With more than 1.4 billion people forced to lockdown and a total of 85,500 cases, China has undoubtedly represented the main protagonist during the initial phase of the Covid pandemic. In light of the containment measures adopted by Xi Jinping, the Chinese economy saw its GDP contracting by 6.8% in the first quarter of 2020, slowing down the rise of the People’s Republic in one of the heaviest crisis faced by the nation in the last decades. Despite the abrupt deceleration, the country managed to quickly recover in the second quarter of 2020, becoming the only G20 member to emerge from the recession with a 3.2% increase in GDP. Together with a general loosening of the containment measures, the immediate, advanced and strategic use of technology and, in particular, of mobile apps certainly represented one of the key drivers of the recovery. While Italy still debates about the validity and propagation strategies of the Immuni app, in China mobile apps such as Shuishenma and Jingxin Xiangzhu, owned by the tech-giants Tencent and Alibaba, allowed more than 1.1 billion people to monitor the health-status of their contacts through simple QR codes. While Italy still debates about restaurants’ and small businesses’ relaunch plans, in China applications like DingTalk and Taobao allowed local businesses to increase their profits by up to 120% during the months of the lockdown. While Italy still debates about wheeled desks and vacant professorships, in China applications such as XuetangX have been further enhanced by the country's major universities and tech-companies to provide adequate digital learning and education since the very beginning of the pandemic. "We are waves of the same sea, leaves of the same tree, flowers of the same garden", that is the quote featured on the shipments containing thousands of FFP3 masks sent by the Chinese company Xiaomi in support of the Italian Civil Protection Department in March. Yet, are our sea, tree and garden really the same? Or do our sea, tree and garden perhaps lack of those technological components crucial for a rapid recovery and growth in the new post-pandemic reality?
Towards a Cashless Society
There is no doubt on how the already advanced mobile apps and digital ecosystem in China did contribute to set the country on a right path towards a swift recovery in the aftermath of the pandemic. Yet, it is fair to mention how this benefit was not only unilateral, but indeed mutual: if on the one hand mobile apps have proved their usefulness during coronavirus, the latter paradoxically created an unprecedently profitable scenario for the former as well. During the months of the lockdown, the mobile apps’ usage has in fact risen by more than 30% across the country, reaching 5 hours a day spent on average on the screen. Statistics from the Chinese Ministry of Industry and Information Technology counted a total of around 1.57 billion mobile phone accounts in the country, corresponding to an average of 112 accounts every 100 citizens. These numbers further materialize into a nearly 50% of worldwide application downloads held by China, who also accounted for almost 40% of the $120 billion spent on apps in last year. Nevertheless, such post-pandemic new and increasingly digitalized normal must be intended and read within a broader picture: the recent increase in mobile apps and electronic devices usage did not only represent a safe space during the coronavirus, it did not only stimulate a swift economic recovery, but it most certainly accelerated China’s digital international presence and influence under the Digital Silk Road (DSR) initiative.
The DSR represents the third main declension of the Belt and Road Initiative, not only characterized by an overland and a maritime route, but now more than ever marked by its digital one. As a matter of fact, in a time where physical transports of whatever sort have been abruptly hit, China has been able to promptly redirect its expanding strategies in the realm of technologies and digital ecosystems through the emphasis on tools such as 5G, Artificial Intelligence (AI) and the Internet of Things (IoT). This expansion has been formalized through policies such as the Internet Plus policy 2015 and the China Standards 2035 plan started in 2018 and developed within the broader industrial policy-package Made in China 2025. The ultimate aim of such programs is not only a national push on innovation and technology, but also and most importantly an international primacy over digital networks and tools. In order to do so, the DSR relies on five main pillars: first, physical infrastructure, including telecommunication, AI and 5G networks, submarine cables, satellite systems and cloud computing groundworks. These elements are then combined within the broader framework of smart cities, leveraging on the power of innovation and digital technologies to promote a sustainable and smart urbanization. Secondly, the DSR unfolds onto policy packages increasingly related to digital governance, cybersecurity and data-sharing. On a more individual and tailored level, the third dimension of DSR touches upon personal, day-to-day emotions and necessities of citizens, such as online education platforms, social medias, video games and entertainment industry. However, the fourth and fifth key aspects of China DSR can be surely considered as two amongst the main drivers of economic development in the country nowadays: e-commerce trade and digital finance.
Key aspects of China’s DSR
Source: Fudan University Digital Belt and Road Centre, DSR Bluebook 2018, p.10, translated
China represents in fact the world leader’s in e-commerce and mobile payment market, with an annual transaction value of mobile payments extraordinarily booming from RMB 9.64 trillion in 2013 to RMB 347.11 in 2019, corresponding to respectively 1.67 and 101.43 billions of mobile payment transactions in the country. Such unprecedented rise is expected to further increase by the end of 2020 to RMB 777.5 trillion, due to the new necessities and imperatives dictated by the pandemic. As a matter of fact, during coronavirus, the main authorities in the country further encouraged mobile payments through QR codes, mobile wallets, barcodes and facial recognition, to avoid risky physical contacts during such precarious times. These methods did not only allow for safer practices during the pandemic, but represent, in general, faster and cheaper purchasing channels, reducing transaction costs and removing the need for intermediaries. Once again, mobile apps have been crucial in promoting this trend: nowadays, in fact, almost 96% of all e-commerce in the country is transacted through two of the most used apps in China, namely WeChat and Alipay, belonging to the tech-giants Tencent and Alibaba. These two pillars of China’s online economy did not seem to feel the burden of the pandemic, with a number of mobile monthly active users across their online shopping properties increasing from 785 millions in Q4 of 2019, to 846 millions in Q1 of 2020 and 874 millions in Q2 of 2020 for Alipay and of 6.5% YoY in Q2 2020 for WeChat’s.
Within what is progressively becoming a “cashless” society, the dominant role played by online mobile payments has clearly showed the potential for a new national digital currency, whose research and design have been promoted in the last years. Since 2014, in fact, the People’s Bank of China’s Digital Currency Research Institute has initiated pilot tests of its digital currency across four cities in the country, namely Shenzhen, Suzhou, Chengdu and Xiangcheng, starting to pay half of the salaries of public officials in Xiangcheng through virtual coins. In October 2020, the Chinese government has entered the second phase of trials by spreading and offering RMB 10 “digital” millions across 50,000 citizens of Shenzhen through WeChat’s popular “virtual gifts” called “red envelopes”. Once again, this revolution has been and will be catalyzed through the major mobile apps in the country, such as WeChat and Alipay. And it is not an exaggeration to talk about a revolution, because it precisely confers the magnitude of the change of paradigm desired and expected by the country. As a matter of fact, this new digital currency aims at completely redefining the Chinese banking and financial industry, allowing China to become the first nation worldwide to possess a fully functioning digital coinage. Hence, this revolution does not want to limit itself to national borders. In fact, it also holds as objective an internationalization of the digital yuan as crucial asset of the DSR, challenging the supremacy of currencies such as the dollar, which are starting to tremble under what started as a technological issue but might indeed represent more of a political one.
The Long “Green” March
The Chinese government and major tech-companies have showed no hesitation in leveraging and recognizing the potential of mobile apps for economic development. However, what seemed to emerge as a priority in the last years is how this economic development, to be efficient, must be also green. Environmental concerns are in fact increasingly guiding the actions and strategies of companies and decision-makers in the country, in a transition towards more sustainable practices and living conditions. While on the other side of the globe president Trump has shamelessly withdrew from the Paris Agreement, president Xi has already pledged more than USD 125.6 billion in renewable energies within the Belt and Road Initiative, constantly highlighting the new, green identity of the country. Within a Green Long March paved with smart cities, sustainable infrastructures and clean energy investments, mobile apps are once again proving their noteworthy contribute as well. Allocating as of last year 0.3% of its annual revenues to environmental funds, the Alibaba group has designed mobile apps and games to promote sustainability while tackling issues such as waste management, desertification and water quality. For instance, through the game Ant Forest, the Chinese tech-giant has allowed users to record their low-carbon footprint data while planting trees to setback desertification. In just four years, the game has funded the planting of more than 120 million trees for more than 100,000 hectares, saving over 2,8 million tons of CO2 and becoming, for its significant contribution, a “UN Champion of the Earth”, UN’s most prestigious environmental honor.
Such initiative and mobile apps did not only promote ecological protection, but deeply influenced more than 1 billion people to adopt eco-friendly lifestyles. Through widely used mobile apps such as Dinaping and Mobike, the Chinese leading e-commerce platform Meituan elaborated easy and accessible mobility schemes, stimulating people’s green movement through electric bicycles and cars. The company has also developed environmentally conscious recycling processes reusing bicycles’ components in a sustainable chain. Such spirit has influenced the priorities of companies such as Tencent and Baidu as well, both partnering with UN agencies to promote a digital-driven ecological transition and conservation. As a matter of fact, whereas the former has signed in 2018 a strategic partnership with WWF for the use of mobile apps and digital technologies in the conservation of the Greater Bay Area, the latter is working close-hand with UDNP to reduce electronic waste and raise awareness among people on recycling best practices through the app Baidu Recycle. The efforts of Alibaba, Baidu and Tencent towards environmental protection are also touching upon the realm of sustainable transports, being them the most prominent investors in electric vehicle companies such as Chinese EV and Tesla.
The contested domain of Chinese mobile apps: a Digital Leviathan?
According to the most recent estimates of the International Monetary Fund, the real GDP of China is expected to grow by 1.9% at the end of 2020, further expanding to 8.2% in 2021. As previously highlighted, one of the major component allowing such rise has been for sure represented by the strong Chinese leverage on mobile apps and, in general, technology. Chinese digital ecosystem has brought up tools and solutions which are generally cheaper, easier to deliver and to monetize, especially during current times of uncertainty. The coronavirus has in fact underlined the potential of such solutions and tools, and the overall crucial importance of digital connectivity. Yet, the ascent of Chinese mobile apps has not come up without controversy. On a digital battlefield made of mobile app bans, 5G networks cuts and commercial threats, international major powers - led by the United States on the forefront - are questioning with words and actions what they interpret as the Chinese digital Leviathan. Under privacy concerns, countries such as the United States are stressing on the dangerous implications of Chinese mobile apps and digital networks, judged as threats to cybersecurity and personal data-privacy. President Trump in fact insists in depicting such tools as instruments for personal data appropriation and further surveillance by the Chinese government, apparently forgetting what seem to be, for the US presidency, minor technological scandals, citing Cambridge-Analytica amongst all. Hence, in a reality where geopolitical power and technological development are increasingly intertwined, it is our responsibility to rebalance the tradeoff between privacy and progress and to ponder whether those who act under claims of privacy and data protection do not already know where we live, what we ate for lunch or where we would like to go on vacation next summer. Finally, while on the one hand these concerns might appear as legitimate, on the other, China’s digital ecosystem has widely demonstrated its effectiveness in economic, social and environmental terms, and will continue to do so in the years to come, despite international offensive strategies and threats which, however, might not often offer real and concrete alternatives.