In July, Shanghai released a blueprint to boost the development of its digital economy during the 14th Five-Year Plan period (2021-2025), setting ambitious goals and also putting forward a series of supporting policies to promote enterprises’ digital transformation.

The digital economy has seen unprecedented progress around the world in recent years, especially when it comes to the impact of the COVID-19 pandemic. Such progress is promoting profound changes in industrial production, people’s way of life, and governance.

In Shanghai, targeted policies have been adopted to boost the development of artificial intelligence, 5G technology, and industrial internet throughout the city over the past few years. Thereby, a large number of high-tech enterprises have emerged and reached new achievements. More investments have also been injected into new infrastructure projects across the city, ensuring a boon for the city’s digital economy development.

In 2021, the share of digital economy in Shanghai’s GDP surpassed 50%, making it a prominent driving force for the city’s economic growth. This has enabled the city to establish its one-stop e-governance platform to offer online public services in a more efficient manner, facilitating the development of companies and its citizens.

The rapid progress of Shanghai’s digital economy benefits not only local enterprises but also international companies, providing them with more opportunities and access to China’s economic hubs, as well as a chance to tap into the world’s second-largest economy.

For example, German behemoth Siemens set up the first digital enabling center for intelligent infrastructure in Shanghai in June to expand cooperation on intelligent infrastructure, while Swiss conglomerate ABB Group reached a new agreement with China Telecom and Huawei in July to integrate its cutting-edge three-party communication and automatic distribution network technologies and promote 5G smart power distribution solutions.

Furthermore, a new generation of information and communication technologies is expected to see remarkable progress as cooperation between Chinese and international companies grows. This will ensure an accelerated integration among various industries and thereby boost the digital transformation of enterprises and industries as a whole.

Since the 18th CPC National Congress, China has attached great importance to the development of the digital economy. According to a report on the global digital economy released last month, the share of the digital economy in China’s GDP has increased from 20.9% to 39.8% between 2012 and 2021, making it a key driving force spurring China’s economic growth. Moreover, the added value of China’s digital economy hit $7.1 trillion last year, accounting for over 18% of the amount of 47 major countries across the world.

Now second year in its 14th Five-Year Plan period, China’s development of the digital economy is expected to be a new boon, aiming to ensure that the added value of core industries accounts for 10% of GDP by 2025, which will ultimately add new impetus to the country’s high-quality development.

Against this backdrop, Shanghai has made the digital transformation of industries a long-term priority in order to build the city into a “digital hub” by 2035. More efforts are expected to be made to boost innovation in terms of planning, policies, and core technologies so as to foster a favorable environment for the development of the digital economy. In turn, this will help unleash the growth potential of digital transformation and technological innovations and contribute to Shanghai’s economic growth as well as the country at large.

He Shuquan is a professor at the School of Economics, Shanghai University. He is also a member of the Fudan University-Jinguang Group Think Tank.