China focuses on digital economy and the digital shift of industrial clusters

The fast development of the digital economy is profoundly changing human production and lifestyle. During his trip to Zhejiang province, Premier Li Qiang emphasized promoting breakthroughs in digital technology innovation and key and core digital technologies. More resources would be applied to strategic frontiers such as big data and computing and artificial intelligence. It is also essential to cultivate digital industry clusters, and to lead the new trend of the digital economy.

According to the Outline of the 14th Five-Year Plan (2021–2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035 of the People’s Republic of China, on the one hand, China would cultivate advanced manufacturing clusters, and promote the national programs of developing strategic emerging industrial clusters; on the other hand, China would push forward the industrial digital transformation and facilitate “migrating to cloud, using digital tools and enabling intelligence” to promote the coordinated transformation of the whole industrial chain empowered by data.

The digitalization of industrial clusters is the new development trend in China’s digital economy. Developing digital economy and accelerating the digital shift of industrial clusters are extremely important, showedin an article titled “Digitalization of National Industrial Clusters in China: Estimation from Online Industrial Belts,” released by the Bulletin of Chinese Academy of Sciences (BCAS, in Chinese), a think tank journal sponsored by the CAS, which focuses on strategic and decision-making research.

The digitalization of industrial clusters in China presents a good example of industrial development which shows in recent years, a great number of digital industry clusters are emerging.The article demonstrates thatin 2021, China’s on-line industrial belts increased to 4,075, which were distributed across 163 cities. With the data on national industrial clusters and Alibaba’s on-line industrial belts in China, it finds that national industrial clusters and on-line industrial belts co-locate in 72 cities in China. Of China’s 159 national industrial clusters, 134 clusters are co-located in the same city with on-line industrial belts that have identical or similar industries, accounting for 84.3% of the total national industrial clusters, with 44.7% in the identical industry group and 39.6% in the similar industry group.

According to the article, a digitalized industrial cluster is a network shared on-line and off-line by a group of enterprises and institutions adjacent to and interconnected in both the geographical and internet spaces. The enterprises, through the application of such digital technologies as big data, internet and cloud computing, strengthen the sharing and connection among them in data elements, data skills and digital technologies in internet space. Its spatial scope is far smaller than the ubiquitous virtual industrial cluster, and the industrial nature is different from that of the e-commerce industrial cluster formed by agglomeration of e-commerce enterprises.

At present, a number of internet enterprises in China and foreign countries, such as Alibaba and Amazon, are pushing forward the development of on-line industrial belts in China, and accelerating the digital transformation of China’s industrial clusters using such digital technologies as big data, internet, and cloud computing.

Some local governmentsin China, such as Guangdong and Hebei have formulated and implemented digitalization plans for industrial clusters or strategic emerging industrial clusters. Meanwhile, well-known high-tech enterprises and e-commerce platforms at home and abroad, such as Amazon, eBay, Alibaba, and Huawei, are all working with local governments at all levels of China to push forward the digitalization of China’s industrial clusters or industrial parks.

For example, as the article points out, Alibaba’s China’s Industrial Belts is the earliest project of Chinese e-commerce enterprises to explore the digitalization of industrial clusters in China; the company’s 1688 is the biggest Business to Business (B2B) e-commerce platform in China, and its industrial belt project launched in 2012 has collaborated with local governments to advance the digitalization of local industrial clusters. In 2021, the 1688 platform owned 1.13 billion active consumers worldwide, including 890 million home consumers and 240 million overseas consumers, all of whom contributed 8.1 trillion yuan (about US$1.2 trillion) in annual transaction volume.

Studies also suggest that Alibaba and other e-commerce platforms that support the digital development of China’s industrial clusters not only “help expand the market capacity of industrial cluster, respond to the market quickly, and integrate regional resources,” but also “promote knowledge spillover and dissemination within the clusters and improve the level of cooperation and intensity of competition of enterprises in the cluster.”

Technological innovation is the driving force for the development of the digital economy and a key support for cultivating and strengthening digital industry clusters. In this regard, the article puts forward three suggestions.

Firstly, given that the on-line industrial belts driven by market forces are widely co-locatedin most of China’s national industrial clusters, the government should examine the policy of digitalizing industrial clusters from the perspective of global competition and national security, and master the digitalization, intellectualization, and innovation of industrial clusters macroscopically.

Secondly, local governments should support the effective connection and integration of digitalized national industrial clusters and internet enterprises’ on-line industrial belts in policies, funds, and other aspects.

Thirdly, national industrial cluster organizations and the administrative committees of industrial parks should strengthen their connection and cooperation with local on-line industrial belt operators, and cooperate with them in information sharing, digital strategic planning and design, digital technical exchanges and training, building of public technology platform, international cooperation, and other aspects.