China lags far behind US in digital economy: analysts

China lags far behind the US in the digital economy, mainly due to its weaknesses in industry integration and innovation abilities, an expert said on Thursday.

The comment came after the release of the Global Connecting Index (GCI) report by telecommunications giant Huawei Technologies Inc on Tuesday, saying that China ranked No.27 in terms of the digital economy among 79 countries and regions assessed, a stark contrast to the US’ No.1 place.

“China lags far behind the US in terms of industry integration and the research and development [R&D] of new technologies backing the digital economy… It would take several decades for China to catch up with the US,” said Gu Wenbin, an expert at CCID Consulting.

Though China’s information-based services sector is booming, the application of the internet in industrial and agricultural fields, including internet Plus and industrial upgrading, still lags behind developed countries, Gu told the Global Times Thursday.

In addition, China has low usage efficiency when it comes to digital resources, especially in industrial and agricultural fields, Gu noted.

“As China used to focus on pursuing rapid economic growth, it put inadequate emphasis on digital resources. Insufficient accumulation of big data, together with the inadequate internet infrastructure in the two sectors, limits the fluidity of big data,” he said.

In terms of the key technology enablers for the digital economy, the areas in which there is the biggest gap between China and the US are data center networks and big data analytics, said the report.

Despite its disadvantages, China’s digital economy has entered a phase of fast development, said a report from ChinaInfo100, a non-government information research platform, in March.

China’s digital economy grew at a rate of 18.9 percent in 2016, compared with the US’ 6.1 percent, Japan’s 17 percent and the UK’s 11.5 percent, it said.

However, Chris Dong, global research director at technology advisory firm IDC China, told the Global Times that the fast growth is largely driven by the government’s industry and innovation policies, and helped by a few giant IT firms that have developed leading-edge capabilities in big data and analytics, artificial intelligence (AI), and the internet of things (IoT).

Innovation required

China needs to accelerate the building of a self-sufficient innovation ecosystem, accompanied by a more innovation-friendly open market, Dong said.

Compared to the US, China has had much less time to develop fundamental and emerging technologies, along with the right environment, talent and the corresponding innovation ecosystems. In China, digital transformation only began to pick up momentum in recent years, with IT spending being mostly hardware and infrastructure-driven.

But in the US, major industries have long been immersed in digital transformation, and have devoted a lot of investment to software, services and disruptive technologies, Dong noted.

Now China is making up for its weakness in innovation. Chinese ministries and commissions have organized special campaigns to promote innovation in cloud computing and big data, and domestic internet giants have been investing in more than 80 segments of the digital economy, domestic news site reported on Tuesday.

By the end of June 2017, there were 592 AI firms in China, representing 23.3 percent of the global total, said the report.

Source: Global Times