14th Five-Year Plan for Digital Economy: the Added Value of the Digital Economy’s Core Industries to Reach 10% of GDP by 2025

On 12 January 2022, according to the Xinhua News Agency, the State Council issued the 14th Five-Year Plan for Digital Economy (hereinafter referred to as the “Plan”) which specifies the guiding philosophy, fundamental principles, goals, key tasks and safeguarding measures for advancing the digital economy during the 14th Five-Year period (2021-2025).

According to the Plan, by 2025, China’s digital economy will be in full extension mode. The added value of the core industries of digital economy is set to account for 10% of GDP by 2025, up from 7.8% in 2020. By 2035, the country’s digital economy will have reached a new level of prosperity and maturity, and a unified, fair and modern market system with orderly competition will have been established. Furthermore, the conditions for developing digital economy, and the level of the industry system, are set to rank among the world’s strongest by 2035.

The Plan sets the principle of “making competition fair, and the market secure and orderly”: this highlights the fundamental role of policy in regulating the market competition, at the same time stressing the importance of anti-monopoly work and prevention of disorderly capital expansion. Indeed, to advance the digital economy it is required to strengthen market supervision and macroeconomic policies, and completing the regulation system.

The Plan articulates eight key tasks to be implemented throughout the period:

Optimizing and upgrading the digital infrastructure, specifically by:
- Accelerating the establishment of information infrastructure
- Advancing the Cloud-Network integration and Computing-Network convergence
- Enhancing the digitization of infrastructure
Making full use of data elements, specifically by:
- Strengthening the supply of data elements with high quality
- Accelerating the market-based circulation of data elements
- Innovating the system for developing and utilizing data elements
Advancing the digital transformation of the industry, specifically by:
- Speeding up the upgrading and digital transformation of enterprises
- Deepening the digital transformation in core industries, industrial parks, and industrial clusters
- Fostering the supporting services for digital transformation
Promoting digital industrialization, specifically by:
- Enhancing the capacities for key technology R&D
- Fostering new business models and formats
- Creating prosperous and ordered business ecosystem for innovation
Elevating the digitization level of public services, specifically by:
- Improving the efficiency and enhancing the capacity for Internet Plus government services
- Elevating the level of digitization of social services
- Promoting urban-rural coordinative development of digitization
Improving governance system for the digital economy, specifically by:
- Completing the system of cooperative governance and supervision
- Enhancing the government’s capacity for digital governance
- Applying a multi-governance model, in which governments, platforms, enterprises, individual organizations, and the public participate simultaneously
Strengthening the construction of the security system for digital economy, specifically by:
- Enhancing the capacities for security protection in cyberspace
- Elevating the level of data security
- Preventing risks of all kinds efficiently
Expanding international cooperation on digital economy, specifically by:
- Advancing the digitization of trade, especially for the Digital Silk Road
- Creating a favorable environment for international cooperation

This Plan has impact on your “futuristic” digital life!

Autopilot, autonomous deliveries, cloud exhibitions, etc: these will be central elements of our futuristic life – to which digital economy is indispensable!

Recently, the 14th Five-Year Plan for Digital Economy (hereinafter referred to as the Plan) was issued. How will the digital economy develop through the next five years? What impacts will it make on our daily lives?

What is digital economy?

Following the agricultural economy and industrial economy, the digital economy is a new economic formation in which data serves as the key element, modern IT as the carrier, integrative application of ICT and digital transformation as the key driving forces, and the promotion of fairness and efficiency as the fundamental purpose.

What are the goals for developing the digital economy?

By 2025, China’s digital economy will be in full extension mode. Specifically, the Plan sets out the following quantitative indicators:

The added value for the core industries of digital economy will account for 10% of GDP.
The number of active IPv6 users will reach 800 million.
The 1000M broadband service is set to cover 60 million households.
The size of software and information technology services will reach 14 trillion yuan.
The popularity of industrial Internet platforms will climb to 45%.
The size of retail sales online will reach 17 trillion yuan.
The size of E-commerce transactions will reach 46 trillion yuan.
The number of real-name users with access to e-government services will reach 800 million.

By 2035, China’s digital economy will reach a new level of prosperity and maturity. An unified, fair and modern market system with orderly competition will have been shaped. Furthermore, the conditions for developing digital economy, and the level of the industry system, are set to rank among the world’s strongest by 2035.

What are the detailed tasks for achieving the goal?

Optimizing and upgrading the digital infrastructure, specifically by:
- Building a comprehensive and intelligent digital information infrastructure, featuring high speed, ubiquity, space-earth integration, Cloud-Network integration, intelligence and agility, green and low-carbon emissions, and secure and controllable systems. The focus will be on:
  - Exploiting the speed and capacity of the optical fiber network
  - Scaling up the deployment of the 5G network
  - Scaling up the deployment of the IPv6
  - Upgrading the spatial information infrastructure
- Constructing a national-level integrated big data center system, coordinating computing power, algorithms, data and application resources
- Establishing an intelligent and efficiently integrated infrastructure. Deploying efficiently AI infrastructure
Making full use of data elements, specifically by:
- Supporting all entities in collecting data in compliance with laws and regulation. Enhancing the processing capacity for data resources. Fostering and expanding the data service industry. The focus will be on:
  - Data labeling
  - Data cleansing
  - Data masking
  - Data declassification
  - Data aggregation
  - Data analysis
- Accelerating the establishment of market rules for data elements. Fostering market entities, and completing the governance system. Enhancing the circulation in the market of data elements
- Exploiting multiple systems for developing and utilizing data elements, compatible with different kinds of data and led by practical application
Advancing the digital transformation of the industry, specifically by:
- Guiding enterprises in nurturing a digitalized mindset. Enhancing employees’ digital skills and capacities for data management. Advancing the digitization level of enterprises’ design, production, processing, business management, and sales service, in a comprehensive and systematic manner
- Promoting all-around and full-chain digital transformation of traditional industries and improving the total-factor productivity while taking into account clearly distinguishing industrial features and discrepancies. The focus of digital transformation will be on the following industries:
  - Agriculture
  - Water conservancy
  - Manufacturing
  - Business industry
  - Logistics
  - Finance
  - Energy
  - …
- Guiding industrial parks in building the digital infrastructure. Applying digital skills to enhancing the capacity for managing and providing services
- Building an ecosystem of digital transformation services, driven by both market-based services and public services, and supported by technology, capital, talents, data and other elements, thus solving the barriers for enterprises’ digital transformation originating from the lack of capacity, methods and confidence
Promoting digital industrialization, specifically by:
- Enhancing the capacities for fundamental technology R&D, by taking advantage of the country’s socialist system, new type of country’s Source-centralized System and large size of the domestic market. The following key technologies await breakthrough:
  - High-end chips, operation systems, industrial software, core algorithms and structure
  - Intelligent manufacturing, digital twin, city brain, edge computing and brain-computer interface
  - Next generation mobile communication technology, quantum information, neuro-chip, brain-inspired intelligence technology, DNA-based storage, third generation semiconductors
- Elevating the supply level of basic software and hardware, core electronic components, key basic materials and production equipment. Strengthening the self-supply capacity of key products.
- Promoting the sound development of the platform economy. Deepening the application of the sharing economy in life services. Advancing the intelligent economy based on digital technologies. The following new business modes in particular await further development:
  - Emerging online services
  - Sharing economy
  - Intelligent economy
  - New type of self-employed economy
- Strengthening resources and data sharing, online-offline coordinated innovation, the sharing of production capacities, as well as supply chain collaboration – under the leadership of digital economy leading enterprises
Elevating the digitization level of public services, specifically:
- Government affair services:
  - Delivering Unified Online Government Services for the benefit of the enterprises and individuals
  - Making quick responses and collective actions to address public emergencies
- Social services:
  - Digitization and networking of public service resources, especially in culture, education, medical healthcare, exhibition, tourism, sports, fitness, etc.
  - Connecting both sides of supply and demand, to meet people’s life expectations such as employment, elderly care, child welfare, nursery, housekeeping, etc.
  - Providing remote services for old revolutionary base areas, minority areas, and poverty-alleviation areas. Expanding services such as education, medical healthcare, social security, counterpart assistance, etc.
  - Promoting information accessibility. Enhancing digital social service capacities for special groups, i.e. minors, the elderly, the disabled, and floating population. The following services in particular await upgrading:
    - Smart education
    - Digital health
    - Digital cultural tourism
    - Intelligent community
    - Social security
  - Enhancing the coordinated development of new type of smart cities and digital villages. Optimizing urban-rural public services in a collaborative manner.
- Digital life:
  - Speeding up the digital renovation of existing residences and community facilities. Encouraging the newly-built communities to plan and establish digital systems
  - Innovating and advancing cloud-based services. Upgrading the quality of consumer goods. Constructing intelligent communities and providing intelligent services
Improving the governance system for the digital economy, specifically by:
- Exploiting appropriate governance systems to contribute to the sound development of the digital economy. Formulating more flexible and efficient policies. Innovating the collaborative governance system
- Enhancing the capacity and role of digital governance to regulate market, to encourage innovation and to protect consumers’ rights
- Constructing and completing an efficient and collaborative multi-governance system for the digital economy. Fostering a fair and efficient market where multiple stakeholders participate in its governance, and healthy competition is encouraged. Achieve collaborative governance with the joint participation of:
  - Governments
  - Platforms
  - Enterprises
  - Individual organizations
  - The public
Strengthening the construction of the security system for digital the economy, specifically:
- Cyber security.
  - Strengthening the construction of cyber security infrastructure
  - Enhancing the capacities to handle cyber security emergencies
  - Supporting the R&D and application of relevant technologies and products
- Data security.
  - Building and completing the governance system for data security. Standardizing the whole data lifecycle, including data collection, transmission, storage, processing, sharing and destruction
  - Standardizing the collection, transmission and utilization of identity, privacy and biometric information. Enhancing the security supervision capacities for the collection and utilization of individual information
- Preventing risks of all kinds
  - Analyzing and gauging the risks of the digital economy, in a comprehensive manner. Preventing potential economic risks, technological risks and social instability caused by the accumulation of risks of all kinds
  - Completing the protection system in cyberspace for special groups of people, i.e. minors, the elderly, etc.
Expanding international cooperation on digital economy, specifically:
- Trade digitization:
  - Strengthening the opening-up of the service sector. Exploiting the possibility of expanding market access to the new business modes of the digital economy. Importing the innovation resources from the international community
  - Constructing cross-border e-commerce comprehensive experimental zones. Encouraging the exploitation and innovation of all parts thereof and creating cross-border e-commerce production chains and ecosystems
- Digital Silk Road:
  - Cooperating with foreign countries on digital infrastructure. Collaborating with countries along the Belt and Road on cross-border construction of fiber optical cables, based on the local requirements and conditions. Ensuring the connectivity of cross-border IT infrastructure
  - Innovating cooperation patterns in the fields of finance, logistics, e-commerce, etc. Supporting digital economy enterprises to participate in international cooperation
- International cooperation environment:
  - Advocating the establishment of a peaceful, secure, open, cooperative and orderly community with a shared future in cyberspace. Upholding the sovereignty in cyberspace
  - Accelerating the formulation of standards and governance rules for digital economy development, in accordance with China’s national conditions
  - Cooperating with the international community on the harmonization and governance of the digital economy, through bilateral and multilateral cooperation mechanisms