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Digital Pivot Boosts Western China’s Economy

 It’s hard to imagine a more compelling case of how digital transformation can actually be the main driver of a region’s economy than the economic output itself. China’s East-to-West digital pivot may be recent but it’s already giving a substantial boost to the region’s industrial output.

The industrial economy in China’s western regions has registered speedy growth in the first quarter. What is becoming apparent is digital adoption and emerging industries are key in injecting fresh impetus into regional economic development amid uncertainties both at home and abroad, industry experts observed.

Specifically, the industrial output of Southwest China’s Guizhou province increased 15.2% year-on-year in the first three months. That is 8.7 percentage points higher than that of the nation, according to the Provincial Bureau of Statistics.

The western regions have ratcheted up efforts to build a modern industrial system and develop Big Data and cloud computing technologies, showcasing strong resilience and great potential in bolstering the development of high-tech and emerging industries.

– Luo Zhongwei, researcher, Chinese Academy of Social Sciences

High-tech and emerging industries have seen solid growth. Firstly, output from the new energy vehicle batteries and materials industry surged 44.9% year-on-year in the first quarter, 29.7 percentage points higher than that of overall industrial output in the province. Moreover, industries directly using digitalisation put up even greater numbers. Output from the computing, telecommunications and other electronics equipment manufacturing sector in Guizhou surged 35.4% on a yearly basis.

Investments into the region rose after Beijing decided to do an East-to-West digital pivot which meant the country’s digital transformation should move to the less-developed western regions. During the January-March period this year, investment in high-tech industries surged 96.1% compared with the same period of the previous year. Among the total, investment in high-tech manufacturing and high-tech services industries increased 129.6% and 66.8% year-on-year, respectively.

The government’s decision to establish eight national computing hubs and 10 national data centre clusters demonstrate that the country is taking steps to channel more computing resources from its eastern regions to less-developed but resource-rich western regions. The move will speed up digital transformation and upgrade industries in western regions, Luo added.

In January, China issued a guideline to support Guizhou in breaking new ground in the country’s pursuit of fast development of its western regions in the new era. The guideline, released by the State Council, China’s Cabinet, underscored the importance of promoting the construction of an inland open-economy pilot zone and developing the digital economy.

Guizhou has seen rapid development in its big data industry in recent years, with tech giants from home and abroad stepping up efforts to set up data centres in the province due to its cooler climate and ample power resources.

Chongqing, another Western province, has also witnessed its industrial output rise 8.5 per cent on a yearly basis in the first three months. The output of emerging industries, such as photovoltaic cells, industrial robots and service robots, expanded 92.9%, 34.1% and 20.7%, respectively, higher than the overall first-quarter industrial output.

The East-to-West pivot, indeed, has its inherent advantages. The western regions have abundant renewable energy and will become a key base for developing strategic emerging industries in the nation, one industry stalwart disclosed. Plus, compared with the Yangtze River Delta and the Pearl River Delta areas, manpower costs are relatively low in western regions, he added.

Digital transformation has defined China’s economic rise. Just recently, industry stalwarts announced that the year 2022 is the Year of the Metaverse, the latest emerging technology from ICT. Additionally, its approach to digital adoption is reflected by its desire to build over 2 million 5G bases by the end of 2022.

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