China’s Digital Economy

by | Jan 30, 2020 | Uncategorized

China’s Digital Economy

by | Jan 30, 2020 | Uncategorized


Being one of the most populated countries in the world with 1,418 million people, China’s digital economy has expanded rapidly in recent years. Digitalization highly developed in certain regions and sectors, especially in e-commerce, fintech, 5G, and facial recognition and coastal region. The size of China’s digital economy has surged from 15 percent of GDP in 2008 to 33 percent in 2017, mainly driven by the integration of Information and Communication Technology (ICT) with traditional sectors. With a population of 60% of 1.4 billion, overall China mobile subscription is at 1.543 billion users, exceeding the actual population by 9%. However, only just over 802 million with 57% penetration are internet users. Active social media users and mobile social media users compatible with 1 billion with the penetration of 71% which indicates a measurement problem. China has become a global leader in some key digital industries. The ecosystem, developed by the so-called “BAT” (Baidu, Alibaba, and Tencent) the three tech giants, capitalizes on its multi-industry reach and rapid accumulation of consumer data to provide easy access to new products and services to millions of users. In 2016, BAT provided 42% of all venture-capital investment in China, a far more prominent role than Amazon, Facebook, Google, and Netflix that together contributed only 5% of US venture-capital investment in that year. 

Connectivity and Internet Use

Having 57% of China’s population being active internet users, China’s infrastructure to support internet connectivity is vital to support the usage. China’s average speed for mobile internet connection is currently at 29.36 MBPS and the average speed for fixed internet connection is at 89.17 MBPS. Pertaining to the streaming content activity, Chinese internet users watch online videos 89% of the time. The technological tool Chinese internet users use to assist in their online activity include voice commands/search at 49%, ride-hailing services at 35%, ad-blocking tools at 52%, and Virtual Private Network (VPN) at 34%. 

Social Media 

Over 802 million with t57% penetration are internet users. Active social media users and mobile social media users compatible with 1 billion with a penetration of 71%.Chinese spend about 6 hours and 30 minutes on the internet through any device every day. Of that, one and a half hour is spent on social media. According to a survey by Data Report, 94% of internet users are performing activities on a mobile phone each month. The most popular social media messaging app WeChat with 79% of those surveyed using it, and QQ followed by 68%. The next three, all with most active social network platforms are Baidu Tiebam Sina Weibo and Youku which are 72%, 60%, and 59% respectively with Qzone coming in 4th with 56%. 99% of the population claims to use mobile messenger apps and Social networking apps. When it comes to monthly activity, WeChat owned by Tencent is again the most popular followed by QQ also owned by Tencent; Taobao by Alibaba group; and Alipay by Ant Financial Services Group. By 2019 January, the most downloaded mobile app is Tik Tok developed by Toutiao. 

E-Commerce in China 

E-commerce in China represents approximately 35% of the overall retail market, making it the world’s global leader in e-commerce. China’s E-Commerce share is expected to reach half of the global market by 2020. In 2016, China’s e-commerce transactions accounted for US$2.1 trillion alongside a 23% year on year growth. 

The Emergence of 5G 

One of the biggest global controversies that were widely debated is the emergence of 5G and China’s role in developing the technology. As one of the leading developers of this technological advancement, 5G is currently available in 50 cities in China. The three main service providers in China include China Mobile, China Telecom, and China Unicom. A prediction by Jefferies Analytics, China is predicted to have 11 million 5G users by 2020. Monthly plans start at around 128 yuan and can cost up to 599 yuan.

Digital Payment System: Facial Recognition

China is known to be a country of constant technological advancements. Third-party mobile payment on non-bank platforms is one fintech area where China has made notable advances. 61% of internet users are using mobile banking. The value of the mobile payment industry in China is nearing $28 trillion per year and the mobile payment market is $6.8 trillion. But some analysts predict that mobile will be replaced by facial as the payment method of choice among Chinese consumers in two years. Facial recognition payment infrastructure is one of the world’s most advances that require no cash, no cards, no mobile banking, and not even smartphones. China’s internet users (shoppers) are increasingly purchasing goods by looking into a screen as the country embraces facial-recognition technology. In 2018, about Seven-Eleven 1,000 convenience stores have already installed a facial payment system, and more than 100 million Chinese have registered to use the technology. About 10% of customers at Seven-Eleven stores in business districts in Guangzhou already make purchases with the system. There are other sectors that have installed the system. Other sectors like transportation, retail, banking, offices, and school as in taking attendance of employees and students. Small restaurants, vending machines and subway stations as tickets are resorting to the technology. The Chinese government has installed more than 200 million security cameras across China to prevent Criminals and persons of interests by identifying via the system. 


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