Why China is set to spend US$411 billion on 5G mobile networks

Mainland China is expected to see total investments on 5G mobile networks reach 2.8 trillion yuan (US$411 billion) in the period from 2020 to 2030, which could mark the country’s most expensive build-out of telecommunications infrastructure.

A 5G study published last week by the China Academy of Information and Communications Technology, the research arm of the Ministry of Industry and Information Technology (MIIT), forecast the combined 5G expenditure of the three domestic network operators to hit a peak of 313.3 billion yuan in 2023.

The research unit also predicted that in 2025 the 5G market would account for 1.1 trillion yuan, or 3.2 per cent of the mainland’s gross domestic product for that year.

“We believe this paper represents the government’s official position in 5G, and its analysis largely explains why China will aggressively support 5G roll-out,” Jefferies equity analyst Edison Lee said.

Jefferies had earlier projected significant 5G capital expenditure for China Mobile, China Unicom and China Telecom, starting from 2019 and reaching an estimated total of 1.2 trillion yuan by 2025.

Mainland China, the world’s largest smartphone market, also has the biggest 4G market, with a total of 843.7 million 4G subscribers as of April 30.

Based on the MIIT research arm’s lofty estimates, the aggressive roll-out of 5G infrastructure could see the mainland become the world’s biggest 5G market by the next decade.