ADVANCING DEVELOPMENT THROUGH DIGITAL SILK ROAD COOPERATION

By Guo Xixian

The rapid development and wide application of information technology kindled the emergence of the digital economy as a new economic form after the agricultural and industrial economies.The world today is undergoing a digital economy revolution sharply and broadly,and digital transformation has become inevitable for human society.

The Digital Silk Road proposition seeks to merge the development of the digital economy with the Belt and Road Initiative (BRI) by using digital technology to support BRI projects,which will help promote the development of digital economy and realize digital transformation of the countries along the routes.

Extensive Definition

According to the definition from the National Bureau of Statistics of China,the digital economy refers to a series of economic activities that use digital knowledge and information as key production factors,modern information networking as the central carrier,and effective usage of information and communication technology as the driving force for improving efficiency and optimizing economic structure.

As explained by Liu Qian,deputy director of the Belt and Road Research Institute at Beijing Normal University,ever since American IT consulting expert Don Tapscott first proposed the concept of the digital economy in a 1996 report titled “Digital Economy:Opportunities and Risks in the Era of Network Intelligence,” constant debate has raged over its meaning around the world,with different understandings reached by academia,governments,and business communities.

“It is incorrect to define the digital economy narrowly as the internet economy,and to equate the digital economy with the virtual economy,”said Mei Hong,an academician with the Chinese Academy of Sciences and president of the China Computer Federation,at the Third World Digital Economy Forum in Chengdu.The scope of the digital economy has become increasingly broad because any economic form that directly or indirectly uses data to exploit the potential of resources and enhance productivity can be included in the category.

Cooperation agreement signing ceremony at the Belt and Road Digital Economic Cooperation and Development Forum in Chengdu,Sichuan Province,on September 21,2018. (WANG LEI)

Although many different understandings of the digital economy still abound,it mainly involves the two specific aspects of digital industrialization and industrial digitization.Liu Qian explained that the digital economy involves emerging technologies such as big data,cloud computing,the Internet of Things,blockchain,artificial intelligence,5G communication,and others.

Digital industrialization mainly refers to the process of using digital technology at the core to boost the scale development of products,services,and infrastructure,resulting in formation of a digital industry represented by the information and communication technology (ICT) industry.

Industrial digitization refers to application of digital technologies in existing products and services and formation of a new industrial chain with data as a new element in existing industries.

The digital economy does not exist independent of traditional industries.Instead,it places more emphasis on integration and win-win results to realize value increment through integration with traditional industries.The integration of the digital economy with all existing economic activities will accelerate the formation of a new economic paradigm,change the structure of the real economy,and improve productivity.

So far,more than 100 countries have already developed digital transformation plans or digital action plans to accelerate the digital transformation of the economy and society.The Digital China Development Report 2022 showed that the scale of China’s digital economy reached 50.2 trillion yuan (US$7.25 trillion) in 2022,ranking second in the world.China has gradually taken the lead in the application of 5G,smart city construction,digital government building,and digital manufacturing.

At the First Belt and Road Forum for International Cooperation in 2017,Chinese President Xi Jinping officially introduced the idea of building a digital Silk Road for the 21st Century.At the recent Third Belt and Road Forum for International Cooperation,“digital economy as a new source of growth”was the topic of one of three high-level forums.Participants reached consensus on deepening cooperation on the development of the digital economy.By the end of 2022,China had signed MoUs on the Digital Silk Road with 17 countries and MoUs on e-commerce cooperation with 30 countries.

Liu Qian illustrated that data and information flow in cyberspace will empower the Digital Silk Road to help overcome differences in the countries and regions along the routes.It will become a driving force for the development of emerging industries,the transformation of traditional industries,and the promotion of employment and economic growth,which is directly related to the future trend and pattern of the world economy.

Leveraging Complementary Advantages

The factors of production in social and economic life have changed dramatically as of late,and data has become the most important factor in production.The digital economy has broken the space-time limits,extended the industrial chain,driven the transformation and upgrading of traditional industries,and fostered new economic growth points,changing the landscape of global competition.Digitization has become a strategic choice for countries seeking to seize opportunities.

And the COVID-19 pandemic made digital connectivity even more important.Liu Qian said that although COVID-19 was a “black swan” event with an impact on the global economy,it essentially stepped on the “accelerator”for global digital economy development.

According to the e-Conomy SEA 2022 report jointly published by Google,Temasek,and Bain analysis,Southeast Asia welcomed 100 million new internet users over the last three years,hitting 460 million users in 2022.The region’s digital economy reached US$194 billion in gross merchandise value in 2022,a 90 percent increase from 2019,and a 20 percent increase year on year,which is expected to exceed US$300 billion by 2025.

Liu Qian noted that although the digital economy in countries along the Belt and Road is relatively small,with weak digital infrastructure and a low level of digitization,it has grown rapidly in those countries and shown huge potential.

In recent years,China and ASEAN have leveraged their respective resource technology and market advantages.They have continuously accelerated alignment of digital development strategies,created an open and inclusive environment for digital economy cooperation,improved their digital infrastructure,and vigorously promoted the digital transformation of industries.

The year 2020 was designated the China-ASEAN Year of Digital Economy Cooperation,and the two sides jointly released the Initiative on Building the China-ASEAN Partnership on Digital Economy.The ASEAN Digital Master Plan 2025 proposes making ASEAN a leading digital community and economic bloc powered by secure and transformative digital services,technologies,and ecosystems.

Panorama of the ground station of the Lao Sat-1 communications satellite located in Vientiane,capital of Laos.The satellite,China’s frist commercial satellite exported to an ASEAN country,was successfully launched from the Xichang Satellite Launch Center and delivered into orbit in March 2016. (VISUAL.PEOPLE.CN)

The China-ASEAN Smart City Innovation Center,a key project in the overall plan of the China-ASEAN Information Harbor,officially began operations on November 28,2018.By May 2023,more than 50 Chinese and ASEAN enterprises and scientifci research institutes such as iFlytek,Inspur,and Huawei (Nanning) Digital Economy Innovation Center had settled there.

So far,three international communication submarine cables,12 international terrestrial optical cables,and 13 important communication nodes have been built to link China and ASEAN.The China-ASEAN Information Port project has received extensive support from ASEAN countries since its inception in 2015.In particular,the China-ASEAN BeiDou/GNSS(Nanning) Center has become an important platform for promoting the development of the BeiDou Navigation Satellite System in ASEAN.

“China’s support for new infrastructure construction has contributed to the rapid expansion of the digital economy,which has promoted connectivity and cooperation between China and ASEAN,”commented Wang Zhimin,director of the Institute of Globalization and China’s Modernization at Beijing-based University of International Business and Economics.He also talked about how China has strengthened cooperation with ASEAN in the areas of e-commerce,5G networks,and smart cities,including a 5G demonstration smart factory in Thailand,the first AI industrial park in Malaysia,and overseas cloud computing centers in Laos,Cambodia,Myanmar,and other countries.

E-commerce is the main engine driving the growth of the digital economy in ASEAN,said Liu Qian.The pandemic accelerated the digital transformation of ASEAN countries,and cross-border e-commerce between China and ASEAN has also been developing rapidly.

Many countries have introduced policies to promote digital transformation,according to Liu.The Vietnamese government is aiming to increase the digital economy’s share of its GDP to 20 percent by 2025,and the proportion of the digital economy in each industry or field to at least 10 percent.The government agencies of Brunei and the Philippines have set up online platforms to help local businesses and farmers sell their products and provide services.In 2016,Thailand launched a 20-year “Digital Thailand”development plan,the “Thailand 4.0”strategy,which aims to make Thailand a cutting-edge digital hub in the Asia-Pacific region.

In terms of business operation,Chinese tech giants such as JD,Tencent,Ant Financial,and Alibaba have been involved in digital industries of e-commerce,e-payment,and games in Thailand,Vietnam,Malaysia,and other countries.

Wang Zhiman pointed to a solid foundation for Southeast Asian countries to cooperate with China in the digital field,with mutually complementary strengths and huge potential.Deepening digital economy cooperation will help the two sides realize a comprehensive strategic partnership of peace,security,prosperity,and sustainable development,he said.

The Digital Silk Road proposition seeks to merge the development of the digital economy with the Belt and Road Initiative (BRI) by using digital technology to support BRI projects.

Bridging the ‘Digital Divide’

The era of the digital economy has brought about both unprecedented opportunities and unseen challenges.The development of the digital economy is unbalanced around the world.Countries and regions are at different levels of digital technology with different potential,further aggravating the “digital divide.”

According to data from the China Academy of Information and Communications Technology,in 2020,the digital economy in developed countries reached US$24.4 trillion,accounting for 74.7 percent of the global total,and three times that of developing countries.In 2020,the number of ASEAN data centers exceeded 295,but 70 percent of them were concentrated in Singapore,Indonesia,and Malaysia,with very few in countries such as Laos and Myanmar.

The “divide” exists not only among countries and regions,but also among industries and enterprises.Liu Qian cited micro,small,and medium-sized enterprises (MSMEs) as an important source of ASEAN’s economic vitality that has contributed to more than 50 percent of ASEAN’s GDP and created more than 83 percent of its jobs.Although 75 percent of the SMEs see digitization as a development opportunity,only 16 percent have used digital tools in business operations.

Cai Zhihui,a sales manager at BOE,a Chinese electronic components producer,reported that it is costly for manufacturing enterprises to carry out digital transformation because the barriers between different industries are high and key technologies are mainly controlled by large companies.MSMEs may want to undergo digital transformation but lack the capability.

At the 23rd ASEAN Economic Community Council Meeting,ASEAN Secretary-General Kao Kim Hourn called on regional countries to actively support and create a digital ecosystem more conducive to the development of MSMEs and encouraged the private sector to cooperate with governments to promote the development of MSMEs to enhance their contribution to economic development.

Liu Qian suggested China adopt differentiated and targeted strategies when cooperating with ASEAN countries according to the status of their digital transformation.For example,in its cooperation with Cambodia,Laos,Myanmar,and other countries with relatively weak digital infrastructure,focus should be on helping improve digital infrastructure.When cooperating with countries with some digital infrastructure,the focus should be on 5G,the Internet of Things,artificial intelligence,the industrial internet,and other fields.

Liu Qian also thinks it’s necessary to strengthen policy communication and institutional synergy and promote cooperation and exchanges among governments,industries,and enterprises to optimize the BRI and other international cooperation platforms.

At the Third Belt and Road Forum for International Cooperation,China and a dozen partner countries jointly launched the Beijing Initiative on the Belt and Road International Digital Economy Cooperation,which included 20 points of consensus on further deepening international cooperation on the digital economy.Chinese enterprises and organizations signed 12 cooperation agreements with foreign counterparts.

Boviengkham Vongdara,Minister of Technology and Communications of Laos,suggested BRI partner countries carry out mutually beneficial cooperation under the framework of the initiative,work to develop the digital economy,and find ways to accelerate digital transformation.Countries should also strengthen policy communication and cooperation and promote construction of the Digital Silk Road,he added.

At the forum,Cambodian Prime Minister Hun Manet noted that many countries,including the BRI partner countries,are promoting economic diversification,and that the digital economy has provided a unique opportunity to foster new industries and markets and promote innovation and entrepreneurship.“Let’s work together to seize the opportunities,embrace the digital revolution,and lay a solid foundation for a new era of growth,” he said.