China's Digital Silk Road

Navigating Emerging Markets

China's Digital Silk Road

The advance of China's digital economy over the last few years has been nothing short of incredible. It already makes up more than 30% of the country’s GDP and it is estimated this percentage will increase substantially over the next decade and more.

Its technology sector has political and economic momentum behind it, which is why the ‘Digital Silk Road’ – a vital, but often overlooked facet of China’s expansive One Belt One Road (OBOR) vision – will soon prove impossible to ignore.

At the fourth World Internet Conference at the end of last year, Chen Zhaoxiong, vice-minister of China’s Ministry of Industry and Information Technology said the country’s aim was to ‘actively promote the digital silk road, to construct a community of common destiny in cyberspace’.

Within China, key pillars are being put in place to enable a world-leading digital infrastructure: The state has been substantially investing in areas of new technology, including a three-year plan to build an artificial intelligence (AI) application market valued at more than US$15 billion.[1] There is also a major push to increase connectivity, including establishing 5G networks in the Pearl River and Yangtze River delta areas, and Beijing-Tianjin-Hebei region (in a minimum of five cities). Arguably, China could soon lay claim to being the world’s most connected country.

At the same time, China is looking outward, as are many of its businesses. This includes improving (or creating) IT infrastructure in developing nations along the OBOR route (the state-owned big three telcos China Telecom, China Unicom and China Mobile are laying cable links between Asia and Europe), establishing ‘smart cities’ along the OBOR route (with notable firms including ZTE and Huawei). At the same time, digital platforms and automation are helping ‘shrink the world’ – Alibaba has helped establish a digital free-trade zone in Malaysia, enhancing trade by speeding up the customs process. Enhancing this feeling of a technological shift from West to East, China has also established its own satellite navigation system BeiDou (Big Dipper), which it aims to expand to a global network of more than 30 satellites and compete with the US Global Positioning System.

The Digital Silk Road is often ignored, in favour of the more tangible OBOR road and sea link aspects. However, the innovation and developments at home and abroad, will establish China and its maturing technology companies as global leaders – setting the pace of change for others to follow.

 

[1] China's Digital Economy - A Leading Force. Discussion Paper, August 2017, McKinsey Global Institute

 

Top