China ranks prominently in International Digital Economy Governance

Published:May 19,2022

By Gerald Mbanda

Prof. Zha Daojiong-Peking University

How can the seeming differences between Chinese positions on governing the digital economy and those as revealed in multilateral digital economy agreements be harmonized? This is a question that was paused by Professor Zha Daojiong,  at the  School of International Studies and Institute of South-South Cooperation and Development, Peking University, in a webinar seminar with Dongfang scholars on Wednesday. 

The world’s digital economy is getting more geopolitical, with practices of digital sovereignty and signs of a splinternet on the rise. However, with its application to join regional-free trade arrangements, China is internationalizing its digital economy governance. This was revealed by Professor Zha Daojiong.

China’s domestic legislations and policy reforms, are increasingly aligning with those in Europe, in addition to industry-level interoperability with the United States. This provides a basis for further harmonization of digital economy governance with the rest of the world, Professor Zha, said. 

Two decades after the first email connection was established between China and the rest of the world, in 1987, China’s digital sector has grown in leaps and bounds. In 2013, China’s e-commerce volume exceeded 10 trillion renminbi and China overtook the United States as the largest e-commerce market in the world. Internationally, in terms of capacity to engage in and benefit from the data-driven world economy, China ranks prominently, Professor Zha added. 

In September 2020, China proposed a global initiative on Data security, a diplomatic pledge on Information Communication (ICT) Supply chain, Professor Zhasaid. He also mentioned that “Data is the new oil.” As oil has been known as one of the most important resources for mankind, in the fourth industrial revolution, which involves technology, innovation and artificial intelligence (AI), it is assumed that Data is the new oil for the digital era. When Data is analysed, it provides insights to enable companies of organizations to make informed decisions and strategies. “The oil and gas multinational companies which have for decades dominated as the largest by capitalization, have been replaced by big Data companies, Professor Zha told Peking University Dongfang scholars. 

According to a discussion paper published by McKinsey global Institute in 2017, China had 731 internet users in 2016, a figure which is more than the European Union (EU) and the United States combined.  According to the paper, China also had 695 million mobile users (95 percent of total internet users), compared with 343 million in the EU (79 percent), and 262 million in the United States (91 percent). Digital native internet users numbered about 280 million, nearly the same as the total number of US internet users. 

China has one of the most active digital investment and startup ecosystems in the world. Its growing venture capital industry is increasingly focused on digitaltechnologies. Overall, China’s venture capital sector has been growing rapidly, from just $12 billion in 2011–13, or 6 percent of the global total, to $77 billion in 2014–16, or 19 percent of the worldwide total, according to McKinsey global Institute. 

The majority of venture capital investment is in digital technologies such as big data, artificial intelligence (AI), and financial technology (fintech) companies. China is in the top three in the world. 

Since 2016, the National Development and Reform Commission of China, the government’s economic planning agency, announced its, “Three Year Action Plan of Internet Plus Artificial Intelligence” that aims to build an AI application market valued at more than 100 billion renminbi ($15 billion) by developing nine major AI ecosystems, including smart home appliances, intelligent automotive, wearable devices, and smart terminals. 

In March 2017, the agency authorized Baidu to lead the first national engineering lab focusing on deep learning in collaboration with institutions including Tsinghua University, the China Academy of Information and Communications Technology, and the Beijing Electronics Standardization Institute.

Since 2014, China has encouraged citizens to participate in mass entrepreneurship and innovation using measures such as tax deductions and state-endorsed startup funds. In August 2016, the government approved the establishment of a state-owned $30 billion venture capital fund in Shenzhen, known for many digital startups. Beijing Zhongguancun Inno Way, a high-tech community dubbed as China’s Silicon Valley, launched its first 500 million renminbi ($74 million) venture capital fund targeting AI-related startups.

When I visited China in the summer of 2019, Iwitnessed in Hangzhou city, an Alibaba supermarket using facial recognition AI machines to effect payments. Coming from the African continent where such innovations are very rare, I realized that the African continent is still light years away from tapping into the opportunities availed by the fourth industrial revolution. During the fight against COVID-19, AI robotics were deployed to provide services among patients where human interactions were highly risky. Other COVID-19 preventive AI innovations were showcased during the   Beijing 2022 Olympic Games.   

China has in recent years passed a number of policies to promote the development of AI. Such policiesinclude, “Made in China 2025,” “Action Outline for Promoting the Development of Big Data,” “Next Generation Artificial Intelligence Development Plan,” and others.

According to iiMedia Research group, in 2021, China’s AI market was estimated to be worth about RMB 150 billion (US$23.196 billion), and is projected to reach RMB 400 billion (US$61.855 billion) by 2025. By 2030, the Chinese government projects the AI industry to create RMB 1 trillion (US$154.638 billion) worth of annual revenues. 

Such deliberate policies that promote digital economy governance, have not only propelled China to catch up, but also puts the country among the top global performers in International Digital Economy Governance. As China strives to build a moderately prosperous society in all respects, being a key player in global Digital Economy Governance is not an option but the only way to go. 

Gerald Mbanda is a researcher and publisher on China and Africa. He is also a Dongfang Scholar-2019.