OPINIONS Investing in digital infrastructure good for industrial upgrading


Investing in digital infrastructure good for industrial upgrading

China Daily

11:00, March 09, 2020

A pedestrian walks past a sign promoting 5G services outside a mobile phone shop in Shanghai. [Photo by Chen Yuyu/For China Daily]

The novel coronavirus epidemic will boost the expansion of the 5G network in the country, as the central authorities recently called for accelerated construction of the 5G network.

This will help push the envelope for the development of artificial intelligence, the industrial internet and the internet of things.

It also represents a new direction for China's investment in infrastructure as it will no longer be focusing on concrete and steel, but on how to make the current system smarter.

This change of focus has been accelerated by the epidemic, but it is in line with the requirements of the country's consistent efforts to restructure its economy, upgrade its industry and modernize its governance system. It will create huge demand for lower-and upper-stream industries, and it will prompt the emergence of new industries and enhance the operating efficiency of the existing systems.

But these new types of infrastructural constructions do not have a long industrial chain like their traditional counterparts, and they do not create a large number of jobs. Their influence on the growth of gross domestic product will also not be as immediate as that of their traditional counterparts, which might lead to the reshuffle of vested interests.

Private investors and enterprises, other than the government, will be the leading investors in this new type of infrastructure, which means the investment efficiency will be higher and local government debts will not increase as before.

At present, the level of informatization of most industrial enterprises is relatively low, so the development of the industrial internet requires large-scale informatization and thus investment.

However, private investors and entrepreneurs will face great liquidity pressure as the returns, if any, will not come soon. Hence the government must mete out more thoughtful supportive financial and monetary policies to escort private investors in the new waters. After all, it is strategic investment focusing on supply-side reform and high-quality development, and laying the foundation for future industrial upgrading.

Large-scale technology investment will contribute to significant improvement in the overall efficiency of the economy.

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