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Digital juggernaut will usher in new, improved globalization

By Lu Chuanying | China Daily | Updated: 2020-07-27 09:33
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A visitor experiences artificial intelligence equipment at an exhibition in Yangzhou, Jiangsu province, on April 28. [Photo by Meng Delong/For China Daily]

The international community is facing a strong wave of counter-globalization, especially after COVID-19 further aggravated this trend.

However, the development of the digital economy is bringing another possibility to this judgment, which is based on the traditional international trading system.

What we see is just the breakdown of the international trading system in the industrialization era. A new round of globalization driven by the development of the digital economy is coming soon.

Some industry experts have predicted at the beginning of the 21st century that the center-marginal economic pattern will inevitably be broken with the coming of the information society and that a new global political and economic pattern based on the information economy will dawn. We can see that this prophecy is being accelerated by the epidemic.

To start with, the digital economy has been developing rapidly during the epidemic. The digital economy has not only achieved tremendous achievements in helping fight against the epidemic and resuming economic development, but also performed well during the temporary shutdown of some global economic activities.

When the world's commodity, personnel and even capital flows are greatly affected by the epidemic, data flow has not been affected. In fact, it has even accelerated its steps. This is because of the fictitious nature of data itself and non-contact nature of the digital economy, which allows it to offset the negative impact of the epidemic and continue to provide services to users around the world.

Second, the international community has reached a consensus on the development of the digital economy. First of all, the United Nations released a digital cooperation roadmap in June 2020. The roadmap includes in-depth analysis of the current influence of COVID-19 on the world. It also called for joint efforts to optimize global technological governance, strengthen global digital cooperation, develop an inclusive digital economy, and launch some key guidelines on the action plans and mechanisms.

On the other hand, countries and regions like Japan and the European Union have beefed up their strategic investments in the digital economy. At the beginning of this year, the European Union released consecutively three digital economic strategy documents on shaping Europe's digital future, artificial intelligence, and data strategy, respectively.

It said in the documents that it will vigorously promote the development of the digital economy and invest more than 4 billion euros ($4.5 billion) to support the development of high-performance technology and quantum computing, as well as edge computing, AI, data and cloud technology infrastructure.

Noting that scientific and technological methods have played an outstanding role in combating COVID-19 recently, the EU once again put forward a 94.4 billion euros research and innovation funding program, which showed that it is boosting its technological investment and cooperation in the field of digital economy in various ways.

Also, developing economies such as those in Southeast Asia and Africa have also formulated relevant strategies to actively embrace the digital economy. The Association of Southeast Asian Nations, or ASEAN, will carry out key digital economic cooperation with China, mainly in deepening the application of digital technology in epidemic prevention, production resumption, digital infrastructure construction, smart city development and industrial innovation digital transformation.

The main aim is to find effective ways for ASEAN countries to get out of the outbreak and resume normal economic activities as soon as possible.

The African Union also developed a strategy for Africa's digital transformation to take place between 2020 and 2030. One of the goals is to create an innovative financing model to achieve Africa's digital transformation. It will make an additional investment of $20 billion from 2020 to 2025 and $50 billion from 2026 to 2030.

Digitalization showed good resilience when fighting counter-globalization during the epidemic. In recent years, trade wars, technology decoupling, and even data localization and other counter-globalization phenomena have continued, but the overall development of the digital economy has withstood the negative impact of these unfavorable factors.

Although news headlines abound that Chinese tech giants may face Western sanctions, that some countries have issued data localization requirements, that Chinese mobile apps are facing bans in overseas markets on grounds of national security, the more important points to note are that the number of digital economy companies has continued to increase, they expanded globally and their overseas profits continue to increase.

Government blockades may have some impact on the expansion of the digital economy for a while, but won't take effect for a long time, as seen from the response of the capital market. Whether it is Amazon, Microsoft, Tesla, Netflix, China's Tencent, Alibaba, and ByteDance, their valuations have been constantly hitting new highs, and their overseas market shares increased rapidly.

The willingness and motivation of businesses in various countries and regions to go overseas for improved prospects have been strengthened. Trends like digitalization, internet of things, and AI continued to develop. A larger and deeper technological and industrial revolution has arrived.

Although we see that many countries have adopted restrictive measures in order to support their own digital economy development at the national level, the global development of the digital economy has also further accelerated, which means that countries will have no choice but to open up, to attract leading technologies.

Each enterprise will consider building its own excellent digital economy firm on the basis of the global market. Participating in the global competition is not only a major development opportunity but also a challenge that enterprises must face.

The rules of digital economy are gradually being established and improved. This task is facing many problems, including cybersecurity, data localization, and technology decoupling.

They are essentially challenges caused by the country's cognitive capabilities, industry supervision capabilities, and corporate security capabilities. With the continuous improvement of international and domestic technologies, laws and policies, the global development of the digital economy will usher in a new wave.

We have seen that the United Nations, the World Trade Organization, and the governments of different countries have stepped up building their capacity in developing trade rules and cybersecurity to create a more friendly internal and external environment for the future development of the digital economy.

So, in light of all these developments, it is reasonable to conclude that although the epidemic situation and geopolitical issues have brought great challenges to the development of the digital economy globally, the development of policies, laws and technologies will overcome these challenges in the long run.

The digital economy will not only become an important weapon against counter-globalization but also lead the arrival of a new round of globalization.

The writer is a director of the Shanghai Institutes for International Studies' Research Center for Global Cyberspace Governance.

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