Digital economy: a new driver for China's economic transformation and upgrade

The President of China Institute for Reform and Development (CIRD) Mr. Chi Fulin said at the International Summit of Business Think Tanks 4th Edition at Tunisia on December 9th, in the next few years, digital economy in China is likely to keep growing at a fast pace, and this will have profound impacts on China’s economic transformation and growth.

Mr. Chi said, the last few years have witnessed rapid development of China's digital economy with explosive growth in some industries, which has become a new driver for China's economic transformation and upgrade. The development of digital economy is an outstanding highlight in China's economic transformation.

China's structural reforms for the purpose of economic transformation are going through a critical period, and its economic transformation shows a trend of the times. Such reforms not only have supported China’s medium-high economic growth, but also are creating a huge market space for the development of digital economy. In 2015, China's e-commerce transactions exceeded 20 trillion Yuan and it is estimated that by 2020 it may well reach 45 trillion Yuan, with an average annual growth of more than 20%.

Mr. Chi Fulin indicated that the consumption structure in China is changing from one with material consumption as the mainstay to one with service consumption as the mainstay. It is estimated that by 2020, China’s total consumption may be expanded from the current 34 trillion Yuan to around 50 trillion Yuan, and its contribution to economic growth will remain stable at above 65%. The proportion of service consumption by urban residents is expected to increase from 40% to 50%.

The industrial structure in China is shifting from industrial domination to service domination. It is estimated that the proportion of China's service sector in GDP may rise from 50.5% in 2015 to around 60% by 2020, and a service-dominated industrial structure will basically take shape. The proportion of producer services may increase from 15% to 30% or so.

Mr. Chi Fulin predicted that in the next few years, digital economy in China is likely to keep growing at a fast pace, and this will have profound impacts on China’s economic transformation and growth. And he made some analysis about this situation.

The size of the digital economy will further expand. In digital consumption, it is expected that, by 2025, China's total information consumption will reach 12 trillion Yuan, and the total size of e-commerce transactions will come up to 67 trillion Yuan.

The digital divide will be gradually narrowed down. In the next few years, China's infrastructure for the development of digital economy is expected to further improve. With the improvement of infrastructure for digital economy, digital divide between urban and rural areas and across regions will be gradually narrowed down, and residents in rural areas and less-developed areas will have more opportunities for participation in the development of digital economy. As of the end of 2015, a total number of 780 villages have met the access conditions of selling products online on Taobao, which is the biggest B2C e-commerce platform in China. A growing number of farmers are selling farm produce and farm tourism services via e-commerce platforms, while more and more migrant workers and college graduates are returning to their hometowns to start their own businesses.

Digital economy is helping promote economic globalization. Currently, economic globalization has arrived at a new crossroads: to adhere to free trade or opt for trade protection? To stubbornly stick to exclusive trade arrangements or to wisely choose inclusive and shared free trade arrangements? China undoubtedly has chosen free trade and opted for inclusive and shared free trade arrangements. While promoting the process trade liberalization, China will promote shared global economic development by using the development of digital economy as an important carrier.

Mr. Chi Fulin has shared several proposals on developing digital economy: strengthening international cooperation in developing digital economy; accelerating the construction of a new pattern of open and inclusive global digital governance; launching an international coalition of think tanks to carry out forward-looking research on the development of digital economy.