Chinese Pin High Hopes on Booming IT Industry

"Digital China" has been a hot top for participants of the sessions of the National People's Congress and the Chinese People's Political Consultative Conference (CPPCC) National Committee. It is partly triggered by Premier Zhu Rongji delivering a report on the outline of the new five-year plan (2001-2005) on March 5.

In their discussions, lawmakers and political consultants, of whom many are scholars and experts, pinned high hopes on the development of the country's fledgling IT industry, insisting that "Digital China" will pave the way to China's future prosperity.

In his report, the premier impressed the audience by announcing that in the next five years, China will speed up the development of infrastructure for IT industry and popularize the use of information technology in different sectors, so as to bring about an integration of industrialization and the IT industry in the country.

"It is the first time that the government has listed an industry as a separate item in a five-year plan," said Hu Qiheng, a CPPCC National Committee member and an automatic-control technology expert. She believed that it is a very important sign indicating the government's determination to achieve fast economic growth by boosting the IT industry.

According to the new five-year plan, China will exert greater efforts to develop broadband information networks across the country and an IT products manufacturing industry, in a bid to accelerate the development of the national economy as a whole.

In the next five years, China will accelerate development in the fields of super large scale integrated circuits (SLIC), high- powered computers, large-scale system software and super-speed networking systems, at a growth rate of 20 percent. These sectors are expected to account for eight percent of China's GDP.

In the coming 10 years, domestic software companies and integrated-circuit products will enjoy an actual low tax rates of three percent and six percent. Namely, they will get refund, based on the favorable rates, immediately after they have paid the 17 percent value-added tax imposed on all businesses.

In the past ninth five-year plan period (1996-2000), China witnessed a rapid growth of its IT industry, four times that of the national economy. In 2000, the domestic IT market was worth about 1.4 trillion yuan, nine times larger than in the beginning of the 1990s.

According to a latest survey, the ratio of investment to returns reaches one to four or even one to 20, in cases involving the use of information technology to transform traditional industries. For a developing country, whether or not it can extensively apply IT has a direct bearing on whether or not it can become industrialized and modernized.

However, the level of IT application in China is quite low compared with the situation in developed nations. According to statistics, in 2000, Americans spent 561 billion US dollars purchasing information technology and equipment, while the Chinese paid only 19.9 billion US dollars for the same products. This indicates a striking "digital gap" between the two countries.

China must try to achieve an information-based industrialization and enhance productivity and international competitiveness, by developing infrastructure for IT industry, developing e-commerce, and adopting intelligent industrial equipment, said Zhang Fuliang, a CPPCC National Committee member.

The expert explained that an information-based society is composed of an IT products manufacturing industry, information technology-powered industries, and an extensive application of IT in economic and social life as a whole.

An information-based society is not confined to the building of infrastructure for information technology or simply developing the IT industry, the expert said, noting that the kernel for an information-based society is to change the ways of economic operation, social operation, government operation, and even the life of ordinary people.

In the past few years, Shanghai, the largest financial and industrial metropolis in China, Beijing, the national capital which boasts the country's largest IT industry, and Shenzhen, China's first special economic zone with focus on the hi-tech sector, have spared no efforts in developing an IT industry as the No.1 economic pillar.

Beijing plans to turn the Zhongguancun Hi-Tech Park into a world-class one, while in Shanghai, some billion-dollar worth IT projects are under construction.

Meanwhile, Fujian Province, southeast China, has also launched a "Digital Fujian" program, in hopes of bringing the province into the IT era.

While many experts and scholars are beating the drums for the " Digital China" concept, some of the lawmakers and advisors have asked people to cool down.

Among them is Duan Yongji, a CPPCC National Committee member and president the Beijing-based Stone Group, one of the leading companies in China's IT industry. "Network economy does not mean an economy developed under the concept of networks, but one which is developed by using networking technology, or in other words, by transforming traditional industries with information technology and networking technology," he noted.

Duan pointed out that the main obstacle for building up a " Digital China" comes from a fragmentation of the industry characterized by the existence of separate information technology centers established by different enterprises and government departments, which is contrary to the nature of networking technology. Instead of "each doing his job in his own way", networking technology is aimed at mutual connection and communication, broadness, and boundlessness, as well as a speedy exchange of information, he said.

The development of IT industry must be compatible with local conditions and facilitate industrialization, said Pan Yunhe, an NPC deputy and an academician with the Chinese Academy of Engineering.

Otherwise, he said, it may turn out to be nothing but "a bubble ", Pan said.






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