Modern China is already a digital giant, home to 632 million internet users, according to a recent government report. “The country has more smartphone users and households with internet access than any other,” notes the Economist.
And yet businesses have been “slow to embrace the internet”. A new study by the McKinsey Global Initiative finds that “Chinese business spend only 2% of their revenues on information technology, half the global average,” says the magazine.
The McKinsey report finds room for enormous growth. Its authors conclude:
Beyond creating economic momentum for China, the internet will enable growth based on productivity, innovation, and consumption. It will sharply intensify competition, allowing the most efficient enterprises to win out more quickly. The impending shift toward the internet across key sectors of the economy will pose some risks and disruptions, but it can ultimately support China’s goal of creating a more sustainable model for growth.
“As Chinese firms of all sizes get themselves plugged in, as they are belatedly doing, there should be a burst of productivity gains, providing a sustained boost to GDP growth,” says the Economist.
“The dwindling supply of cheap labour will be less of a worry for China, and its economy will be driven more by innovation and consumption.”
Graduates, meanwhile, are increasingly diving into the startup sector in an economy becoming “consumption- and innovation-led”, notes a report for the news agency Xinhua printed in the People’s Daily. “China’s youngest generation of entrepreneurs are tapping into the country’s enormous, and yet fast-growing internet market.”
See also: The “ghost cities” of China