Zhang Jin: Creating A New Engine for High-quality Digital Economy Development

The highly concerned Central Economic Working Conference concluded on December 12th. As an important government conference held at the end of every year, the purposes of the meeting is to review the economic performance in the past year and make new arrangements for economic development in the next year.

2020 is the final year of building a well-off society and the 13th Five-Year Plan, and China’s economic trend will attract worldwide attention in 2020 amid the complex international economic structure. The Central Economic Working Conference puts forward six major tasks for 2020 and the fifth is “promoting high-quality development and vigorously developing the digital economy”, implying that the digital economy is an important driving force for China’s high-quality development.

Recently, Dr. Zhang Jin, a researcher from the China Center for International Economic Exchanges (CCIEE), was interviewed by Zhonghong Net regarding digital economic development in China and other issues.

The digital economy has become an important driving force for high-quality development.

Question: How do you comprehend the task of promoting high-quality development and vigorously developing the digital economy?

Zhang Jin: The digital economy has made a significant contribution to GDP growth. According to the China Academy of Information and Communications Technology, China’s digital economy has reached 31.3 trillion yuan in 2018, accounting for 34.8% of GDP, and its contribution to China ’s GDP growth exceeded 67.9%. Amid the changing international economy, the digital economy has become an important driving force for high-quality development. By changing production methods, the digital economy has improved total factor productivity, led consumption upgrading, opened up new market spaces, and brought development opportunities for network infrastructure construction and technology enterprises.

The digital economy is an important driver of high-quality development. Thanks to new technology and the needs of China’s high-quality development, the digital economy has become the engine of economic development by improving total factor productivity, transforming traditional industries and boosting employment. With the support of technologies such as big data and blockchain, information can be quickly disseminated and hence reduce information asymmetry, strengthen market competition and improve total factor productivity. By promoting the integration of the Internet, big data, artificial intelligence and the real economy, digital economy can deepen the informatization of traditional enterprises and stimulate the innovation capabilities and motivation of market players. The development of digital economy platform can promote the development of small and micro enterprises and create more jobs.

The digital economy is upgrading consumption through changing production methods. The emergence of e-commerce, mobile payment, artificial intelligence, industrial Internet and other innovative applications have accelerated the transformation of manufacturing production models. For example, data mining and analysis allow companies to understand and meet customer needs in a more efficient and effective manner, so as to avoid unnecessary waste of resources and truly achieve on-demand production.

In 2019, cross-border e-commerce has developed rapidly and gradually become a major channel for manufacturing companies to expand their business overseas. In 2020, 5G will begin large-scale commercial use. The combination of information technology innovation and new consumer demands will stimulate market vitality. Information consumption will become the first source of influence on the knowledge structure of individuals, and enable enterprises to improve the efficiency of information acquisition.

Network infrastructure construction and technology-based enterprises will usher in great development. In a complex internal and external environment, infrastructure construction plays an important role in adjusting economic development and maintaining stable economic growth. Driven by commercial use of the 5G, network infrastructure construction will become a strong support for the development of the digital economy. 5G is the key information infrastructure for realizing the interconnection of all things and plays an important role in supporting digital transformation of the economy and society. Therefore, a quick application of the “5G + Industrial Internet” will strongly promote the digitalization and smart development of the industrial economy.

The advent of 5G is a great opportunity for industries and enterprises with a high level of informatization. For those companies with a low level of informatization, improvement is needed. In the future, the commercial application of 5G, related infrastructure construction, artificial intelligence, industrial Internet and the Internet of Things will grow rapidly. With the support of government policies, enterprises with core technology in artificial intelligence, chips, 5G, and software will embrace great development opportunity.

Question: In light of the spirit of the Central Economic Working Conference, what suggestions do you have for the new situation, new tasks and governance during the process of promoting digital economy for high-quality development?

Zhang Jin: In the era of digital economy, data has become a new production factor for social and economic development. We should take corresponding measures in the aspects of infrastructure, market system, information sharing, intellectual property rights, innovation environment, talent training and social issues to ensure stable and rapid development of the digital economy.

Improving the construction of digital infrastructure. We should accelerate the construction and upgrade of 5G network, Internet data centers, big data, cloud computing application platforms and content distribution networks, apart from building a new generation of mobile, fast and secure information infrastructure. The construction of high-quality 5G networks should start in certain key areas and gradually spread to other cities. We should make full use of existing infrastructure resources during the construction of the 5G networks. Initially, the 5G should be used to enhance mobile broadband and reliability, while giving priority to key cities and industries. With the maturity of technology and network, the 5G network should be able to support the three major scenarios and strengthen the coverage of high-frequency millimeter waves.

Relevant departments should come up with policies supporting co-construction and sharing, and promote network construction by cultivating rich application scenarios. As for 5G operators, they should actively explore new business models, form a sound development of capital operations, encourage vertical industries to use 5G for innovation, launch excellent 5G applications, use investment fund efficiently, and make 5G an engine of economic growth. The government must assist the 5G network during this crucial turning period with active publicity, rational analysis and pragmatic policies and investments.

We should create a market system to ensure sustainable development of the digital economy. For instance, we should create an innovative and inclusive supervision system, formulate regulations and systems for the applications of digital economy, and further strengthen policy support for science and technology, finance, taxation, talent, pricing, intellectual property and so forth. Furthermore, we should deepen deregulation, remove industry policy barriers, encourage equal entry of diversified market players and cultivate new technologies, industries, business and models. In accordance with the inherent requirements of the digital economy development, we should strengthen the building of legal systems and standards; reduce non-administrative license approvals and qualifications in the digital economy, strictly control and review new administrative licenses; abolish entry barriers, introduce market mechanisms in social management and public services, and make the best use of government-enterprise cooperation to promote smart cities development.

We should research on property rights systems promoting data sharing. If data wants to become a valuable asset, big data analysis must be used to transform the data into information. When making strategic decisions, country, industry and enterprise need data analysis to improve the refinement of planning and ensure rational allocation of resources. Data is an important raw material for the optimization of artificial intelligence algorithms and it has become increasingly important for the future development of enterprises. The competitiveness of a country’s digital economy lies in its data processing capabilities, degree of sharing and openness. Big data has become a valuable resource, which will trigger fundamental changes in the property rights system, incentive mechanism, market credit relationships, market organization structure, and rules of the digital economy market. China’s legal system has great room for improvement in these areas and we need to come up with a property right system that promotes data sharing while protecting privacy.

We should encourage technological and business model innovation because they are the driving forces of the digital economy. It is necessary to strengthen international cooperation, increase support for new technologies such as cloud computing, edge computing, big data, artificial intelligence, and blockchain, and make more investment in research. Moreover, we should establish various investment systems, strengthen the legal system for technological innovation, and provide incentives and protection for technological innovation in the digital economy. Finally, we should encourage business model innovation, promote the combination of online and offline, manufacturing and services, technology and markets, industry and finance, and motivate information companies to innovate business models through policy measures and special funds.

We should implement a strict intellectual property protection system. The following three actions need to be taken to strengthen the protection of intellectual property rights, encourage enterprises to increase investment in research and development and promote technological innovation in the digital economy.

Firstly, accelerating the improvement of intellectual property protection in the fields of mobile communications and related industry applications, cracking down on patent infringements and creating a good atmosphere to encourage scientific research and innovation. Secondly, attaching importance to the quality of patents and effectively strengthening the layout of patents. The value of patents in the communications field should be determined by the market. Thirdly, establishing a market-driven patent transaction and licensing platform to facilitate technology transfer and licensing. By implementing effective incentives such as technology authorization, we can maximum the potential of innovators in the field of mobile communications, introduce advanced technologies and make them better to ensure that consumers and business users have timely access to the most advanced technology applications.

In order to create an environment that promotes the integration and development of industries, we need to implement the following four measures.

First, the government should guide the establishment of a cooperation and communication platform for the communications industry and related industries. Based on industry platforms such as the IMT-2020 (5G) Promotion Group, scientific research institutions and companies can make joint research on information technology, standard development and industry application to accelerate the integration and development of 5G and related industry applications. Second, government procurement policies should play a guiding role. The government can support the application of major innovative products in the digital economy through its procurement policies. Third, promoting advanced innovations and increasing the social perception of applications in industries related to the digital economy. Advanced scientific and technological achievements should be recognized to reflect its social value. To achieve that goal, we could hold more high-level industry competition to gather wisdom, incubate applications, explore business opportunities and improve social recognition.

Strengthening the training of personnel in the digital field. First, selecting the best talents in the digital industry. 5G communication industry experts, data scientists, AI engineers, and related industry consultants should be included in the high-level talent classification directory and given corresponding funding. For top projects and talents, they should be assessed individually. Second, encouraging the establishment of public service platforms and think tanks that serve the digital industry. For example, project funding can be given to think tanks and platforms that have achieved good results. Improving the status of consultants who understand both communication and key issues of the digital industries. Third, attaching great importance to the research and innovation of digital products. Appropriate financial support should be given to companies that meet relevant requirements, such as supporting companies to develop products in 5G core equipment, modules and industrial applications.

Finally, focusing on social issues relating to the digital economy. The social problems related to digital technology have brought huge challenges to the development of the digital economy. Therefore, we need to establish mechanisms to prevent internet addiction, advocate good cyber behavior, establish positive values, prevent high-tech cybercrimes, and strengthen the police force. The digital economy will also cause problems such as deepening the digital divide, privacy violations, and information technology security issues. Although we cannot predict what will happen exactly, we can reserve a part of the profits obtained from the digital economy to compensate for loss when problems occur.