Thursday, 2 Jul 2020

Digital economy's growing role in rescuing the real economy: China Daily contributor

BEIJING (CHINA DAILY/ASIA NEWS NETWORK) – The digital economy was first mentioned in a work report of the Chinese central government in 2017.

This year’s report delivered in late May stressed again that China will advance Internet Plus initiatives across the board and create new competitive strengths in the digital economy, partly to deal with the economic fallout of the novel coronavirus outbreak.

The pandemic is the toughest and fastest spreading public health emergency with the largest scale the world has ever seen.

The lockdown measures and similar approaches such as Japan’s initiative to avoid enclosed and crowded places have to some extent brought the world economy as well as flows of human and capital to a halt.

As a result, the normal functioning of globalisation and the global industrial chain have both been affected, and it is still impossible to predict the intensity and duration of the pandemic’s effects.

But while the flows of goods and people have been hard hit, information flows are booming, so the digital economy has a growing role to play in rescuing the real economy, boosting the sustainable development of society and promoting a new type of globalisation.

It will be a path to the future to integrate the digital economy with the bricks-and-mortar economy and combining the virtual world with the real one.

However, there is a problem: knowledge and information are not sufficiently shared. Due to the lack of cooperation between industries, regions and countries, people still have limited access to information.

Countries such as Japan have already started exploring ways to establish a society in which industrial, technological and social systems are highly optimised, all people and objects are connected by means of the internet of things, all knowledge and information is shared.

In a word, it will be a highly sustainable and intelligent society with the largest social benefit and smallest risk and cost.

In the existing information society, people have created value by analysing information, while in the new one, artificial intelligence will analyse large quantities of big data and feed the results back to humans, offering unprecedented value to industries and society.

Making Value for America: Embracing the Future of Manufacturing, Technology and Work, a report published by the National Academy of Engineering of the United States in 2015, proposed a new strategy focusing on the digital economy and the integration of industries and the service sector.

The US is now the No 1 in terms of the digital economy. China ranks second.

The China Statistical Report on Internet Development issued by the China Internet Network Information Centre shows China’s digital economy reached 22.4 trillion yuan ($4.4 trillion) in 2006, accounting for 30.1 percent of the country’s GDP; and in 2019, the value increased to 31.3 trillion yuan, the second-highest in the world.

The growth rate of China’s digital economy has been leading the world for three years in a row.

As of March 2020, there were 904 million netizens in China and the internet has covered 64.5 percent of the population, representing an increasingly solid user foundation for the digital economy.

Therefore, even if the Covid-19 pandemic had not happened, human society would still be transitioning to the integration of the virtual and real worlds. The pandemic has just accelerated this change.

The pandemic has sped up our transition toward the digital age.

We have found in our response to the disease that a lot of things can be done by means of the internet and the digital economy, no matter whether at the international or domestic level, or whether the affairs of the public or private sector, or whether related to large corporations or small enterprises.

By switching to the digital economy, we are choosing to become more economical, environmentally friendly and sustainable.

Take the reduced carbon dioxide emissions for example, these not only come from the fact that a considerable part of the global economy has been shut down, but also because people’s way of production and life have both changed due to the disease.

As the pandemic is being brought under control in the country, China will take big strides into the digital age, as people in the political, industrial and academic circles have been fully aware of both the international and local digital landscape.

To be specific, the digital age includes digital sciences, technologies, the economy and society. The first two are preconditions for the last two.

As digital sciences become more intertwined with AI and other technologies, basic theoretical research will become increasingly important.

Digital technologies are both tools and an industry, covering AI, the internet of things and blockchain, to name just a few.

These technologies combined are powerful enough to drive the digital economy, which presents an opportunity nurtured by the past five decades of technological revolution.

As the core purpose, the digital economy is closely linked to the planet, social and human systems, so we should boost its development at four levels of the macroeconomic structure, way of production, consumption mode and management model.

The world will not return to what it was before the pandemic. As the new round of technological and industrial revolutions speed up and new business models such as AI, big data and the internet of things are booming, the digital economy has embraced a greater driving force and brighter prospects.

The digital economy is becoming a new engine for the economy and will lead China’s growth in the post-virus era.

China and the world as a whole should take the pandemic as a chance to change the way of production and growth, push for closer integration of cyberspace and the real world, boost the digital economy, build a low-carbon, circular, inclusive, secure, intelligent and sustainable society, so as to achieve the targets of the UN 2030 Agenda.

The author is a professor at the College of Policy Science at Ritsumeikan University, and the director of the Research Institute of Global 3E in Japan. China Daily is a member of The Straits Times media partner Asia News Network, an alliance of 24 news media organisations.

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