Accelerate the Digital Transformation

By Lynn Yu

During the Two Sessions this year， the Government Work Report （thereinafter the Report） pointed out the goal to encourage development of the digital economy. From growth to creating new advantages， to promoting development and improving governance， the digital economy is accelerating China’s economic development.

In this regard， Kitty Fok， President of IDC China， said： “In the past three years， all enterprises have experienced unprecedented storms， and digital transformation is no longer an option， but an inevitable development of enterprises. The digital transformation spurred on by the pandemic has gone from digital adaptation in 2020 to digital acceleration and digital resilience in 2021， and then to digital priority in 2022. The 2022 Report on the Work of the Government clearly emphasizes the need to promote the development of the digital economy and strengthen the overall layout of China’s digital construction. Both industry users and ICT solution providers should have a deep understanding of the report of the Two Sessions， and constantly update and improve their strategies in the tide of digital priority. ”

According to IDC data， in 2021， China’s digital transformation expenditure reached USD 277.6 billion， an increase of 16.7%. IDC predicts that the scale of China’s ICT market （including the third platform technology） will reach USD 789.7 billion in 2022， up 8.6% year-on-year； In 2022， China’s digital transformation expenditure reached USD 329.1 billion， an increase of 18.6%. The main measures to achieve the goal of 2022 provide a clear direction for the digital transformation of enterprises and business opportunities in ICT market.

Speed-up the construction of digital infrastructure

At present， China’s information infrastructure is leading the world， but it also needs to be acknowledged that the existing economic， industrial and urban foundations have made it difficult to meet the needs of the development of the digital economy. Therefore， in the past two years， local governments have paid more attention to the construction of digital information infrastructure， and policy potential has continued to increase. Among them， “optimizing and upgrading the construction of digital infrastructure and promoting the development of cloud network coordination and computing network integration” has become an important direction. Take the recently launched“East Data West Computing” project as an example， which can effectively promote the regional coordinated development of the digital economy and make full use of the superior resources of both east and west of China.

Under the measures of regional coordinated development， the “East Data West Computing” project will be accelerated. The project has planned 8 computing hubs and 10 data center clusters to guide large and super-large data centers to form data center clusters. The “East Data West Computing”project is conducive to transferring more advanced applications and IT concepts to the western region， helping the western region to develop the digital economy， thus supporting the government’s goal of eliminating regional imbalance and achieving common prosperity.

Shi Ke， a member of the National Committee of the Chinese People’s Political Consultative Conference， chairman of the Jiangxi Provincial Committee of the Chinese Peasants and Workers Democratic Party and chairman of the Provincial Association for Science and Technology， suggested：“Grasp the characteristics of low labor costs and high marginal benefit of investment in underdeveloped provinces such as Jiangxi， and introduce policy incentives at the national level to speed up investment in digital economy infrastructure construction and help overtaking in corners.”

The construction of smart cities and digital villages will continue to deepen

The Report points out that it is necessary to promote the digital transformation of industries and develop smart cities and digital villages. This measure will further realize data sharing and accelerate the deepening of e-government and smart city construction. According to the IDC’s Guide to Smart City Expenditure， the scale of smart city support in China will reach USD 30.3 billion in 2022， with an estimated increase of 16.8%. At the same time， it will also accelerate the marketization mechanism of state-owned enterprises， enhance the competitiveness of state-owned enterprises， promote the cooperation between high-quality private enterprises and state-owned enterprises， and accelerate the digital transformation of large-scale countries and private enterprises.

According to the Digital Rural Development Action Plan （2022-2025）， by 2025， significant progress will be made in the development of digital villages， the innovative application of 4G and 5G in rural areas will be deepened， the digital transformation of agricultural production and operation will be significantly accelerated， and the construction of smart agriculture will achieve initial results. A number of famous， high-quality and distinctive rural e-commerce product brands will be cultivated， the rural network culture will flourish and the rural digital governance system will be gradually improved. The Action Plan also planned 26 key tasks， involving information infrastructure transformation， big data application， sky-land integrated agricultural observation network， digital transformation of agricultural production， e-commerce of agricultural products and many other fields.

Digital software and hardware technology will be continuously improved

The digital economy has become the key driving force to stabilize economic growth. However， it is worth noting that in terms of digital industrialization， although a comprehensive hardware manufacturing industry has been formed， it lacks cutting-edge core technologies. At the same time， it is still difficult to use digital technology to transform traditional industries.

According to industry insiders， in the past two years， the development speed of China’s digital hardware field has slowed down， and the key lies in the insufficient supply and innovation ability of software and hardware. Shen Nanpeng， a member of the National Committee of the Chinese People’s Political Consultative Conference and founding and executive partner of Sequoia China， said： “In recent years， China has developed rapidly in leading and catalyzing industrial big data， and achieved initial results in many fields such as integrated application and ecological cultivation. However， compared with the high-level goal of effectively solving problems and creating value for the manufacturing industry， there are still many challenges in the development and utilization of current industrial data.”

At present， “digital-real integration”is in a critical period of systematic and allround integration， but there are also some problems in its development， such as weak adaptability of technology application to the needs of different industries， difficulty in getting through different digital tools and weak interoperability. In this regard， Ma Huateng， Deputy to the National People’s Congress and chairman and CEO of Tencent， suggested that the leading role of technical standards should be brought into play， the formulation of technical standards for digital transformation should be promoted， integration between tools should be promoted， and the use threshold and cost of traditional enterprises should be reduced， and the accuracy and effectiveness of digital upgrade support for “specialized and special new”enterprises should be improved.

In this regard， the Report proposes to accelerate development of the Industrial Internet， build up digital industries such as integrated circuits and artificial intelligence， and enhance China’s technological innovation and supply capacities for key software and hardware. The implementation of this measure will benefit the digital transformation of scientific research institutes and manufacturing industries， and lay a solid foundation for self-reliance of science and technology. According to IDC’s Digital Transformation Expenditure Guide， the digital transformation expenditure of China’s manufacturing industry will reach USD 118.2 billion in 2022， up by 18.7% year-on-year.

Digital economic governance has been put on the agenda

With the entire industry booming， in recent years， the problems of unbalanced， inadequate and nonstandard development of China’s digital economy have become increasingly prominent， and risks such as data abuse， algorithm discrimination and personal data leakage have appeared. The Report 2022 proposes to improve the governance of the digital economy and realize the potential of data as a factor of production， to further stimulate economic development and enrich people’s lives.

“We should build a digital economic governance and supervision system， fully release the new vitality of the digital economy and promote high-quality economic and social development.” Pan Yue， Deputy to the National People’s Congress， and professor in the finance department of the School of Economics， Xiamen University， suggested， “we should speed up digital economy legislation， improve relevant laws and regulations， ensure that there are laws to follow， strengthen collaborative governance and effectively crack down on illegal and criminal activities in the digital economy， use advanced supervision technology to improve the supervision level and efficiency of the digital economy， empower the supervision， continuously improve the supervision level and escort the vigorous development of the digital economy.”

Another important topic of digital economic governance was to pay attention to strengthening cross-border data flow supervision in China. Chen Xiao Hong， member of the National Committee of the Chinese People’s Political Consultative Conference， academician of the Chinese Academy of Engineering and secretary of the Party Committee of Hunan University of Technology and Business， proposed to improve the legal and regulatory system of crossborder data flow jurisdiction， promote the capacity building of cross-border data flow security， and strengthen the internal audit mechanism of cross-border data flow security， actively promote China’s governance plan for cross-border data flow， actively participate in the negotiation of multilateral or bilateral agreements on cross-border data flow， promote the formation of commonly recognized data protection certification， standard contract terms， data flow agreements and standards， and maintain and improve the multilateral digital economic governance mechanism.

Pi Jianlong， a member of the National Committee of the Chinese People’s Political Consultative Conference and director of Beijing Jintai Law Firm， suggested that the Digital Economy Promotion Law should be promulgated as soon as possible， Data Property Rights Law should be formulated as soon as possible， the judicial guarantee mechanism for the development of digital economy should be improved， and the National Digital Economy Bureau should be established as a management and coordination organization to coordinate the development of digital economy and continuously promote the modernization of the digital economy governance system and governance capacity.