Digital economy holds great potential, but challenges persist: experts
The Chinese Internet sector, which has enjoyed rapid growth in recent years as a bright spot in the slowing domestic economy, is aiming for new heights by further transforming traditional industries across the board and connecting businesses and consumers around the world. [Special coverage]
New technological innovations that more Chinese companies have been embraced on, such as big data, cloud computing and artificial intelligence, could lead to another boom in the digital economy, experts said on Tuesday.
"The boom in the Chinese Internet sector that started in 2006, when the number of Internet users, especially mobile users, rapidly rose, is reaching its limit, and new innovations are necessary for the industry to transform and expand its presence in the economy," Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times.
The Internet sector has significantly transformed daily life in the last few years. More and more people are using online platforms to socialize with others or to shop for goods from electronics to clothes to groceries.
At the end of June, there were 710 million Internet users in China, the largest group in the world, up 21.32 million from the end of 2015, according to data released by the China Internet Network Information Center (CNNIC) in July. Meanwhile, the number of mobile Internet users reached 656 million, 36.56 million more than from the end of 2015, the data showed.
More impressive are the economic performances the Internet sector has achieved, highlighted by the vast online consumption the sector has spurred and its increasing contribution to the Chinese economy.
During the one-day Singles' Day online shopping event this year, Chinese Internet users spent an eye-dropping $17.8 billion, increasing $14.3 billion from last year's figures, according to Forbes.
The Internet sector's contribution to the overall economy is on the rise as well. In 2010, the sector accounted for only 3.3 percent of China's GDP. In 2015, that percentage exceeded 7 percent, higher than the average percentage of 5.5 among G20 economies, China Economic Net reported on Monday.
Lu said the fast growth in the Chinese Internet sector in the last few years was mostly supported by the immense domestic market which has the world's largest population of Internet users. However, growth based on just the market size is reaching its limit and might slow down in the next few years.
"The era of just depending on the scale of the market will soon be over, and new business models and innovations are necessary for Internet firms to expand their business," Lu said.
Another boom
Chinese companies are already onto the next big thing in the world of the Internet, according to Xiang Yang, an industry expert at Beijing-based CCID Consulting. Xiang told the Global Times Tuesday that more Chinese companies are focused on areas such as big data, cloud computing and artificial intelligence.
"Big data could be the thing that will bring another boom in the Internet economy. It holds big market potential for the industry itself, and it could also help transform many traditional industries," Xiang said.
"In the era of big data, data is key, which will surely become the core engine for economic growth. Everybody is a contributor to data as well as a consumer," Sun Pishu, president and CEO of Inspur Group Co, told the Global Times.
Artificial intelligence and big data, with their wide application in sectors such as commerce, manufacturing, wholesale, finance and services, have the potential to change businesses and the whole economy, Gao Hongbing, a vice president at e-commerce giant Alibaba Group, said at the company's Singles' Day sales event, according to China Economic Net.
More than that, a platform built with artificial intelligence and big data will connect businesses and consumers around the world, Gao said, noting these are at the core of the more inclusive, fourth industrial revolution.
With a vast domestic market and advanced technologies, Chinese Internet companies are well positioned to lead the global Internet wave, experts said Tuesday. But they warned, as the sector continues to grow more challenges will also arise down the road.
"The larger the scale, the more problems there will be," Lu said. He pointed out that one of the challenges could be regulating the industry without discouraging innovation. "This could be a very complex problem, because the industry, as it is now, will become even more complicated."
Gao said current problems such as counterfeit goods flooding online marketplaces and fraud will haunt the industry if not properly addressed.
