Tax Data Highlights the Surging Momentum of China's Digital Economy：Revenue of Core Industries Increased by 34.2% in the First Half of the Year

On July 26th, Zhao Lianwei, Deputy Director of the Revenue Planning and Accounting Department of the State Administration of Taxation, introduced at a press conference of the State Administration of Taxation that tax data showed that in the first half of the year, the sales revenue of the core industries of China's digital economy had a year-on-year growth rate of 34.2% and a two-year average growth rate of 20.8%, which was 3.6% higher than the first quarter and 5.7% higher than the overall national level. It indicates China’s digital economy is gaining momentum and gradually becoming a new engine to boost overall economic development.

Credit: CFP.CN

1.Digital product manufacturing improves quality and efficiency. In the first half of the year, the sales revenue of the digital product manufacturing industry had a year-on-year growth of 26.3%, and a two-year average growth rate of 13.6%, which was 2.8% higher than the first quarter and 0.7% higher than the overall level of the manufacturing industry. Among them, the sales revenues of smart equipment, integrated circuit, and other electronic components and equipment were all on the rise, with an average growth of 39.9% and 16.8% respectively in the last two years.

2.The potential of digital products and services continues to be brought out. In the first half of the year, the sales revenue of digital products and services increased by 28.8% year-on-year, and the two-year average growth rate was 13.7% with an increase of 5.1% than the first quarter. Among them, the sales revenue of digital product retail and digital product maintenance increased by 16% and 16.2% respectively in the last two years. In particular, the sales revenue of electronic and digital publications retail, computer software retail, and communication equipment maintenance services grew rapidly, with a two-year average increase of 19.6%, 19.8%, and 19.1% respectively.

3.The application of digital technology has accelerated its expansion. In the first half of the year, the sales revenue of the digital technology application industry increased by 35.3% year-on-year, and the two-year average growth rate was 26.4%, which was 3% higher than the first quarter and 5.6% higher than the sales revenue from the core industries of the digital economy. Among them, the sales revenue of Internet-related services, software development, and information technology services increased by 46.5%, 27.1%, and 26.1% respectively in the last two years. In particular, the sales revenue of application software development and Internet of Things technology services grew rapidly, with an average growth rate of 64.6% and 60.7% respectively in the last two years.

4.Digital factors drive innovation and accelerate breakthroughs. In the first half of the year, the sales revenue of the industries driven by digital elements had a year-on-year growth of 56.2%, a two-year average growth rate of 34.9%, which was 5.6% higher than the first quarter, and ranked first among the four major industries. Among them, other industries driven by digital elements such as supply chain management, digital content, and media were also on the rise, with an average increase of 30.2% and 46.7% respectively in the last two years.

Themed “Global Services, Shared Prosperity”, the 2020 China International Fair for Trade in Services (CIFTIS) was held in Beijing from September 4 to 9, 2020. President Xi Jinping put forward three initiatives in his speech at the Global Trade in Services Summit of the 2020 CIFTIS, in which he pointed out that we should follow the digital, web-based and intelligent development trends, work together to bridge the “digital divide” and promote the digitalization of trade in services. President Xi said that China is willing to work with other countries to strengthen macro-policy coordination, accelerate international cooperation in the digital field, enhance the protection of intellectual property rights, actively contribute to the prosperous development of the digital economy and the sharing economy, and facilitate the continuous growth of a vibrant world economy.

The 2020 Summit Forum on Trends and Latest Developments of Digital Trade was also held during the 2020 CIFTIS. Xiao Yaqing, Secretary of the Leading Party Members’ Group and Minister of the Ministry of Industry and Information Technology, stated that currently, data has become an important factor of production and a new engine to improve the quality, efficiency and driving force of economic development. Data flow will drive the flow of technology, capital, and talents, optimize resource allocation, increase total factor productivity, thus exerting a profound impact on economic development, social progress, improvement of people’s livelihood and national governance.

Huai Jinpeng, Secretary of the Leading Party Members’ Group, Executive Vice Chairman and First Secretary of the Secretariat of the China Association for Science and Technology, said that digital trade is a symbol of the digital age, a sign of technological empowerment and a direction for future trade development. Global trust and cooperation are the cornerstone of digital trade. We need to build a digital governance system together, promote the coordination of digital trade rules at multilateral and regional levels, strengthen organizational and institutional innovation for privacy protection, data security, confirmation of data rights, digital taxation and data rule of law, so as to share the fruits of digital trade.

Ji Lin, Secretary of the Leading Party Members’ Group and Chairman of the Beijing Municipal Committee of the CPPCC, stated that as a national science and technology innovation center, Beijing has taken the development of digital economy and digital trade as the strategies to promote its high-quality development, promoted the formation of the new development paradigm with domestic circulation being the mainstay and the two circulations reinforcing each other, and actively cultivated the new strengths for participating in international cooperation and competition under the new situation. He also said that looking ahead, the city will accelerate the establishment of high-quality digital trade demonstration areas, and build digital trade pilot zones based on the National Digital Service Export Base of Zhongguancun Software Park, the Jinzhan International Cooperation Service Zone, and the China (Hebei) Pilot Free Trade Zone Daxing Airport Area. It will fully promote blockchain, artificial intelligence, big data and other technologies to empower all aspects of production and trading, cultivate a number of leading and unicorn enterprises in digital economy with global influence, and build a sustainable, stable, open and prosperous global digital trading system.