- The State Council has proposed an eight-pronged approach to shore up China’s digital economy
- The proposal came days after a rout of Chinese tech stocks in Hong Kong and New York wiped out trillions of dollars of market value
The State Council, China’s cabinet, has pledged to bolster the country’s digital economy through major new policy commitments, signalling Beijing’s response to the Biden administration’s recent moves imposing further US restrictions against the mainland’s tech industry.
He Lifeng, the minister in charge of the National Development and Reform Commission, reiterated the pledge as part of a digital economy development report that he delivered before the latest standing committee session of China’s top legislature, the National People’s Congress, on October 28.
The report proposed an eight-pronged approach to shore up the sector and increase the country’s international competitiveness. These include pooling resources to pursue breakthroughs in core technologies, ramping up construction of digital infrastructure, stepping up digital innovations and establishing an advanced industrial cluster.
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Citing the report, He described China’s digital economy as having “infinite possibilities” and potential for massive growth, thanks to the nation’s vast digital population, various data resources, user applications and domestic demand.
The report also called for deeper integration of digital technologies into traditional industries to raise efficiency, enhancements in cyberspace and data security, and improved collaboration with economies around the world.
It envisioned China’s digital economy to step into a “period of full expansion and digitalisation” by 2025 to “lead the country’s development”.
While the report summarised the achievements made by China’s digital sector over the past decade, it also pointed out some of its weaknesses. These include valuing speed over quality and lacking the strength that is commensurate to its scale – China has the world’s biggest number of internet users, as well as the largest market for e-commerce, video games, smartphones and personal computers.
Beijing’s renewed policy support for the country’s digital economy reflects a heightened sense of urgency after Washington’s recent moves to expand the scope of US hi-tech export controls targeted at chip makers on the mainland, which followed the Biden administration’s enactment of the Chips and Science Act in August.
For companies that are part of the domestic digital economy, disruptions from the US-China tech war have been further exacerbated by the impact of weak consumer spending and slow economic growth at home.
The State Council’s digital economy proposal came days a rout of Chinese tech stocks in Hong Kong and New York wiped out trillions of dollars of market value, as investors reassess the sector’s fundamentals.
Following a series of regulatory crackdowns, China’s various tech platform operators rushed to divest noncore and unprofitable businesses in the past year, putting an era of breakneck expansion behind. Restructuring has led to lay-offs across the sector since the beginning of the year.
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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