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China Strengthens its Digital Economy After the Tech War with US

A woman demonstrates a brain-computer interface for stroke victims at this month’s World Robot Conference in Beijing, where China’s cutting-edge tech advancements were on display. Photo: Xinhua (Source: South China Morning Post)

China will strengthen its digital economy by investing in technical advancements while constructing additional data and computing centers as the rivalry for data and computing power increases globally. China has the second-largest computer capacity in the world, but it must expand to strengthen the country’s digital economy and fend off Washington’s tech restrictions.

China will advance in computing development. (Source: Techspot)

China Will Prioritize the Advancement of Computing Power to Strengthens its Digital Economy

According to a published article in South China Morning Post, as China focuses on building a solid basis for strengthening the growing digital economy, which has emerged as a key front in its tech war with the US, China says it would prioritize the advancement of computing power. High-ranking Chinese officials’ urgent appeals for action show how Beijing is rushing to increase its technical self-sufficiency at a time when US President Joe Biden’s administration has tightened tech restrictions to restrain China’s technological advancement and economic growth.

At a seminar in Ningxia Hui on Saturday, MIIT chairman Jin Zhuanglong said computer power is the foundation of digitization. China produces about 41% of its GDP from the digital economy and has the second-largest computing capacity in the world, behind the US. Jin said the world’s second-largest economy needs speedier national computing hubs and data centers to catch up. Underpinning everything from ride-hailing services to regular business operations and chatbots like ChatGPT, computational power is essential for the operations of artificial intelligence (AI), big data, and cloud computing. Beijing’s plans for AI, however, are being hampered by US efforts to limit Chinese enterprises’ access to American cloud computing services, which would prevent mainland clients from benefiting from the power of cutting-edge AI chips.

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Technological and Industrial Development to Strengthen its Digital Economy

An organization connected to the MIIT called the China Academy of Information and Communications Technology calculated that every yuan spent on increasing computer power will increase China’s gross domestic product by between 3 and 4 yuan (41 to 55 US cents). According to Zhang, China has a statewide data-center infrastructure with more than 7.6 million standard server racks in use as of the end of June. This infrastructure has contributed to China’s achievement of an average annual growth rate in computing power of about 30% over the past five years.

To further strengthen its digital economy, China also established the Central Science and Technology Commission this year. It is a key component of Beijing’s strategy to resist US-led efforts to technologically restrict China and is managed by the Ministry of Science and Technology. The commission is anticipated to lead governmental initiatives for science and research and advance the creation of military-civilian technologies.

The government said the committee will build a “national innovation system,” examine industrial strategy, and address major issues. Zhang Yunming, deputy MIIT minister, said computing power is becoming a strategic emphasis for major economies and driving technological and industrial development. He added at the same meeting that global competition for data and computing power has risen, with major nations upgrading their strategic deployment in the computing and computational power sectors to obtain an advantage in impending international competition.

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