Local efforts to raise digital economy output

Many regions set related targets in development plans to spur recovery

Many provinces and cities in China have assured stronger efforts to raise the output of the digital economy, which they hope will better support the recovery of the larger economy from adverse COVID-19 impacts.

The 31 provincial-level regions in the Chinese mainland have all highlighted the goal of developing the digital economy in their latest economic development plans.

And 21 of them have set for themselves the goal of expanding the share of the digital economy in their GDP in the years to come.

Shanghai aims to improve the output of its digital economy-related core industries to 18 percent of the city's GDP in the coming four years from 15 percent last year.

Jiangxi province set the target of raising the corresponding figure from the current 35 percent to 45 percent by 2027.

The output of the digital economy-related core industries of Zhejiang province is expected to reach 1.6 trillion yuan ($235 billion) by 2027, while the output of the overall digital economy market of Hunan province is set to exceed 3 trillion yuan.

"The ultimate reason behind boosting the development of the digital economy is that it will bring new growth impetus to local economic development, especially in industries, investment and consumption, and help offset COVID-19 impacts," said Zhao Gang, head of CIO Manage, a Beijing-based digital economy market consultancy.

During the relevant annual provincial legislature sittings and key economic conferences, they have mapped out specific measures to develop the digital economy. Focus will be on infrastructure construction, especially computing centers, industrial digitalization, emerging digital industries like the metaverse as well as data transactions.

"The specific goals (of each province or region) are slightly different based on the development level of the local digital economy. For instance, industrial digitalization will be prioritized in manufacturing clusters while computing centers will be prioritized in energy-rich regions," Zhao said.

Central China's Henan province, home to the world's largest iPhone factory, will invest 50 billion yuan ($7.39 billion) on digital infrastructure expansion, according to a work plan recently released by the Henan Development and Reform Commission.

The province will also promote the digital transformation of its manufacturing sector. This would involve building 150 smart factories and 10 provincial-designated industrial internet platforms.

Local governments' efforts to accelerate the development of the digital economy are in line with China's plan to boost the output of core industries of the nation's digital economy to 10 percent of the country's GDP by 2025, up from 7.8 percent in 2020, as noted in China's 14th Five-Year Plan (2021-25).

Wei Jianguo, former vice-minister of commerce and vice-chairman of the China Center for International Economic Exchanges, said, "China's efforts in developing the digital economy will enable companies to not only lead development in various business sectors in the domestic market, but also compete further on the global stage in the future."

A white paper released by the China Academy of Information and Communications Technology, a government think tank, showed that the market scale of China's digital economy reached $7.1 trillion last year, which was the second-largest globally.

Ruan Weixiang, chairman of Lonsen, a chemical leader from Zhejiang province, said: "Digital economy goals really matter. In the past, the complicated production process used to create instability within Lonsen, but the setting up of intelligent factories since 2017 has greatly helped the company to improve manufacturing quality and stability."

Su Ganting, co-founder of Leekr Technology, a smart chassis-by-wire system solutions provider, said, "Without the great support from the local government in developing the digital economy, it is impossible for startups like us to reach mass production merely one year after foundation."

Su said Leekr has established a complete product line, and is keen to take advantage of Shanghai's strengths in technological research and development, in order to accelerate the development of its new digital products.