Professor Hui Zhibin, Shanghai Academy of Social Sciences

Recently, China has launched a new infrastructure plan, and Shanghai has announced a three-year action plan for online new economy. These are important policies introduced in the complex environment of fighting the epidemic and resuming work and production, reflecting Chinese government’s wisdom and determination to turn crises into opportunities. Admittedly, had there not been the epidemic, the digital economy will also develop. However, this epidemic has made us better understand the significance of achieving economic and social innovation and development through digital transformation. Next, I will share my observations on development of China’s digital economy now and in the future from five dimensions, i.e., new technologies, new infrastructure, new factors, new economy and new governance.

One important basis for digital economy is new technologies. There are many new technologies, let’s take the artificial intelligence technology as an example. In the 1940s, Alan Turing proposed the idea of artificial intelligence through the Turing Test. Then, in the 1950s, the concept of artificial intelligence was formally put forward at the Dartmouth Conference held in America. In the past few decades, AI theories and technologies were sourced from America or Western developed countries. It wasn’t until Google’s AlphaGo defeated Lee Sedol, one of the strongest players in the history of Go, in 2016 that AI technology really matured and began to enter the commercial field. For any technology to become mature, it requires support and collaboration from other technologies. AI technology became mature by relying on the strong computing power of cloud computing, big data’s ability to collect and analyze massive amounts of data, and the continuous development of an intertwined technological ecosystem. In the past few years, many AI technology companies emerged in China. Foreign technology companies and teams are willing to come here because we have so many application scenarios and abundant user resources that can promote continuous innovation and evolution of AI technology. Therefore, I believe that digital technology is the public wealth of all countries in the world and should not be monopolized by certain countries. All countries can make their own contributions to digital technology and promote domestic economic and social innovative development while benefiting other countries.

The second is the new infrastructure which was already put forward in 2018. The traditional infrastructure construction is one of the important factors in the troika for industrialization and urbanization in China. From the perspective of new infrastructure construction, the core feature is the new digital infrastructure, including 5G, data centers, etc. The combination of digital technology with traditional infrastructure construction lays important foundation for the future development of the digital economy or industrial internet. Because we see the need to promote new development of industrialization and high-quality economic and social development through digital transformation, the government and society need to put aside many resources, for example, through debt issuance, to “build bridges and pave roads” for digital transformation now and in the future, which can reflect China’s institutional advantages. When the global economy is in recession, China further strengthens its confidence and promotes digital transformation, so as to face the uncertainties and pursue a successful path for economic development.

The third is new factors. The CPC Central Committee issued Opinions On Building a More Perfect Market Allocation System and Mechanism of Factors in April, and Opinions on Accelerating the Improvement of the Socialist Market Economic System in the New Era in May, listing data for the first time as one of traditional resource factors such as land, capital, labor and technology which are crucial for economic and social development. Some studies have previously compared the value of data to oil in the industrial era. But I think the value of data in the digital economy era is more unique and important. Through data circulation, sharing and exchange, the marginal utility increases and marginal cost decreases, stimulating more demands and promoting more innovation. Digital economy is essentially a data-driven economic form. Obviously, the problem is about data security and governance. Without data security as the foundation, the digital economy will not sustain.

The fourth is new economy, which is a broad concept. Take live streaming e-commerce as example. There are some famous online celebrities selling goods through live streaming, such as Li Jiaqi, Wei Ya and Li Ziqi. Their success marks the advent of the era featuring intelligent business transformation. Through intelligent technology, data, algorithms and MCN institutions, the platform continuously promotes the precise matching of products and users, eliminates intermediate links as much as possible, and removes business friction costs, thus greatly improving business efficiency, meeting and even guiding users’ new needs, which include both basic shopping needs and value-added experience such as various cultures, entertainment, and even creation. For example, many people like watching Luo Yonghao selling goods through lives streaming, not necessarily because the goods cannot be bought anywhere else, or the price is the cheapest here. They simply have a very good shopping experience of live streaming e-commerce. After listening to Luo Yonghao’s cross talk, they happily buy the goods he sells. The new economy in the future must be an economic form that meets various personalized needs and flexible production, which will also cause disruptive changes in the manufacturing industry. Live streaming e-commerce represents the deep integration of consumer internet and industrial internet, which will bring about a very strong momentum for innovation.

The last is new governance. It has two dimensions. The first is how to use digital technology to achieve social governance innovation, and the second is how to deal with the social problems caused by digital technology. As a super-large city in the world, Shanghai has a high population density and extremely developed economic activities. Meanwhile, it is also an international hub with many problems in public service and social management, which can only be solved through new ideas and technologies. For this end, Shanghai has accelerated the construction of “services accessed via one website” and “unified online government management” in the past two years, which is an innovative practice in extremely complicated systematic governance. According to my observation, Shanghai is now one of the leaders in China or even the world in the governance model and philosophy. What’s most important is people-centered digital transformation of government departments at all levels, including sharing data resources that could only be used by a single department, and restructuring the original decision-making process in public management and services. Behind the technology is actually the transformation of the government governance model, reflecting the correct direction in the modernization of the country’s governance system and capabilities. This digital transformation and technological innovation will inevitably bring a series of governance problems, of which how to protect personal information is a matter of great concern to the whole society. Recently, we have offered legislative consultation on public data security management, and increasingly found that governments and large enterprises attach great importance to data security. How to balance the needs of data sharing and privacy protection, and how to carry out data security governance are fundamental problems about production relations in the digital economy era. Finally, in terms of international governance, we are currently facing friction and mistrust between China and the US. However, according to its development trend, digital economy is a brand new “cake”, and countries are not competing for the stock. The digital economy can create a large number of new needs, new industries and economic value, which is why the digital economy is so attractive. If everyone realizes this, I think there will be open and cooperative international governance of digital economy in the future. For example, in terms of AI technological innovation and governance, China hopes to meet international standards, and is drawing on the useful experience from the US or other countries. In the future, it will definitely require the cooperation between Chinese governments and industries and the US and European governments and industries, etc. To a certain extent, every country faces the same opportunities and challenges, which is also reflected by a community with a shared future in cyberspace advocated by General Secretary Xi Jinping.

The above “five new aspects” represent my understanding of the digital economy and digital transformation. Although all countries are facing complex challenges, I believe that as long as we stay committed to the goal of opening up and reform, we will surely usher in a better digital economy era.