China is racing down the path of global digital domination, with Xi Jinping in the driver’s seat
China is already spending the equivalent of 2.1 per cent of its 2016 economic output on technology research and development, more than the European Union’s 2.08 per cent.
China’s government will allocate more resources toward the implementation of big data analysis and digitalising the world’s second-largest economy, part of a US$150 billion strategy to turn the nation into the global innovation hub for artificial intelligence by 2030.
“China should speed up its effort to improve our digital infrastructure, promote the integration and sharing of digital resources, protect data security to better serve the nation’s economic and social development, as well as improve people’s lives,” President Xi Jinping said during a Friday meeting of the Communist Party’s political bureau, or Politburo, according to a Xinhua News Agency transcript.
By leading the party’s top decision-making body in a meeting on big data, Xi - China’s most powerful state leader in generations - is putting his personal imprimatur on the government’s strategic push, underscoring his determination to drive for results. Less than two months earlier before he was confirmed in his second five-year term as China’s president at the party’s congress, Xi had called for advanced technologies to be “embedded” into the real economy to foster growth.
Known among technologists and economists as the “fourth industrial revolution,” artificial intelligence, robotics and big data may bolster the global economy by a further 14 per cent by 2030 – the equivalent of an additional US$15.7 trillion in value – and China will see an estimated 26 per cent boost to its economic output, PwC said in June.
“China should lay out our digital master plan early and strive to take the initiative,” Xi said on Friday, according to Xinhua. “We [should] aim for world class, cutting-edge technologies, and nurture a group of big data companies.”
China’s 2016 spending on technology research and development rose 10.6 per cent to 1.57 trillion yuan (US$237 billion), equivalent to 2.1 per cent of the economy’s output, according to the National Bureau of Statistics data. The figure exceeded the average of 2.08 per cent for the European Union.
Digitalisation has given China’s economy a shot in the arm, especially in the country’s booming development of e-commerce. The country has already leapt ahead of Europe, North America or Japan in cashless payments and online commerce.
China already has 42 per cent share of the world’s e-commerce transactions, processing US$790 billion in 2016, or 11 times more than mobile payments in the US, according to McKinsey’s data.
E-commerce and e-payment have already become the beacons of the digital era with China’s three largest internet companies – Baidu, Alibaba Group Holding and Tencent Holdings – increasingly wielding their influence over China’s business activities and daily lives. Alibaba owns the South China Morning Post.
Still, China lags behind the US in the application of digital technologies in traditional sectors, especially in transport and logistics, agriculture, real estate and construction.
Beijing is looking to slash about 1 trillion yuan in national logistics costs by 2020, pinning hope on the latest digital technologies to enhance the efficiency of transport and delivery services.
China has more than 8 million logistics firms, more than 90 per cent of which are small-scale and individually owned.
Inefficient management at the transport businesses have been weighing on the economy, which passes huge logistics costs on to Chinese-made products, squeezing their profits and making it hard for them to sell.