We have launched E-mail Alert service,subscribers can receive the latest catalogues free of charge


Harnessing the Power of Information Technology for Economic Transformation and Upgrading


By Li Wei

Research Report Vol.18 No.1, 2016

Information is the basic element in the production of goods and services as well as in people’s lives. Information exchange is not only indispensable but also significant in interpersonal communication and social development. Undoubtedly, in the new round of great transformation of the world political and economic pattern, whether an economy can seize opportunities brought by information technology determines whether it can get the initiative in the development and keep pace with the times.

I. Four trends in information technology development

First, information will be collected and processed in a digital and standardized way. Information has varied forms, such as images, sounds, movements, and words, but numbers are the most precise information carriers convenient for human use. According to Galileo, an Italian scientist during Renaissance, the “great book” of the universe is written in the language of mathematics. With numbers as the most important information carriers, modern information technology integrates sensor technology and computer technology, and rapidly turns more and more information into standardized data, which greatly improves the efficiency of information collecting, sorting, processing and transmission, and reduces the cost of information exchange among people, between people and goods, and among goods. As a result, policies will be designed more scientifically and implemented more precisely; production and corporate management will be more efficient.

Second, information processing and transmission will have higher speed at a lower cost. Since the first computer was created, geometric growth in computing power has been seen. The world’s first electronic computer, unveiled at University of Pennsylvania in 1946, could only perform 5,000 mathematical operations within a second, while the supercomputer Tianhe-2, built by China, has a peak performance of 54.9 petaflops. Besides, information travels faster. Take mobile wireless communication technology as an example. Global System for Mobile Communications (GSM), first deployed in the mid-1990s, allows data connections at up to 9,600 bits/s in theory; while the fourth generation of mobile telecommunications technology (4G), expanding since 2010, has a theoretical peak data rate of up to 100 Mbit/s, increased by 10,000 times compared with the former. The high speed of information processing and transmission has not only significantly accelerated information exchange and expanded its scale, but greatly reduced the cost. For example, in The Information: A History, a Theory, a Flood, the American writer James Gleick wrote, sending messages by telegraph was luxurious in the 19th century in Britain, because the message “May I ask you to do me a favor” cost 6 pence for a distance of 50 miles. And only the rich could afford it. Today, nonetheless, people can use the Internet to transmit huge amounts of words, images, voice messages, videos without costing much.

Third, a huge amount of data can be used to observe, measure and analyze social and economic operation. With the technology development, information collecting facilities, such as sensors, can be conveniently installed everywhere like in the power grids, vehicles, planes and household electrical appliances, so as to widely collect and connect real-time information, and provide abundant information for the society. According to International Data Corporation (IDC), the amount of information in 2013 totaled 4.4 ZB, the capability of 302.36 billion 16GB tablets. These data enable people to understand the law of social development more precisely, and analyze economic and social conditions more scientifically. Here is another example. In 2009 before the outbreak of influenza A in the United States, Google handled 450 million data models with the help of online search terms, and timely predicted the epidemic in specific areas and states, with the predictions 97% matching with the official data.

Fourth, information technology will be deeply integrated with all fields in the economic society. On the one hand, it is more involved in each link of social reproduction. With the progress of information technology, the production of commodities will be more digital and intelligent; and the circulation of goods more convenient and fast. “Unmanned workshops” showed up at home and abroad, such as the digital factory in Chengdu built by German Siemens in 2013, which are the results as information technology is applied in the field of manufacturing. On the other hand, information technology has penetrated into people’s daily life. Nowadays, it has become a common lifestyle to read on mobile phones, socialize on the Internet and shop online. “WeChat”, a social networking software in China, is widely used with much convenience and fun, the epitome of the information revolution in social development.

To give full play to the key role of information technology in China’s economic transformation and upgrading, we must thoroughly understand connotations of economic transformation and upgrading, and find out which fields information technology should be applied into and how.

The connotations of China’s economic transformation and upgrading are as follows. First, it is important to take effective measures at both macro and micro levels, in order to enhance the total factor productivity and create a pattern where less material and human resources can bring greater economic benefits. While maintaining medium and high economic growth, it is necessary to reduce pressure on resources and environment, and lay a solid material foundation for social justice. Second, it is essential to build a more coordinated economic structure, promote efficient equilibrium of supply and demand, and realize reasonable resource allocation among industries and regions. Third, efforts should be made in optimizing industrial structure, increase the added value of all types of goods and services, and strengthen China’s position in the division of labor in the global value chain. Fourth, it is of significance to improve corporate operation and management, and enhance the quality and efficiency of micro economic operation.

II. Four aspects in China’s economic transformation and upgrading

First, we can use information technology to optimize the management of the national economy and improve the efficiency of resource allocation. Based on classical theories of economics, price is set in the market through competition, signal of which guides the flow of resources and optimizes their allocation. The economy in reality, however, is a huge complex system. Especially with the rapid development of economic globalization and the flawed market rules and system, various market players behave in a complicated and changing way; price information is distorted; and resources are wrongly allocated. The development and widespread application of information technology will help improve the accuracy of macroeconomic management, overcome the defects of the market, and promote reasonable allocation of resources. For example, big data and cloud computing technology gather information about logistics, capital flow and movement of people, and rapidly analyze information about industries, enterprises and consumers as well as their future trend, which can help policy makers grasp the direction of macroeconomic regulation and control, help enterprises design production and business strategies, and give urban and rural residents suggestions on consumption. Moreover, the study of China’s employment situation using the data on the Internet and mobile phones, co-conducted by Development Research Center of the State Council and related institutions, has produced real substantial results, which is still being improved and expected to play a role. Therefore, we should utilize information technology, vigorously implement the strategy of the “Internet plus”, constantly optimize management of the national economy, and improve the efficiency of resource allocation. Several things should be done. First, it is crucial to study and formulate rules and regulations on big data management, with explicit stipulations of collecting and using data. Second, it is of importance to integrate data resources in the hand of the government and of state-owned enterprises, establish a platform where social data can be shared, and greatly increase economic and social benefits brought by data. Third, based on national conditions, efforts should be put in boosting the ability to analyze and use big data, timely and accurately predict the trend of economic and social development, improve the effectiveness and preciseness of macroeconomic regulation and control, as well as correctness of all kinds of policy-making. ...

If you need the full text, please leave a message on the website.