China Responds to US Competitiveness Act With Plan To Boost Its Own Digital Economy

China's State Council, on 12 Jan 2022, unveiled a plan to give the country's digital economy a boost as it continues to engage in a geopolitical arms race with the U.S.

Credit: Jason Lee via Reuters

According to the South China Morning Post, the target is to have China's digital economy account for 10% of the national GDP by 2025, up from 7.8% in 2020. Propelling this growth will be the software and information service industry, which is expected to be worth 14 trillion yuan by 2025 from 8.16 trillion in 2020. E-commerce will also help, with online retail sales expected to reach 17 trillion yuan by 2025 from 11.76 trillion in 2020.

Beijing also wants to push for the research and development of sixth-generation wireless networks, 6G, which is quickly becoming the new battleground for technological superiority between countries of the world. The stakes couldn't be higher for both the U.S. and China, with the new communications technology having a host of applications, from fully self-driving vehicles to real-time holograms. 6G is reportedly up to 100 times faster than peak speeds of 5G.

While 6G probably won't be available until 2030 at the earliest, China has already started development of the communication network. Nikkei Asia reported last year that the country had the highest number of 6G patent filings in the world with 40.3%. The U.S. came in second with 35.2%. Many of China's patents were filed by Huawei, one of the country's largest telecommunications equipment maker and the same company sanctioned by the U.S. in 2019. The report notes that countries with more patent filings tend to have a bigger say in industry standards.

China's 6G satellite. Credit: CCTV via Reuters

The University of Electronic Science and Technology of China last November also launched the world's first 6G satellite, seemingly suggesting that the Asian superpower is making some strides in technological development, despite having to deal with resistance from the U.S.

The plan furthermore wants to accelerate the construction of big data centres in a bid to expand the data industry and satisfy growing needs. In line with this, the plan also looks to increase the number of users of gigabit broadband to 60 million by 2025 from 6.4 million in 2020.

China last year promised to retaliate against the U.S. if it ever passed the Innovation and Competition Act and this new plan is clearly a response to that. The legislation, which last year garnered bipartisan support among U.S. lawmakers, would pump US$250 billion into technology research over a five-year period. Industries benefitting from this include artificial intelligence, semiconductors, quantum computing and communications, among others.