China looks to drive digital transformation to drive opening-up

The Chinese government has published an action plan to drive the integration of digital technologies in business practices nationwide by 2026. Long-term, Beijing is aiming to spearhead the digital transformation of its commercial sectors and drive the nation’s opening-up.

The plan, published by the Ministry of Commerce, sets out how all commercial sectors can implement advanced information technologies to drive innovation in business models, products and services.

It also stressed the need to deepen international cooperation in digital commerce by expanding communication channels, including advancing the development of Silk Road e-commerce and joining the Digital Economy Partnership Agreement.

Data released by the ministry in January showed that China’s online retail sales hit 15.42 trillion yuan ($2.13 trillion) in 2023, representing an 11% year-on-year increase. China has maintained its position as the world’s largest online retail market for 11 consecutive years. Its total online retail sales grew by 12.4% year-on-year to 3.3 trillion yuan in the first quarter of this year.

An official with the ministry said the action plan is part of broader steps “to empower economic and social development and help foster a new development paradigm”.

The official also said the plan prioritises measures to attract foreign investment in the digital sector, including steps to loosen restrictions on industries such as telecommunications to draw in a greater number of foreign enterprises investing in digital industries.

China will further ease cross-border data flow for qualified foreign enterprises, the spokesman said.

Li Mingtao, head of the research institute at the China International Electronic Commerce Center, said one of the major highlights of the action plan lies in its emphasis on boosting digital consumption.

Key measures to spur consumer spending include incentives for spending in the digital, green and health sectors and conducting online promotions for trade-ins on furniture and other products.

The plan specifically highlights entertainment and tourism, sports events, healthcare and health preservation for the creation of more digital consumer brands.

To unlock rural consumption, initiatives will be rolled out to implement high-quality rural e-commerce development projects. This includes fostering a cohort of rural e-commerce livestreaming hubs and leading enterprises in county-level digital distribution, as well as organizing rural livestreaming e-commerce events to drive the digitalization of agricultural product supply chains.

To foster greater synergy between domestic and international markets, the policy document pledged greater strides in promoting the standardized and healthy development of cross-border e-commerce imports, thereby offering Chinese consumers a diverse array of global goods.

Li said such measures can enable businesses to fully capitalize on China’s vast domestic market by importing a greater array of high-quality foreign goods through cross-border e-commerce.

“Streamlined online channels can also entice more overseas small and medium-sized enterprises to access the Chinese market via cross-border e-commerce, with low costs and risks,” he said.

“This will enable the unlocking of China’s consumer market potential to become a crucial driver for furthering global development and advancing globalization.”

To promote greater openness in the digital commerce sector, the action plan spelled out steps to broaden cooperation in Silk Road e-commerce.

According to the Ministry of Commerce, China’s Silk Road e-commerce initiative has so far attracted participation from 31 countries.

“The nation will build up the network of Silk Road e-commerce partnerships and promote the establishment of bilateral e-commerce cooperation mechanisms with more countries,” the plan said.

It said the government will explore the establishment of a global e-commerce cooperation alliance by creating a series of local cooperation brands, and encouraging local authorities to leverage their resources for cooperation with relevant countries and regions.

Jiang Rongchun, an associate professor at the Institute of International Economy at the University of International Business and Economics, said the joint construction of cross-border e-commerce platforms and intelligent logistics systems has driven countries to integrate into the global supply chain, achieving mutual benefits.