What’s up in China´s Digital Economy? Trends and Opportunities浅析后疫情时代中国的数字经济下的趋势、挑战和机遇



Key words

Digital globalization, Digital transformation, Global value chains, Labor allocation, Comparative advantages, Metaverse, NFT, Platform economy


During the opening speech of the “2022 China International Fair for Trade in Services (CIFTIS)” concluded in Beijing on Sep 5th, President Xi Jinping said that China stays committed to promote high-quality development by high-level opening-up, broadening market access in the services sector and facilitating cross-border services trade. China will support cities such as Beijing in taking the lead in cross-border data flow and other aspects to build a benchmark city for the global digital economy.



Trends and new opportunities brought by digital globalization

With the increased amount of data and users, digital globalization is progressing quietly but rapidly. The pandemic has further accelerated the digital transformation, as a link to the reallocation of global resources, data elements have reshaped the entire global value chain (GVC). New competitive advantages driven by digital technology will replace the traditional competitive landscape and bring new opportunities during the reallocation of resources.

China’s huge market, knowledgeable talents and integrated industrial chains are the comparative advantages that attract foreign investments, especially in the manufacturing and service sectors. In addition to China’s modern infrastructure network, highly integrated supply chains, competitive energy prices, using China as a business hub can help foreign investors achieve costs effectiveness and access to more market potentials.

Digital technology is reshaping the entire value chain of manufacturing and services, despite the pandemic, we have seen that digital producer services become the main part in global service trade, and foreign trade has become the strongest driving force for China's economic growth in 2021.



What is the investment and development trend in China Market?

Clear trends appear in a variety of sectors of China market. In the consumer sector, platform economy such as take-out delivery platforms Meituan, ele.me and ride-hailing firm Didi Global are redefining consumption models with optimized supply chain, marketing tools and services, such as influencers marketing, group buying, express delivery, etc.


Data source from: iResearch

Development of 5G, 6G and the Internet of Things are giving birth to new business forms and ecosystem of dynamic enterprises, for instance, Chinese top home appliance company, Haier take advantage of the IoT to partner with other service providers by creating an "eco-platform" where customers have continuing access to a network of resources such as Smart home devices.


Picture source from: Haier website

Metaverse although still in its infancy is one of the hottest trends for promoting connection and awareness. China aims to become the global role model, with the establishment of the first professional association on the metaverse and is keen to explore more specific commercial applications.


China’s policy orientation in digital economy need to be noted for foreign investment

As the accelerated digitalization has upgraded the challenges of regulatory compliance of China businesses, it is more important than ever for foreign investors to understand China's current strategic focus of development and policy orientation in order to define a tailormade China strategy and grasp the market opportunities that help you stand out in the high competition.

To spur foreign investments, China’s newest edition of “Encouraging Industries for Foreign Investment (2020 Edition)” further encourages investments in the production-oriented services industry by adding items such as professional design and technical services. The market access for manufacturing industries has been further relaxed and large tax incentives and subsidies are allotted to encourage innovation.

Cross-border e-commerce, in essence, has transformed traditional currency into digital currency, becoming an inevitable trend in the era of financial technology. And NFTnon-fungible tokenas the value carrier of digital cultural and creative products, is expected to become the core asset class of the metaverse. Given the government’s positive attitude and encouragement towards the development of metaverse and blockchain, it would be a great opportunity for foreign investors to cooperate on the basis of complementarity to ensure seamless operation in the field.


Picture source from: JonRadoff building the metaverse

As China is now still at the phase of policy preparation of Metaverse field and the provisions of the Blockchain Measures do not go into great detail about the implementation, uncertainties still remain with respect to implementation. For instance, Chinese government appears to have two different attitudes towards blockchain technology and cryptocurrencies. On the one hand, it has been promoting blockchain technologies through multiple policies and initiatives in a wide range of industries, including government affairs. On the other hand, cryptocurrencies are closely scrutinized by the China regulatory authorities. It’s critical for foreign investors to keep informed on further clarifications and implementing measures issued in relation to the field.


Six layers of Metaverse industry chain in China market


The Sino-Foreign Cooperation Fields and Trends

As economic growth is slowing down, China is aiming to speed up the development of key technologies, fund innovation and strengthen supply capacity to consolidate its lead in advanced technology. The 14th Five-Year Plan of China specifies that the digital economy will grow at a rate of 12.7% accounting for 10% of GDP. Expansion of international cooperation and developing cross-border ecosystems are included in the development plan, which means huge industrial opportunities lie in high quality and growth-related projects cooperation, for instance, fields of development in

- High-tech and innovation projects
- Data computing infrastructure
- Manufacturing
- Green transformation and Renewable energy

In the past decade, the globalization brought by digitalization has been an unstoppable trend. Companies and entrepreneurs investing in these fields will be able not only benefit from advantageous policies but also to ensure their long-term success in China. To better grasp these opportunities, its critical for foreign investors to gather necessary info and data for a thorough analysis on suitable investment strategies and the cross border cooperation model before making an overseas investment. If you are interested in exploring a variety of new models of cooperations with local partners, share resource, optimize structuring, mitigate risks, achieve synergy and win-win, please reach out to us.

With rich experience, Sirmione Consulting Group China-based team can assist you from your virtual market presence, build your China business, establish partnership for you to accelerate your sales and expansion, eventually achieve your sustainable growth in China.


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