إعداد

أسماء عاصم أحمد

باحثة

بكالوريوس كلية الاقتصاد والعلوم السياسية – جامعة القاهرة

جمهورية مصر العربية 

 

ملخص

باللغة العربية يُعد الاقتصاد الرقمي اليوم أحد المحركات الأساسية للتغير الاجتماعي والاقتصادي في القرن الحادي والعشرين، لما له من دور مؤثر في أنماط الإنتاج والتجارة والتشغيل والحوكمة، اعتمادًا على التقنيات الرقمية المتقدمة مثل الذكاء الاصطناعي، وإنترنت الأشياء، وتحليل البيانات الضخمة، وتقنية “البلوك تشين”. وقد أسهم هذا التحول في إعادة تشكيل سلاسل القيمة العالمية وطرق تقديم السلع والخدمات، كما أتاح للدول النامية فرصًا لتعزيز التنمية الشاملة وتقليص الفجوات الاقتصادية والاجتماعية من خلال دمجه في قطاعات حيوية كالصناعة والزراعة والتعليم والصحة والخدمات المالية. ورغم هذه الفرص، لا تزال الدول النامية تواجه تحديات جوهرية تتمثل في ضعف البنية التحتية الرقمية، واتساع الفجوة الرقمية، وقصور المهارات الرقمية، مما يستدعي تبني سياسات متكاملة لدعم التحول الرقمي وجعله محركًا مستدامًا للنمو الاقتصادي.

وفي الحالة الصينية، يقوم الاقتصاد الرقمي على توظيف المعلومات الرقمية وتكنولوجيا الشبكات لتعزيز التنمية الاقتصادية، ويشمل مجالات متعددة مثل التجارة الإلكترونية، والمدفوعات الرقمية، والخدمات المالية الرقمية، والمحتوى الرقمي، إلى جانب التقنيات المتقدمة كالذكاء الاصطناعي والحوسبة السحابية والإنترنت الصناعي. وقد شكّلت النماذج القائمة على المنصات الرقمية سمة رئيسية للاقتصاد الرقمي الصيني، وأسهمت في ظهور شركات ومنصات عملاقة ذات تأثير إقليمي ودولي.

وخلصت الدراسة إلى أن الاقتصاد الرقمي في الصين أصبح ركيزة أساسية للنمو الاقتصادي والتحول الهيكلي، حيث انتقل من مرحلة تقليد النماذج المستوردة إلى مرحلة الابتكار المستقل والتكامل العميق بين التكنولوجيا والقطاعات الإنتاجية. كما أظهرت النتائج أن قوة الاقتصاد الرقمي الصيني لا ترتبط بحجمه فقط، بل بقدرته على توظيف البيانات كمورد إنتاجي أساسي، واستخدام التقنيات المتقدمة لإعادة تشكيل أنماط الإنتاج والاستهلاك، بما أسهم في رفع الإنتاجية وتحفيز الطلب المحلي ودعم التعافي الاقتصادي. وفي المقابل، لا تزال هناك تحديات داخلية وخارجية تتعلق بعدم التوازن الهيكلي، والفجوة الرقمية، والحوكمة والتنظيم، فضلًا عن الضغوط الجيوسياسية والمنافسة الدولية. وعليه، فإن مستقبل الاقتصاد الرقمي الصيني يتوقف على تحقيق توازن دقيق بين الابتكار والتنظيم، وبين التوسع السريع والاستدامة، بما يضمن تنمية أكثر عدالة وشمولًا على المدى الطويل.

Abstract

The digital economy is a key driver of 21st-century social and economic change, reshaping production, trade, and governance through technologies like AI, IoT, big data, and blockchain. In China, it spans e-commerce, digital payments, finance, content, and advanced technologies, with platform-based models fostering major domestic and global players. China’s digital economy has evolved from imitating foreign models to independent innovation and deep integration with productive sectors, using data as a core resource to boost productivity, stimulate demand, and support recovery. However, challenges remain, including structural imbalances, the digital divide, governance issues, and geopolitical pressures. Future success depends on balancing innovation with regulation and growth with sustainability to ensure inclusive and equitable development.

Introduction

Today, the digital economy has become a fundamental force driving social and economic change in the 21st century, influencing production, trade, labor markets, and governance. It relies on digital interactions among individuals, businesses, machines, and information, leveraging advanced technologies such as artificial intelligence, the Internet of Things, big data analytics, and blockchain. These technologies have reshaped the ways goods and services are produced and delivered, as well as global value chains. The digital economy also contributes to process automation, reducing transaction costs, enhancing financial inclusion, and creating new and flexible jobs, particularly for youth and women. However, its effective implementation faces challenges related to infrastructure, the digital divide, and digital skill gaps, necessitating comprehensive policies to support digital transformation. When these policies are successfully executed, the digital economy can serve as a sustainable driver of growth, employment, and economic development (Saeed, 2025).

In the Chinese case, the digital economy is based on leveraging digital information and network technologies to promote economic development. It encompasses a wide range of fields, including e-commerce, digital payments, industrial Internet (IoT), big data, and artificial intelligence (AI). Integrated applications of information and communication technologies, alongside the digital transformation of all economic sectors, serve as the main drivers of digital economic growth in China and the development of its modern infrastructure.

The main areas of China’s digital economy include:

• E-commerce: covering online shopping, digital platforms, and cross-border e-commerce.
• Digital payments: such as mobile payments and online electronic payments.
• Non-payment digital financial services: including digital lending, digital investment and wealth management, and digital currencies.
• Digital content: such as digital entertainment, e-reading, online music, and video.
• Advanced technologies: including big data, AI, industrial Internet in smart cities and smart homes, and cloud computing services to support enterprise transformation and improve service quality.

Platform-based business models are a hallmark of China’s digital economy. They rely on network infrastructure such as cloud computing, the Internet, and mobile devices, and utilize modern technological tools like AI, big data analytics, and blockchain to facilitate transactions, content management, and operational optimization. Numerous successful digital platforms have emerged in e-commerce, online car rental, entertainment, social media, search, and digital financial services, with some becoming prominent global players (Kong, 2025).

Research Problem of the Article

Despite the growing importance of the digital economy in promoting economic growth, improving productivity, and creating jobs, many countries, especially developing ones, face significant difficulties in taking full advantage of it due to weak digital infrastructure, the digital divide between different groups, and a lack of digital skills. This reality raises questions about the extent to which the digital economy can promote sustainable development, reduce economic and social disparities, and achieve financial inclusion, as well as what policies and strategies are needed to overcome these challenges.

Article Objectives:

1. To study the impact of the digital economy on economic growth and productivity growth.
2. To analyze its role in creating job opportunities and expanding financial inclusion, especially for young people and women.
3. To identify the challenges and obstacles facing the implementation of the digital economy, such as weak infrastructure and the digital divide.
4. To propose policies and strategies to enhance the role of the digital economy as a sustainable driver of economic growth and inclusive development.

Theoretical Framework of the Paper

1. Digital Economy
2. Definition of the Digital Economy The term “digital economy” has been widely used in recent years to describe economic activities that rely on Information and Communication Technology (ICT), particularly in the U.S., while avoiding terms like “new economy,” which artificially divide economic sectors into old and new (L’Hoest, 2001). The digital economy focuses on enhancing efficiency across all parts of the economy, including traditional firms, by leveraging technologies such as the internet, cloud computing, big data, artificial intelligence, and blockchain (Saeed, 2025). These technologies allow economic processes to be more flexible, integrated, and innovation-driven, reshaping production, distribution, and business operations.

Three main characteristics distinguish the digital economy: network effects, which increase a network’s value as more users join; changes in the business cycle, as ICT combined with globalization can reduce the non-accelerating inflation rate of unemployment (NAIRU) and extend periods of economic growth; and more efficient business methods, where the adoption of new technologies boosts long-term trend growth (L’Hoest, 2001). Cross-country studies have shown that ICT investments significantly contributed to output growth and labor productivity, particularly in G7 countries during the 1990s, accounting for about two-thirds of the U.S. labor productivity increase in the late 1990s.

The digital economy is recognized as a key driver of high-quality economic development because it fundamentally transforms traditional economic structures by fostering innovation, increasing productivity, and expanding markets. Its impact extends beyond ICT adoption to include knowledge generation and dissemination, improvements in firms’ efficiency and competitiveness, reductions in transaction costs, and support for sustainable economic growth. Moreover, it helps reduce regional disparities, enhance economic inclusion, integrate less-developed regions into global value chains, and overcome geographical and financial barriers. By promoting structural transformation toward knowledge- and innovation-based industries, strengthening human capital, and reinforcing intersectoral integration, the digital economy contributes to the economic, social, and environmental dimensions of sustainable development (Chen & Xing, 2025).

2. Theoretical frameworks for the relationship between the digital economy and economic growth There are several theoretical approaches that explain the relationship between the digital economy and economic performance. Endogenous growth theory emphasizes the important role of technological innovation in raising productivity and achieving long-term growth. For its part, Schumpeterian theory views digital entrepreneurship as a process of “creative destruction,” whereby new digital businesses can replace inefficient traditional systems, thereby enhancing economic efficiency. Economic network theory also suggests that digital connectivity accelerates the flow of information, increases market efficiency, and promotes competition, making digital transformation a multiplier for economic growth by improving productivity, reducing transaction costs, and expanding market access (Saeed, 2025).
3. Empirical evidence on the relationship between the digital economy and growth Empirical studies confirm a positive correlation between the digital economy and economic growth. Data indicates that countries that invest in digital infrastructure and e-commerce achieve higher rates of productivity growth and enhance trade competitiveness. However, the strength of this effect depends on the quality of institutions, the level of human capital, and the extent of public policy support, indicating that digitization cannot bear fruit without an integrated system to support it (Saeed, 2025).
4. The impact of the digital economy on the labor market and employment The digital economy plays an important role in shaping employment patterns by creating new job opportunities and entrepreneurship, especially in the fields of information and communications technology, logistics, digital marketing, and software development. Digital platforms such as e-commerce, freelance networks, and mobile banking contribute to the creation of flexible and suitable employment opportunities for young people and women, reducing geographical and gender barriers. However, challenges such as job displacement due to automation, skills mismatches, and the growing prevalence of informal freelance work lacking social protection call for new approaches to digital skills training, labor market regulation, and the adaptation of social protection systems (Saeed, 2025).
5. Economic Growth
6. Concept of Economic Growth The concept of economic growth refers to changes in the volume of material production over a relatively short period of time, typically measured on an annual basis, and is expressed in economic theory as the yearly increase in the value of gross domestic product or national income. Economic growth reflects a quantitative rise in the level of output; however, it does not necessarily imply the achievement of comprehensive economic development, as an economy may experience high growth rates without corresponding genuine developmental transformations (Ivic, 2015).

Analytical Framework

Structure of China’s Digital Economy China’s digital economy can be divided into two main categories:

• Industrial digitization: which involves providing digital technologies, products, services, and infrastructure to support the digital transformation of industries.
• Digital industry: which focuses on upgrading, transforming, and reengineering traditional industries using digital data and technologies.

At the micro level, the digital economy enables companies to adopt technologies such as big data, cloud computing, AI, industrial Internet, and blockchain to improve efficiency, management, marketing, and create new business opportunities. It also empowers individuals to use digital technologies to enhance quality of life and meet daily needs, such as seamless cross-border transactions, access to information, communication, entertainment, online shopping, and skill development through digital education. The digital economy also promotes financial innovation, including digital payments, virtual currencies, and advanced digital financial services.

By 2022, China’s digital economy exceeded CNY 50 trillion, accounting for 41.5% of GDP. Despite having the world’s largest digital market with over one billion Internet users, challenges remain in developing high-quality technological advantages and enhancing innovation capabilities in key sectors. Digital development is also unevenly distributed, with top-performing sectors and regions concentrated in certain areas, such as Beijing, where the digital economy’s value added reached CNY 1,625.19 billion, representing 40.4% of local GDP (Kong, 2025).

                   Scale of Digital Economy in China (trillion yuan) (Jiao et al., 2025)

Characteristics of China’s Digital Economy

• Seizing Technological Opportunities and Industrial Transformation The digital economy is considered the main form of the future economy. China has started on equal footing with developed countries in taking advantage of the technological revolution and industrial transformation. This has strengthened national competitiveness, built a modern economic system, and enabled China to capitalize on new opportunities arising from technological and industrial advancements to achieve sustainable economic growth.
• From Imitation to Independent Innovation In the early stages of its digital economy, China initially imitated models from advanced countries and then transformed them locally to develop independent solutions. Examples include platforms like Taobao and Alipay, which advanced C2C (consumer-to-consumer) and B2C (business-to-consumer) e-commerce models. As a result, China has become the world’s largest e-commerce market, demonstrating the domestic growth and innovation capacity of its digital economy.
• Focus on Consumer Internet and Market-Driven Model China’s digital growth has mainly relied on its vast consumer market, emphasizing actual consumer demand rather than technology alone. With a comprehensive industrial system covering all sectors and leadership in 5G and artificial intelligence, China has expanded digital applications from the consumer sector to the industrial sector. This has enhanced digitalization, networking, and intelligent processes across all stages of production, distribution, and services.
• From Business Model Innovation to Technological Innovation As the digital economy developed, diversified demands stimulated technological advancement and R&D. Integrating technology with traditional business models created innovative services, such as live-streaming e-commerce, short-video commerce, and smart retail. Chinese digital enterprises successfully entered global markets, like TikTok and Alibaba, while patent filings and scientific publications surged, reflecting significant technological innovation.
• Data-Driven Digital Economy Data has become a crucial resource for China’s economic and social development. By collecting, analyzing, and utilizing data, management efficiency and decision-making have improved. Data also supports upgrading traditional industries and creating new data-driven business models powered by AI and cloud computing. National strategies have accelerated the development of a data-driven digital economy, making data a core engine of economic growth.
• Local Initiatives for Digital Economic Development Local governments in China have launched initiatives to develop the digital economy in alignment with regional characteristics and industrial foundations. These efforts have fostered healthy interregional competition and explored innovative development paths. The central government has outlined six development models: comprehensive economic strength-driven, industry cluster-driven, digital policy and environment-driven, integrated application-driven, innovation factor-driven, and market demand-driven, reflecting China’s accumulated experience in cultivating its digital economy (Rihui et al., 2024).

Stages of China’s Digital Economy Growth

• Foundational Stage (1990s – early 2000s): China began exploring the Internet and launched its first Internet companies, such as China Online and Sohu, with limited digital economy penetration.
• Initial Development Stage (early 2000s – early 2010s): As China’s economy and Internet technologies grew, e-commerce emerged, especially after Alibaba’s establishment in 2003. Digital payments also started to spread with the launch of Alipay in 2004.
• Rapid Growth Stage (early – mid 2010s): E-commerce expanded significantly, making China the largest e-commerce market globally, driven by mobile networks, smartphones, and digital applications.
• Intelligence and Innovation Stage (mid 2010s – present): The digital economy gradually became innovation-driven, with AI, big data, and industrial Internet technologies spreading, fostering new fields such as digital financial services, smart manufacturing, and smart transportation (Kong, 2025).

Scale of Digital Economy in Major Countries in the World (USD 100 million) (Jiao et al., 2025)

The Digital Economy and Its Role in Enhancing Economic Growth in China

1. E-Commerce

• Evolution of E-Commerce: In the post-pandemic era, e-commerce has undergone significant changes. During the pandemic, restrictions on the movement of people across regions led to the emergence of new industries such as community group buying and online shopping. These emerging sectors continue to exert influence in the post-pandemic period, injecting fresh momentum into the e-commerce industry.
• Rising Consumer Confidence: As pandemic prevention and control measures have matured across countries, economies have gradually entered the recovery phase after a significant shock, leading to a steady increase in consumer confidence. For instance, surveys indicate that Chinese consumers are the most optimistic about economic recovery, maintaining confidence levels around 50%, compared to 22% in the United States, -4% in Australia, and even lower rates in Italy, the United Kingdom, and Japan. This heightened confidence encourages Chinese consumers to spend more on e-commerce, supporting the sector’s recovery.
• Advanced E-Commerce Infrastructure: China began developing e-commerce earlier than most countries, allowing it to build a highly mature infrastructure. This infrastructure, coupled with consumer readiness for online shopping, has fostered e-commerce growth in the post-pandemic era. Many luxury brands have also embraced online sales; for example, the LV Group launched live-streaming rooms for one-on-one interaction with consumers, offering exclusive remote sales without requiring physical store visits, thereby providing a rich virtual shopping experience.
• Growth of O2O Services: Community group buying and Online-to-Offline (O2O) grocery retailers leveraged rising consumer demand during the pandemic to expand their business territories. Companies like Hema and Meituan adopted omni-channel business models to efficiently connect businesses with consumers, breaking down barriers between online and offline shopping, offering competitive prices and more convenient services. These platforms continue to expand, contributing to the sustainable growth of e-commerce (Fu, 2024).

2. Digital Payments

• Regulatory Policies: Chinese authorities, including the People’s Bank of China, have implemented regulatory policies under the concept of “payments for the people,” maintaining strict supervision while promoting innovation. Measures include improving card acceptance, facilitating cashless and mobile payments, issuing regulations for non-bank payment institutions, and developing the digital yuan with clearly defined operational, technical, and regulatory frameworks to ensure safe and efficient transactions.
• Cross-Border Payment Development: Cross-border e-commerce has become an increasingly important part of the digital economy, enabling online transactions and contactless product delivery. China has supported this sector through preferential policies such as reduced import tariffs and tax incentives, as well as establishing pilot zones for digital trade. These measures have strengthened cross-border digital payments and promoted international trade growth.

3. Impact of the Digital Economy on China’s Economy

• Impact on Industrial Structure: The digital economy has accelerated the digital transformation of Chinese industries, particularly in the primary and secondary sectors. Integrating digital technologies into traditional industries enhances efficiency, reduces costs and labor and resource consumption, while promoting productivity and environmental sustainability. The incorporation of fintech into traditional financial services has also improved data analysis and service accuracy (Fu, 2024).
• Emerging Industries: Emerging industries, such as artificial intelligence, big data, new energy, and digital creative sectors, rely heavily on technological innovation and digital assets. The digital economy provides ample opportunities for innovation and the creation of new business models, such as using AI to analyze medical images or attracting talent to global innovation hubs like Silicon Valley.
• Impact on Employment: The digital economy is a double-edged sword: it creates new employment opportunities while replacing repetitive traditional jobs. For instance, the rise of digital finance and data analytics has generated positions in fintech and data science, whereas automation has reduced demand for factory and traditional customer service roles. Unemployed individuals need retraining to transition into emerging sectors and adapt to the evolving digital economy.
• Impact on Consumption: The digital economy has introduced new, more convenient consumption patterns, offering personalized shopping experiences. Online shopping reduces transportation and related costs and encourages post-pandemic consumption through digital payments and digital currencies, which simplify transactions and lower costs, further promoting consumer spending (Fu, 2024).                                                                                                 

Internal Dilemmas and External Challenges of China’s Digital Economy

1. Internal Dilemmas China’s digital economy heavily relies on its vast consumer market, which may limit sustainable growth and lead to issues such as over-dependence on the service sector. China also faces institutional challenges, including restrictions on the growth of domestic companies, weak incentives for technological innovation, and a governance system that has not kept pace with the rapid development of the digital economy, including issues like monopolies and data protection.
2. Market Challenges and Digital Transformation of Enterprises Chinese companies face difficulties in integrating digital business models with traditional industries. There is a digital divide between large and small enterprises, as well as across sectors and regions, creating disparities in digital transformation. Additionally, digitization impacts the labor market, as repetitive and low-skilled jobs are replaced by technology, increasing technological unemployment and inequality.
3. External Challenges China’s digital economy faces strong competition from the United States, which seeks to limit China’s progress and establish an “anti-China” ecosystem. To address these pressures, China must enhance independent innovation, expand international markets, and deepen global cooperation while maintaining a stable economic structure (Rihui et al., 2024).

The Linking of the Theoretical Framework to the Chinese Digital Economy: A Comparative Analysis

The researcher presents a comparative analysis based on insights from the theoretical and analytical frameworks. The relationship between the digital economy and economic growth is interpreted through several theoretical approaches. Endogenous growth theory emphasizes the role of technological innovation in increasing productivity and supporting long-term growth. In China, this is evident in the shift from imitating foreign digital models to developing independent solutions, such as the platforms Taobao and Alipay, which reflect domestic innovation capacity and contribute to sustainable productivity growth. Similarly, Schumpeterian theory views digital entrepreneurship as a process of “creative destruction,” where new digital businesses replace inefficient traditional systems, enhancing economic efficiency. In China, this is manifested in the rapid expansion of e-commerce, digital payments, and digital financial services, alongside the restructuring of traditional sectors such as retail and financial services.

Economic network theory suggests that digital connectivity accelerates the flow of information, improves market efficiency, and fosters competition, making digital transformation a multiplier for economic growth. In China’s data-driven economy, platforms like Alibaba and Meituan, as well as AI-based services, enhance resource allocation, reduce transaction costs, and expand market access domestically and internationally. The integration of technologies such as artificial intelligence, big data, cloud computing, and industrial Internet enables both industrial digitization and the digital industry to create a connected ecosystem linking consumers, businesses, and government services, supporting rapid industrial upgrading and innovation.

Empirical evidence supports these theoretical insights, showing that investments in digital infrastructure and platforms are directly correlated with higher productivity and improved trade competitiveness in China. By 2022, China’s digital economy exceeded CNY 50 trillion, accounting for 41.5% of GDP, highlighting the combined roles of consumer demand and industrial integration in driving economic expansion. Digital technologies have also reshaped the labor market by creating new opportunities in ICT, logistics, digital marketing, and digital financial services, while automation has reduced low-skilled traditional jobs, reflecting the dual impact anticipated by theory.

The researcher concludes that the Chinese experience demonstrates that the effectiveness of the digital economy in promoting growth depends on complementary factors highlighted by theory, such as human capital, institutional quality, and public policy support. Regulatory policies, including the promotion of digital payments, the digital yuan, and cross-border e-commerce, exemplify the institutional mechanisms required to maximize the benefits of digitalization while mitigating risks related to monopolies, data governance, and technological unemployment.

The Impact of U.S. Policies on the Chinese Digital Economy

The impact of U.S. policies on the Chinese economy is evident through the lens of American media coverage, which focuses on the rise of China’s digital technology in terms of globalization, national sovereignty, and technological power. Media outlets such as The Wall Street Journal portray China’s technological advancement as a threat to U.S. economic dominance, while The New York Times highlights concerns over digital sovereignty and privacy. This coverage illustrates how technology is employed as a tool of political and economic influence within the discourse of globalization. Meanwhile, non-Western scholars offer alternative perspectives that emphasize opportunities for cooperation and technological innovation. Critical analysis of these narratives demonstrates that American media reflects a mix of security concerns and economic competition, shaping the understanding of China’s digital economy rise and its impact on the global technological system (Xie & Jiang, 2025).

Digital trade, as an emerging form of global commerce, requires a coordinated regulatory framework to ensure sustainable development, yet regulations often lag technological advances. The United States has played a pivotal role in shaping global digital trade governance through its leadership in regional trade agreements, promoting the “American model” that emphasizes free cross-border data flows, strict limits on data localization, protection of source codes and algorithms, and strong privacy standards. This model supports the global expansion of U.S. digital firms while embedding American regulatory preferences in multilateral and regional agreements. In contrast, China has developed a sovereignty-driven digital regulatory model, prioritizing local supervision of critical information infrastructure, multi-tiered data protection, and secure data transfer enforcement under laws such as the Data Security Law, Personal Information Protection Law, and Cybersecurity Law. This institutional divergence is evident in China’s digital services trade with CPTPP countries, highlighting tensions over data flows and market access. Analyzing the impact of U.S.-influenced digital trade rules on China is essential to understand institutional frictions, assess trade effects, and guide China in navigating future negotiations, ultimately supporting a balanced governance framework that integrates growth, security, and openness (Ma & Kang, 2025).

U.S. policy toward China, for example in the semiconductor sector, has shifted from the comprehensive trade pressure of the Trump administration to the Biden administration’s approach, which focuses on technology and the digital economy through the strategies of “small yards, high fences” and “multilateral alliances.” This policy targets key sectors related to national security, while strengthening U.S. control over advanced chip production, supporting research and development, and establishing international alliances to ensure dominance in digital technology. These measures are part of a broader effort to enhance the U.S. digital economy, as semiconductors are a fundamental pillar of digital transformation and smart industries, including artificial intelligence, quantum computing, the Internet of Things, and industrial and consumer applications. At the same time, U.S. restrictions on Chinese companies provide opportunities to develop local supply chains and increase investment in digital manufacturing, but they also pose challenges to global market stability and raise the cost of electronic devices, highlighting the importance of international cooperation to ensure sustainable growth in the global digital economy (Wang, 2024).

Conclusion and Key Findings

The analytical framework shows that China’s digital economy has become one of the fundamental pillars of economic growth and structural transformation. It has evolved from an initial stage of reliance on imitation and imported business models to a more advanced stage based on independent innovation and deep integration between technology and industry. This evolution has expanded the scope of the digital economy to include both industrial digitization and the digital industry, positively affecting productivity, the efficiency of resource allocation, and the modernization of traditional sectors.

The analysis also demonstrates that the strength of China’s digital economy does not stem solely from its large scale or broad consumer base, but from its ability to treat data as a key productive resource and to apply advanced technologies—such as artificial intelligence, cloud computing, and the industrial Internet—to reshape production and consumption models. E-commerce and digital payments have played a central role in stimulating domestic demand, enhancing consumer confidence, and supporting economic recovery in the post-pandemic period.

At the same time, the analytical framework highlights significant internal and external challenges. Internally, the digital economy continues to face structural imbalances, particularly regional and sectoral disparities, the digital divide between large and small enterprises, and challenges related to governance, regulation, and data protection. Externally, China faces increasing international competition and geopolitical pressures aimed at constraining its technological expansion, which necessitates accelerating independent innovation and strengthening international cooperation.

Accordingly, it can be concluded that China’s digital economy represents a key driver of long-term economic growth; however, it remains a dynamic process that requires a careful balance between innovation and regulation, as well as between rapid expansion and quality and sustainability. China’s future ability to maximize the gains from its digital economy depends on its success in addressing these challenges, deepening comprehensive digital transformation, and achieving more balanced and equitable development across sectors and regions.

Recommendations

1. Transform data into a reliable productive resource to support industrial innovation while safeguarding privacy and digital sovereignty.
2. Support the development of strategic technologies, such as advanced semiconductors, AI, and quantum computing, through targeted research funds and innovation centers.
3. Enable small and medium-sized enterprises to access modern technologies, enhancing productivity and reducing the digital divide with large corporations.
4. Build a sustainable, specialized workforce for the digital economy through higher education, professional certifications, and reskilling programs.
5. Establish a balance between innovation and security/rights protection using regulatory sandboxes and risk-based, adaptive legislation.
6. Lead in setting international technology standards and build strategic tech partnerships to enhance digital influence and safeguard national interests in the global digital economy.

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