China partially outperforms US in digital economy: CICC report
Published: Sep 24, 2020 01:56 PM

Workers are busy distributing and packaging parcels in an e-commerce industrial park in Lianyungang, East China's Jiangsu Province on Thursday. E-commerce platform, which initiated the online "6/18 shopping festival" years ago, has seen a sales volume of about 239 billion yuan ($33.7 billion) by Thursday afternoon, media reported. Photo: IC

The size of China's digital economy still pales in comparison with that of the US in broad terms, but China outshines the US in especially e-commerce and mobile payment, according to a research report by China International Capital Corporation (CICC) on Thursday.

China's broad-based digital economy as a percentage of GDP tallied 34.8 percent in 2018, while the ratio for the US hit 60.2 percent. The size of digitized industries in the US totaled $10.8 trillion, higher than $3.8 trillion in China's case, indicative of a close integration of digital technologies into the US economy as well as the vast untapped potential of digitalization in China's economy, said the CICC report.

The core part of China's digital economy accounts for 6 percent of the GDP, trailing the US with a reading of 6.9 percent, meaning a gap of nearly $700 billion per year, the top Chinese investment bank revealed in its report.

While the gap might point to the US' advantage in research and development when it comes to the core component of digital economy, China is seen growing at a brisker pace than the US in notably e-commerce and digital finance.

CICC cited China's e-commerce transactions which amounted to $5.1 trillion in 2019, 8.4 times the US number. From 2011 to 2019, China's e-commerce market recorded an annual compound growth rate of 23.3 percent, well above the US' 14.7 percent. 

Additionally, China's mobile payment market totaled $414 billion in 2018, while the marketplace for mobile payments was only worth $64 billion in the US, according the CICC report, which noted that China holds an edge on the commercial applications of digital economy in that the nation has more application scenarios, a huge market and fewer obstacles to innovation.

Also worth pointing out is that CICC reckoned the digital economic development in the US is shown to be much of a trajectory with robots replacing humans and the penetration of capital replacing jobs, as labor costs still outweigh machine prices, making the case for the greater use of machines to substitute labor.

The situation is different in China where a high population density in cities makes digital technologies and its labor force mutually complementary, the investment bank argued, citing the occupations of food delivery, ride-hail drivers and video streamers.