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Development of digital economy in China shifts focus to production side – Analysis – Eurasia Review

By Wei Hongxu

Recently, China’s Central Commission to Deepen Reforms Comprehensively reviewed various data system plans, including a guideline on building basic data systems and making better use of data resources. The central government’s layout of building the basic data system is designed to lay a solid foundation for the advancement of the digital economy and drive the development of the data-based data industry to accumulate more resources and driving force. These new changes in the digital economy mean that there is the introduction and improvement of rules in China’s digital economy.

Looking at the content of the policies and plans, two aspects are worth mentioning, the first is the clarification of ownership and classification of data, and the second is the construction of a data transaction mechanism. Clarifying ownership and rights and obligations is critical to establishing the legal basis for data transactions. Of course, the new plan still has to clarify that, but it gives hope for the development of a system with clear ownership structures so that the corresponding data transactions can be carried out. Although Shanghai, Beijing, Hainan and other places have started trying to create data exchange and data transactions in terms of scale and transaction frequency, it is still in the early stages of testing. ANBOUND researchers believe that the focus of developing data assets and applying digitization will shift from the consumer side to the production side.

Although the new concept offers a framework for establishing the data system, it does not mean that short-term impulses for the development of the data industry or the digital economy can arise. The future relies on digital technology to generate data rather than monetize data, and the same is true in other areas. As a result, the model of harnessing online traffic flow through capital and market expansion will face ever-increasing business costs and regulatory obstacles. Judging by the development trend of China’s digital economy, after the country’s Internet platforms and domestic 5G network have reached the stage of large-scale popularization, the overall driving force for the development of the digital economy is weakened.

Statistics show that the scale of China’s digital economy has reached US$5.4 trillion in 2020, accounting for 38.6% of GDP, maintaining a high growth rate of 9.7%, and becoming the main driving force for stable economic growth becomes. Compared to the previous year, however, the growth rate still fell by 5.9 percentage points. The downward trend in the growth rate of the digital economy deserves attention. In 2021, the expected growth of the digital economy scale was RMB 42.4 trillion, accounting for 37.06%, a slight year-on-year decline. At the same time, China’s digital economy share in GDP was 21.4 percentage points lower than that of the United States, Germany and the United Kingdom, and 5.1 percentage points lower than the world average.

ANBOUND researchers pointed out that the main problem to be solved in the future development of China’s digital economy is data resource ownership. The main point of contention in the country’s transport economy, which restricts Internet platforms, is precisely the right to use data. In the existing Internet platform economy, such as online consumption, when market expansion is limited and data collection costs are increasing, Internet platforms, relying on their own collected customer data, seek cash in consumption and financing realize. This has major implications for the current real economy and financial sector, and is also an important reason for the agency’s correction of internet platforms. As noted by ANBOUND, clarifying and resolving the matter regarding ownership of data resources becomes a pragmatic matter. As for the data resources, although there is still room for development in the medical and financial fields, against the background of the antimonopoly system becoming more and more perfect and the supervision constantly improving, the transport economy is now being inhibited and restricted. This means that the space for the application and development of the existing large amount of data resources based on consumer data on the consumer side will be restricted.

When the Internet platform is limited and the transportation industry encounters increasing bottlenecks, the development of digital industrialization, dominated by digital consumption at the terminal, will have difficulties in transformation after a period of rapid growth. Looking at the data industry, strengthening oversight means, on the one hand, that the big data resources, mainly consumer data, also face institutional barriers to advancement and “diversion”. The development of digital industrialization not only faces the obstacles of insufficient digital infrastructure, but also requires technological breakthroughs in its industrialization development itself. In addition, the production side also faces the fundamental hurdle of lack of a large amount of production data. Therefore, in the new growth space of the digital economy, the demand for large amounts of data on the production side will be the main driving force for building a basic data system and establishing a data transaction mechanism.

The central and western regions of China are building data centers to meet current and future needs for large-scale data storage. However, the application of this data and the development of data resources not only face fundamental systemic problems, but also lack the development of data application fields. In Guiyang, known for its development of big data industry, the focus is mainly on storage, and the big data investment projects there are mainly focused on the data centers. In order to mine data resources, it is not only necessary to realize the accumulation and mining of data, but also the support of technology and industry to realize the appreciation of data through digital technology. However, the weak real economy and lack of data development capabilities have become the biggest shortcoming of Guiyang’s development. As a result, its data industry is generally at the middle and bottom of the value chain and its core competitiveness is rather weak. If the big data industry wants to play more roles in various places, it still needs upgrading and integrated development of basic industries. The future development of the data industry depends on the collection, application and development of a large amount of production data. This also means that the future focus of the development of the digital economy will start to shift from the consumer side to the production side.

Conclusion of the final analysis:

The conception of the Central Commission to deepen the data infrastructure construction reform comprehensively means that it will solve the fuzzy area of ​​data ownership and further realize the tradability and transmission of data. This provides an institutional and market-based basis for large-scale data development. The digital industrialization of the consumer side has been completed according to the current status, whereby the growth focus of the digital economy will shift to the production side.

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