China Update 2025

The Digital Transformation in China

China is undergoing significant digital transformation of the economy now. The digital economy—driven by AI, big data, cloud computing, and robotics—offers new opportunities for creating new and frontier high-tech sectors as well as transforming the traditional sectors of the economy, potentially offsetting high costs of labour and enhancing efficiency.

China’s digital economy has grown rapidly from 11.2 trillion yuan in 2012 to 53.9 trillion yuan in 2023—a 3.8-fold increase in 11 years. After three decades of full connection to the global internet, China now has 1.09 billion internet users and the world’s largest digital consumer market. China’s online retail sales have now ranked first globally for 11 consecutive years, and its mobile payments have increased 239 times since 2012.

The future of China's digital economy faces various challenges including fostering original tech innovation, implementing relevant regulations, and developing accurate methods to measure its true impact on total factor productivity (TFP). Regulatory frameworks must balance vitality and oversight, particularly as digital platforms expand globally. Ultimately, success depends on increasing R&D efficiency, protecting intellectual property rights, supporting private sector innovation, and promoting openness and international cooperation. If these goals are met, digital development could become a central driver of China's high-quality economic growth in the new phase of its development.

In China Update 2025, we will delve into the above-mentioned issues and aim to identify new opportunities and challenges for deepening digital transformation in China.