The Data Opportunity: The promise of digital trade for China
Although China has enjoyed historically high growth rates over the past decade, analysts anticipate that it will start to face a slowdown due to several broad socio-economic shifts, including the shift from an industry-based to a services-driven economy. To sustain its growth momentum into 2030 and beyond, China would need to hone competitive strategies, particularly in the digital realm. Digital trade will be crucial, not only to increase and diversify China’s export base, but also for helping local businesses leverage digital technologies across every sector of the economy. The value that digital trade creates for the domestic economy today is estimated at RMB 3.2 trillion (US$466 billion), but can grow by more than 11 times to reach RMB 37 trillion (US$5.5 trillion) by 2030. Some of the largest beneficiaries are expected to come from the traditional sectors, such as retail and manufacturing.
Besides creating value from abroad through digital exports, digital trade also supports large productivity improvements in China’s domestic sectors. Yet, traditional economic measures fail to adequately measure the value of digital trade to exports and China’s economy.
A robust fact base is thus crucial to ensure that the value of digital trade is fully appreciated and taken into account when formulating trade and economic policy. This includes assessing (a) the current and future value of the digital trade opportunity for China’s exports and the domestic economy; (b) perceived concerns relating to digital trade abroad and how these could be addressed without unduly impeding digital trade flows; (c) priority areas China could focus on in order to fully harness the benefits while managing the potential risks of digital trade.
This research by AlphaBeta was commissioned by the Hinrich Foundation, and developed in collaboration with the Center for China and Globalization (CCG).