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China Telecom technicians test an equipment at the 5G network base station near Yellow River in Lanzhou, Gansu province, China on May 16, 2019. Photo: Reuters

China’s economy was hit hard by the pandemic. Its 5G ambitions could be crucial to its recovery

  • President Xi Jinping has put 5G networks and data centres at the top of China’s plans to spend on ‘new infrastructure’
  • The renewed push for the country’s ambitions to become a global leader in 5G is part of plans to help cushion the economic impact of the coronavirus outbreak
China’s economy declined sharply in the first two months of the year under the weight of the coronavirus pandemic, with industrial production, retail sales and asset investment all declining far more than analysts expected.
In this bleak economic landscape, President Xi Jinping has put 5G networks and data centres at the top of the country’s plans to spend on “new infrastructure”, hoping to cushion the impact of the outbreak.

The next-generation networks and big data centres are considered fundamental elements of China’s new digital infrastructure, aimed at driving greater connectivity for consumers and businesses across the country.

Despite the hit taken by many sectors in China’s economy, China has maintained its leading role in 5G due to massive state-backed investment and growing enthusiasm from consumers and companies, leading industry group GSM Association (GSMA) said in a report last week.

In separate announcements last month, the Central Politburo of the Communist Party and the Ministry of Industry and Information Technology (MIIT) said the country’s 5G network development should be accelerated.

On Tuesday, MIIT again urged telcos to speed up the construction of the 5G network to reduce the impact of the coronavirus pandemic, encouraging local governments to provide resource support needed for the construction and to integrate the digital infrastructure into their land use planning.

China’s three largest telecommunications operators – China Mobile, China Unicom and China Telecom – have vowed to complete their infrastructure deployments without delay, with China Mobile chairman Yang Jie describing the network expansion as “a major political task”.

Chinese operators are expected to invest more than US$180 billion in mobile capital expenditure between 2020 and 2025, roughly 90 per cent of which will be on 5G networks, according to GSMA.

GSMA says China maintains lead in 5G networks

The construction of the network is also expected to drive investment in applications in other industries, which is projected to exceed 3.5 trillion yuan in the next five years, state-run news agency Xinhua reported.

With peak data rates up to 100 times faster than current 4G networks, 5G has been held up as “the connective tissue” for the Internet of Things, autonomous cars, smart cities and other new mobile applications, establishing the backbone for the industrial internet.

“It is a truism that the 5G technology will bring all these 'smart' concepts closer to reality,” Ivan Platonov, an analyst at Beijing-based think tank EqualOcean said.

“5G can be compared to a highway for data and information: we could build a lot of things along the road such as AI, smart cities and the Internet of Things,” Zhao Guodong, general secretary of Zhongguancun Big Data Industry Alliance, said.

The technology, which the carriers began rolling out in November last year, has been put to use in China’s battle against the spread of the novel coronavirus.

Doctors at Huoshenshan and Leishenshan – the two temporary hospitals built in original outbreak epicentre Wuhan – used high-definition video conferences supported by 5G to share medical images such as CAT scans with colleagues in other cities such as Beijing, Shanghai and Guangzhou, according to reports by state-owned China Global Television Network and news start-up Jiemian News.

The instant transmission of high resolution medical images, to speed up diagnosis and the formulation of treatment plans, could only have been supported by 5G network speeds, Jiemian News reported.

Beijing has 26,000 5G base stations serving 800,000 users

The network has also been used to power robots to deliver drugs, check temperatures, offer medical advice, guide routes, clean and disinfect rooms, according to a China Daily report.

Doubts have been raised though about whether China will be able to meet this aggressive timetable under the impact of the coronavirus outbreak, which has seen large parts of the country locked down, disrupting work at factories and construction sites.

“The best telcos could do on 5G in 2020 is to not cut the target,” said analysts in a research note from Jefferies, a Hong Kong-based financial services provider.

The pandemic has already hit China’s US$759 billion mobile technology market, which accounted for 5.4 per cent of the country’s GDP in 2019 according to GSMA.

China Mobile, the world’s largest telecoms operator by subscribers, admitted last week that the novel coronavirus outbreak has posed problems for its business development this year as its mobile users dropped by more than 8 million in the first two months. China Unicom’s mobile users also dropped by 7.8 million in the same period, according to its website.

But 80 per cent of China’s 5G deployment programmes are still on schedule as of end-February, according to state broadcaster CCTV.

And despite its overall drop in subscribers, China Mobile ended February with 15.4 million 5G customers, compared with 6.74 million 5G users in January, according to its website.

Huawei wins half of China Mobile’s 5G network equipment contracts

The pandemic has bolstered the growing trend of trend of businesses and customers using more digital and cloud-based services, boosting demand for faster network speeds, China Mobile chairman Yang said in a release accompanying the carrier’s 2019 earnings results last week.

Currently, the telco has 50,000 5G base stations in service and plans to invest up to 100 billion yuan in building at least 250,000 5G base stations in 2020, China Mobile said in its earnings presentation.

China Unicom and China Telecom have teamed up to build 50,000 5G base stations across the country and are aiming to complete 250,000 by the end of the third quarter, ahead of their original target of end-2020, China Unicom said in a press release on Monday.

As of end-2019, MIIT minister Miao Wei said China had already built 130,000 5G base stations across its network.