The future of high-quality economic development hinges on accelerating the digital economy, fostering its deep integration with the real economy, and building internationally competitive digital industry clusters. This path is not just beneficial—it is essential.
The New Development Trend
The digital economy is an economic form that uses big data to guide the rapid optimization and regeneration of resource allocation. It is an undeniable fact that digital technologies and industries have profoundly embedded themselves into social production and daily life.
For instance, personal information—identity, background, life events—and daily behaviors like learning, socializing, and entertainment are increasingly encoded into binary data, stored, and utilized. Online shopping, food delivery, hotel bookings, and digital payments via platforms like WeChat and Alipay have become routine.
Activities popular among Generations X, Y, and Z, such as online gaming, robotic housekeeping, virtual meetings, travel, and education, as well as simulations of disasters or irreversible events, all rely on digital technology and its fusion with the physical economy.
Science and technology act as the "adhesive" in this integration. Since the 18th century, a technological revolution has occurred approximately every century. The first two industrial revolutions were driven by relatively single engines: the steam engine and the generator. The third, beginning in the mid-20th century, was marked by atomic energy, electronic computers, space technology, and bioengineering.
Today, the old industrial revolution continues while a new one is on the verge of emerging. The world stands at a historical turning point. No single technology appears poised to solely lead the next wave. Instead, clusters of technologies and industrial convergence are shaping a new trend.
The development of the digital economy and its integration with the real economy will likely drive the next wave of technological and industrial revolution, profoundly impacting the global economic and geopolitical landscape.
A Variable in National Strength
The digital economy has become a new engine for economic and social development worldwide. Any economic activity that directly or indirectly uses data to guide resources and enhance productivity falls under this umbrella.
Globally, the digital economy of 47 countries reached an estimated $38.1 trillion in 2021, a nominal increase of 15.6% year-on-year, accounting for 45.0% of their collective GDP. Although the scale of the digital economy in developing nations is smaller than in developed ones, their growth rate is higher.
Regardless of size or speed, the consensus remains that the digital economy must serve the real economy. It is through this service that human needs are met and comprehensive development is promoted. This "substance-function" relationship is determined by the essential nature of humanity. Without it, we risk undermining our carbon-based biological foundation for a silicon-based digital existence—a "post-human society."
Digital industrialization and industrial digitization are key methods for integration. Here, "digital" does not merely mean numbers but data—specifically, digital data. Our world is inundated with vast and complex data. In 2021, China's data output reached 6.6 zettabytes, a year-on-year increase of 29.4%. How to store, manage, and efficiently apply this data to production and life is becoming a critical variable in national competitiveness.
Another manifestation of this integration is the financialization of technology and the technologization of finance. The latter refers to the integration of digital technology with traditional finance (mainly banking), transforming and upgrading its operational structure through computing, networks, big data, AI, biometrics, and mobile payments. The former involves internet and tech companies entering the financial sector, with cryptocurrencies like Bitcoin, Litecoin, Ripple, and Ethereum reflecting this trend.
Focusing on Algorithms and Computing Power
Humanity generates data incessantly. Some is immediately useful; other data seems useless but holds potential value—much like how physical waste can be recycled and turned into resources.
The digital economy encompasses not only digital industrialization—the commercial development of emerging technologies like big data, cloud computing, IoT, blockchain, AI, and 5G—but also the digitization of primary, secondary, and tertiary industries.
Traditional algorithms and computing power can no longer meet the high-quality development demands of modern agriculture, industry, and service sectors. This calls for a revolution in both algorithms and computational capacity. The competition in the digital economy will ultimately be a competition in algorithmic and computing prowess.
Computing power is the combination of specific algorithms, computational techniques, and tools. Supercomputing systems represent the current pinnacle of this power. The computing revolution is, in essence, a supercomputing revolution. We are rapidly entering the exascale era, capable of performing quintillions of operations per second.
Shanghai, for example, steadfastly regards manufacturing as the foundation of its real economy. It promotes the integration of manufacturing and services, the synergistic development of industrial digitization and digital industrialization, and the interconnection of industrial and consumer internet. Its goal is to build a globally influential international digital metropolis, explicitly expanding the space for digital economic growth and continuously strengthening and growing Shanghai's digital economy to support the construction of a digital China.
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Frequently Asked Questions
What is the digital economy?
The digital economy refers to economic activities that use digital data and technologies to optimize resource allocation, enhance productivity, and drive innovation. It includes everything from e-commerce and digital payments to advanced AI and IoT applications.
Why is integrating the digital and real economies important?
Integration ensures that digital advancements serve tangible economic and human needs, promoting sustainable development. It enhances efficiency, fosters innovation, and helps maintain a balance between technological progress and real-world applications.
How do algorithms and computing power affect the digital economy?
Algorithms and computing power are the backbone of data processing and application. They determine how efficiently data can be used to solve problems, create value, and drive growth across various industries, from agriculture to finance.
What role does policy play in promoting digital-real integration?
Policy provides the framework and incentives for businesses and industries to adopt digital technologies, invest in research, and collaborate across sectors. Governments can accelerate integration through supportive regulations, infrastructure development, and international cooperation.
What are the risks of poor integration?
Without effective integration, there is a risk of creating a digital divide, economic imbalance, and over-reliance on virtual activities that may not address real human needs. It could also lead to wasted resources and missed opportunities for holistic development.
How can businesses prepare for digital transformation?
Businesses should invest in modern technologies, prioritize data literacy, foster a culture of innovation, and seek partnerships that enhance their digital capabilities. 👉 Learn more about implementing digital solutions to stay competitive in a rapidly evolving landscape.