The National Data Administration (NDA) was officially inaugurated on October 25, 2023, in China. It issued the 2024-2026 Action Plan, a three-year plan on data construction, on December 15. The Plan focuses on invigorating data economy in three years, with a growth rate of 20% each year, resulting in a total 44% over two years and 72% over three years, to achieve data prevalence, hopefully doubling it in three years. In other words, the real growth rate needs to reach 30% each year to achieve the goal in three years. According to the plan of NDA, people’s lives and the management and production of enterprises will increasingly become “digitalized” so the goal of 70% data prevalence in three years will manifest the prevalent use of data in daily life and work. This national policy that digitalizes all activities is rare globally, showing that the development of the 5G communication, internet, smart phone device has reached a certain extent and been widely used following the computer revolution. With the ideal of digitalizing and interconnecting everything, it could drive the escalating development of industries, leading to the advance of productivity and consumption efficiency, and of course it would be facing challenges as well. The most important thing about internet is to connect as much data as possible, so it will take great efforts to build extensive communication and information infrastructure to link all economic resources given China’s vast land and huge population mobility. How could China build a digitalized state with all the national resources at the time when local debts and real estate debts are high, and the GDP growth rate is significantly slow? And when the unemployment rate is deteriorating, and national income remains stagnant, are the people still financially enthusiastic about interconnecting all aspects of things? The NDA has obviously well-prepared for these challenges with specific details.
The term “digitalization” is to convert information to digital format, transforming all objects, images, sounds, and words into binary code for computer processing, and strictly speaking it is a process of converting analog signals to digital format. Why conducting digitalization? It facilitates the memorizing and saving diverse information and connect them together for the convenient and quick process of computers. In the field of artificial intelligence (AI), digitalization will benefit the efficiency of life and work. The production of data, establishment of databases, sorting out and exploring data will become the most crucial factors for economic development in the future. China has a population of 1.41175 billion that could produce abundant information of daily life for collection, and it will definitely create unexpected commercial and business possibilities with the interconnection of such a huge data sample. In line with the principles of AI, permitted users could access these big data samples to find the characters of every behavior and event, thus satisfying their needs for solving problems through quick exchange and trade of information.
It would be a new way of thinking and a milestone for China’s economic growth. Traditionally, in the microeconomics, the production resources of an industry consist of land, labor, funds and management techniques. But with the progress of computerization, internet revolution and communication efficiency, the future business mode is changing. The elements of production will transit to consumers’ consumption preference and demands, their personal data, producers’ unique technologies, and the connecting and sharing between production and consumption. In terms of the current economy, China has built the longest high-speed railway network in the world, if further leading in digital revolution, it will accelerate progress in production, consumption, transaction, healthcare, and daily life while digitalization will ensure a mor efficient economy. All these changes will pose significant implications even greater than steam engine, computer and the efficiency of internet revolution, that will transform China’s economy dramatically, leaping high up.
Economically, China has been facing challenges like real estate debt crisis, falling prices, economic downturn, rising unemployment of young people. Therefore, it intends to break away from the impact of the pandemic and the trade war with the US through digitalized economy, presenting the blooming image of a great rejuvenating nation, and leading the future economic development in a new look and framework. It would be very challenging to complete the goal. The digital economy plan targets at a performance index of 20% annual growth rate to break through the current situation, eliminating the middle-income gap in two years. To diminish deflation, it needs renovation in both production and consumption methods to reverse economic downturns. However, this goal faces challenges such as people’s education prevalence and advancement, and the sufficiency of the country’s technological capabilities, especially in the internet technology. Whether the supply of advanced semiconductor wafers and AI chips is sufficient to support such a huge infrastructure. The 12 Big Data Element Multiplier Plan proposed by the NDA includes various development projects like industrial manufacturing, modern agriculture, trade circulation, transportation, financial services, technology renovation, culture tourism, healthcare and emergency management, weather services, city governance, and green low carbon. For instance, the connection of city governance and transportation will help keep traffic smooth during rush hours to avoid traffic congestion; modern agriculture can apply AI to the farming of crops; and transportation can simplify the supply process in production and distribution. The major function of AI is to collect mega data related to various human life, work and daily activities in the past and when new data comes in the system, the computer will distinguish its meaning from millions of past data. Digitalization and the use of AI is currently widespread in China. When dining in a restaurant, one can scan the QR code in the menu with his cell phone to order without the attendance of servers, and later to pay to the cashier’s pay receiver with the payment system in the phone. Such scenes are very common in China, where everything is digitalized, and life could be impossible without cell phone and internet.
The industry, production and economics sectors of Japan have been studying very hard the Innovation Theory by US economist Joseph Schumpeter after World War I. Schumpeter identified innovation in relation to economic growth, economic cycle, and entrepreneur in his monograph The Theory of Economic Development in 1912. He argued that development is the result of innovation, and, without market application, invention alone is ineffective economically; therefore, disruptive innovation is crucial to the success or failure of Schumpeter’s theory in practice. The types of innovation include: 1. introduction of a new product that consumers are not familiar with, 2. introduction of a new method of production, 3. opening up a new market, 4. conquest of a new source of raw materials or seeking new provision of products, 5. carrying out a new organization of any industry. The innovation development of China’s digital economy started very early, even before the US-China trade war in 2018 when the Made in China 2025 policy was issued. Then the NDA was established in 2023 that clearly showed China’s strong desire to break away from economic downturn.
(Chiu Chih-Chang, Associate Professor, Department of Statistics, Tamkang University)
（Translated to English by Tracy Chou）
