to make breakthroughs in advance； on the other hand， based on major technological breakthroughs and developmental needs， we shall strive to increase the competitiveness of key links of the industrial chain and focus on key areas such as integrated circuits， communication equipment and intelligent hardware， to build new advantages and improve weak links.

Shen Nanpeng， member of the CPPCC National Committee and founding and executive partner of Sequoia China， suggested in the proposal of this year’s two sessions： first， we shall promote the compatibility and adaptation of industrial sensors and communication protocols， and strengthen data supporting capacity through technological upgrading and new technology application. Second， we shall rely on specialized， fined， peculiar and new enterprises， and explore new ways of integrating digital technology and industrial manufacturing knowledge to promote “digital intelligence”. Third， we shall reduce development costs and cultivate digital technology service providers based on real needs of business enterprises.

According to relevant surveys， 70% of the managers of small， mediumsized and micro enterprises have a strong desire for digital transformation， but nearly 80% of the small and medium-sized enterprises that have entered the digital transformation are still in the basic exploration stage. Due to weak data collection foundation， lack of talents and low level of technology application， most of these enterprises cannot achieve real transformation； the slow effect， poor coordination and unclear expected results make small and medium-sized enterprises lack confidence in the digital transformation.

In this regard， Yang Yuanqing， Deputy to the National People’s Congress and chairman and CEO of Lenovo Group， suggested using digital transformation to encourage more small and medium-sized enterprises to become specialized， fined， peculiar and new enterprises. He said that the government and relevant associations shall jointly establish the “digital development index of small and medium-sized enterprises” to enable scientific evaluation of the development level of small and medium-sized enterprises. It is also important to build an platform for accelerating digital transformation of and providing digital evaluation， consultation， training and funding services for small and medium-sized enterprises， to give these companies more knowledge and confidence to promote digital transformation； it is also imperative to make assistance policies， optimize the business environment to enable the digital transformation of small and medium-sized enterprises. These supporting policies includes increasing fiscal and tax support， improving credit support and providing more marketoriented financing channels.