New areas of the digital economy, including the Internet of Things, virtual currencies, financial technology, artificial intelligence, advanced robotics, and big data are expanding rapidly in China. Leading Chinese technology companies like Baidu, Alibaba, and Tencent, are at the forefront of innovation and are lending credibility to the notion that the digital economy will soon outpace the traditional economy.
China is home to more internet users than the United States and European Union combined. Consumption-related mobile payments amounted to $790 billion in 2016, or 11 times that of the United States. Because of this, a large amount of venture capital funds in China are pouring investment into digital technologies.
Albeit Baidu, Alibaba and Tencent (BAT) have driven the digital economy forward, providing 42% of venture capital investment in China in 2016, it is not only venture capitalists and customers driving China’s new economy. The Chinese government has promoted growth of the digital economy through its Internet Plus policy. This initiative encourages firms to use the internet in order to grow and innovate.
China’s digital economy is expected to reach $16 trillion by 2035, with a penetration rate throughout the overall economy of 48%. This will change the nature of the economy, replacing jobs that carry out standardized types of processes with technology and increasing the number of jobs for higher-skilled workers.
The digital economy is also spreading through traditional sectors such as education, industry, shipping, and healthcare, improving efficiency and adding value in these areas.