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China's economy is the first to enter the digital era

30.11.2020
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According to E.K. Hontz

China's economy is transforming towards cutting-edge digital trends. After consolidating power, Xi Jinping created a new domestic economy in China, autonomous from most of the rest of the world. Today, it most resembles an app store or online sales platform: The Chinese Communist Party (CCP) serves as the gatekeeper and aggregator for China's domestic market.
Western firms know that in order to enter the Chinese market, they must create joint ventures or share intellectual property with Chinese enterprises, which are often state-owned. This PDA requirement is similar to how many online platforms (Apple, Google, Amazon) allow sellers to visit their websites, but then collect data for use and resale.
At one time, this practice was only used by private firms producing goods with a lower value. But in recent years it seems to have become more focused and strategic, organized by state and state-affiliated companies under the leadership of the CCP.
If the firm plays by C's rules, then disobedience will be unacceptable; otherwise, the terms of the agreements can be quickly canceled. Any criticism of the CCP is definitely unacceptable.
The state can intervene and deprive the entrepreneur of the right to do business and even bring to criminal responsibility. Applying the app store analogy, parallels can be seen in the recent dispute between Fortnite creator Epic Games and Apple. Criticism of the regulatory body is unacceptable, regardless of the damage caused to the regulatory body or the businesses and employees involved. The platform is owned by the PDA, and it will show any business who is the boss here.
However, for its clients, the ruling party has not only a stick, but also a carrot: it offers a range of its own products and services. Like any online business that owns a platform, Beijing guides customers towards the preferred choice. State-owned CPC firms, especially banks, prefer government-subsidized promoted apps. Chinese businesses and consumers do have a choice between competitors and government-selected companies, especially at the local level, where competition can be fierce. However, even private firms have close ties to the CCP, blurring the line between public and private spheres.
While Deng Xiaoping's economic and political reforms have enabled China to achieve unprecedented growth, China under Xi is building walls and creating a controlled market focused on the CCP's internal decisions. State control over the economy in China is like a paid digital platform that determines the rules of the game. The music has changed and this is a completely new dance.

 

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