2021Global Digital Economy Outlook: New Digital Machines in Crisis

Cheng Shi and Gao Xinhong: With the dominance of data security, the savage growth of the digital economy will come to an end, and high growth enterprises are gradually gathering in the digital economy. The Chinese stock market is expected to benefit from the excess returns brought by structural transformation.

2020In, risk events such as the COVID-19 occurred frequently, and the global economy suffered a heavy blow under the situation of weak supply and demand. The epidemic is a crisis, and enterprises and production models that cannot quickly transform against the current will be submerged in the tide of the times; The epidemic is also giving birth to new opportunities, and scene transformation has accelerated the change in the production and lifestyle of individuals and enterprises, promoting synchronous digital transformation of various departments in an unnatural way.

Standing on2021The starting point of the annual recession like recovery, the collective path leap of the digital economy will bear fruit, and the technological resonance in the industrial internet field will lead the acceleration of the digital economy, injecting sustainable growth momentum into the global economy. At the same time, with the increasing dominance of data security and the successive landing of central bank digital currencies, the savage growth of the digital economy will come to an end, and the relationship between regulation and innovation will become increasingly prominent.

From an investment perspective, high growth companies are gradually converging towards digital economy enterprises, and the Chinese stock market is expected to benefit from the excess returns brought by structural transformation. differ1995-2001During the Internet foam period in, high-quality digital economy enterprises show strong fundamentals and clear strategic positioning, laying a realistic foundation for their high valuation and high returns. However, in the pursuit of hot areas by capital, we still need to pay high attention to the potential risk of excessive speculation and be vigilant against the aggressive development of the digital economy, in order to avoid the waste of real economic resources.

chart1：2019Overview of the Development of Digital Economy in the Year

Source: China Academy of Information and Communication Technology, ICBC International

The transformation of the epidemic scene has accelerated the collective evolution of the digital economy.

2020The COVID-19 abruptly changed the recovery track of the global economy in, making a major change in the overall macro narrative tone. At the same time, in order to reduce physical contact, this epidemic has also become an exercise for people to fully enter the digital world from the physical world. Scenario transformation enhances the adaptability of customer needs and model innovation, giving rise to a new path leap in the digital economy, shifting from the competition for traffic dividends to the exploration of emerging needs, thereby having a long-term impact on enterprises and individuals.

Prior to the epidemic, with the full penetration of the consumer internet, the traffic dividend had become saturated. On the way to the digital economy advancing towards enterprises, embracing new models poses substantial financial constraints. Compared to individuals, companies have high stickiness to products and models, high trial and error costs, and difficult to quickly iterate requirements. Although digital transformation has helped businesses improve efficiency and reduce costs in the long run, it was not just a requirement for businesses before. In general scenarios, the reform of traditional enterprise architecture has a high implicit cost, and the reform cost is proportional to the maturity and stability of the enterprise. Therefore, large enterprises often need to weigh their costs and benefits multiple times.

Under the special scenario of epidemic control, companies under cash flow pressure are actively seeking change, shifting their work scenarios online to minimize the negative impact on revenue. In addition, after a one-time capital investment such as building a digital operation platform, the cost will be diluted into the subsequent life cycle of the enterprise, so the group expansion will at least continue after the end of the epidemic2to3In, a new path dependence was formed. The establishment of digital operation models such as online office and online sales, which are transmitted from enterprises to individuals, will also promote the continuous decline of personal non-contact service consumption.

Technological resonance leads the acceleration of the digital economy and injects sustainable growth momentum into the global economy.

The growth momentum of the digital economy comes from two aspects: technological breakthroughs and resonance effects. In the past decade, technological breakthroughs have mainly occurred in the field of consumer internet, such as the threat posed by smartphonesAPPRevolution, grafted on4GShort video bursts on the internet. In the second half of the digital economy, the epidemic accelerated the layout of the global industrial Internet, focusing on artificial intelligence, Industrial Internet5GThe investment in new infrastructure is gradually increasing. Against this backdrop, the manufacturing industry is leveraging digital transformation to leverage the triple advantages of refinement, innovation, and scale, and is expected to switch to becoming a new growth point for the digital economy.

The resonance effect between technology and patterns has created an acceleration in the evolution of the digital economy. For example, in the field of consumer internet, the combination of multiple modes such as mobile payment, short video, live streaming, and online shopping has unleashed new opportunities for live streaming and sales. Leading anchors Li Jiaqi and Wei Ya each achieved more than30Despite considering factors such as return rates, the final sales volume during the "Double Eleven" period will still reach this value at a high probability, with a sales volume of one billion yuan. After comparison,2020Achieved in a single month in the first half of the year30100 million yuan of operating revenueAListed companies are only200Home, its consumption of manpower and capital is far higher than that of Li Jiaqi and Weiya's team, which reflects the indexation value creation ability of data elements.

In the field of industrial internet, the multiplier effect of technological resonance will be more eye-catching. Huawei'sGCI2019A survey found that when a country's cloud readiness reaches50Score, and achieve readiness for the Internet of Things45At the same time, the contribution of artificial intelligence to the economy has begun to expand. Specifically, a country'sITInvestment proportionGDPTotal3%-4%When it comes to leveraging the inflection point effect of cloud and artificial intelligence, it will help the takeoff of artificial intelligence2。 Data shows that developed countries, especially European countries, generally attach more importance to itICTInvestment, Australia, Denmark, Sweden, and the United KingdomICTThe highest level of investment (see figure for details)2）。2020In, epidemic prevention and control indiscriminately caused physical isolation, promoting the collective evolution of the digital economy, and creating conditions for the accumulation of resonance effects.2021In, as the global economy enters a recession like recovery phase, the self strengthening of the digital economy will accelerate and provide sustained momentum to the global economy with its acceleration.

chart2：ICTCountries with investments exceeding the global average

Source: HuaweiGCIinvestigation, ICBC International

Regulation and innovation competition, combining macro and micro to seek the optimal solution.

In the era of digital economy, the changes in business formats will drive the iteration of regulatory systems and rules, and the mutual promotion and interdependence between regulation and innovation will become increasingly prominent.

On the one hand, new technologies such as blockchain have become a solution for data authentication, and the legal and regulatory system that interfaces with them has been further improved. As a new factor of production, data should also be regarded as a private property right protected by law, thereby stimulating the sustainability of digital economy innovation. Currently, many technology companies collect a large amount of user financial data in their business activities, but the control and processing rights of these data are blurred, which not only easily raises concerns about personal privacy leakage for users, but also sharply amplifies the potential harm of improper data processing behavior, especially the cross-border data transmission that poses new information challenges to national security. Represented by the EU's General Data Protection Regulations, countries have successively introduced laws and regulations for data protection. Looking forward to the future, the combination of global collaborative and benign regulation, coupled with the immutable nature of blockchain, will curb the risk of data abuse, thereby resisting the threat of digital hegemony, and restoring a fair competitive digital innovation environment.

On the other hand, regulating the race between technology and innovation, accurately grasping the macro and micro dynamics of the real economy.2019Year,FacebookreleaseLibraThe white paper, with its "super sovereignty" and "super bank" attributes, has sparked strong controversy, leading central banks around the world to accelerate their research and design of digital currencies. Central Bank Digital Currency（Central Bank Digital Currencyhereinafter referred to asCBDC）Since then, it has widely entered the public eye and become the International Monetary Fund（IMF）Bank for International Settlements（BIS）Major issues discussed by international financial regulatory authorities.2020In, the epidemic accelerated the evolution of digital currency and became the founding year of central bank digital currency. According to statistics, currently exceeding30Central banks of individual countriesCBDCInvest in attention, with China, Sweden, the Bahamas and other countries taking the lead in launching pilot tests. In addition to countering the challenges posed by new technologies to traditional fiat currencies, the central bank's digital currency will also undertake the digital economy era. By improving the central bank's control over the full flow of currency, it will provide quantitative reference for formulating fiscal and monetary policies, while also expanding the long-term negative interest rate/The operational space of zero interest rate policy.

surface1Digital Currency Event in Developed Economies and International Organizations

Source:ICBC International

The convergence of high growth digital economy enterprises will benefit the Chinese capital market from the dividends of the digital economy.

From the perspective of the capital market, as shown in the figure3As shown, in recent years, the growth rate of traditional enterprises has continued to slow down,2016-2019yearEPSMarket value weighted growth rate（5yearCAGR）The mean is determined by2011-2015Of9.11%Descend to9%。 At the same time, the digital economy continues to provide high growth potential,EPSThe average growth rate is determined by2011-2015Of15.55%Further increase to2016-2019Of17.38%, significantly ahead of other enterprises. end2020year9month30Among the top ten global companies by market value7Compared to digital economy enterprises2000In the Internet foam in, this round of digital economy was popular in the capital market, which was supported by more powerful fundamentals.

As a successful representative of Digital transformation, the structure of China's capital market has also changed in the past decade, as shown in the figure below4As shown, digital economy enterprises (e-commerce, internet media, and technology) in Shanghai and Shenzhen300The proportion of quantity in the index is determined by2010Of4%Ascend to2020Of14%。 The communiqu é of the Fifth Plenary Session of the Communist Party of China proposed the construction of a strong online country and a digital China, and the above trend is expected to continue to accelerate during the 14th Five Year Plan period. During the same period, the proportion of digital economy enterprises in the Bloomberg Global Index and Bloomberg Asia Index decreased slightly, both of which were around8%The level of. As a result, structural transformation will also inject momentum into the Chinese capital market, and the high growth of the digital economy may continue to bring excess returns to the Chinese stock market.

chart3Digital economy enterprises continue to provide high growth potential

Source:Bloomberg, ICBC International

chart4The proportion of digital economy enterprises in China gradually surpasses that in Asia/Global level

Source:Bloomberg, ICBC International

Be alert to the risks of aggressive development, and balance the digital economy with the real economy.

Looking ahead, uncertain factors such as sanctions against technology enterprises in the game of major powers may continue to disrupt the orderly development of global digital economy technology and applications, posing external risks. In addition, we also need to pay attention to the internal risks of balancing the digital economy with the real economy, and form a clear and correct understanding of the high multiplier effect of the digital economy. After our statistical analysis, we found thatAConceptual sectors related to the digital economy (including the Internet of Things, online games, cloud computing, mobile internet, etc.)17Total companies in each sector500The Yu family, but among them36.5%The main business of our company is not significantly related to the digital economy. In fact, the digital economy, especially in key core technology areas that involve neck neck risks, is expensive and has a long recovery cycle, making it not a place for speculation. The large-scale completion of China's chip projects has already highlighted the risk of rapid development. According to data from Caijing Tianyan, as of2020year9month1Today, China has established new semiconductor enterprises this year7021Last year, more than 10000 new semiconductor enterprises were established, making it difficult for the "big and scattered" development pattern to precipitate true core technologies, and instead, it is a blind waste of real economic resources. The digital economy uses non-exclusive data as the production factor, which can break the bottleneck of marginal diminishing effect and provide momentum for sustained economic growth. It is a good recipe for the global economy to step out of the stock game and move towards dimensional competition. However, currently in the transition period from traditional economy to digital economy, the allocation of resources between the two cannot be neglected, and technological resonance is based on research investment and open cooperation, rather than unrealistic fantasies. In the capital market, investors should also distinguish right from wrong, carefully screen the relevance of the company's main business and the authenticity of its technological processes.

Note:

1.According to data analysis platform Zhigua, Li Jiaqi ranks first in live sales on the first day of the "Double Eleven" pre-sale, with an estimated product sales of100010000 pieces, estimatedGMVreach39.11RMB100mn Weiya followed closely, with an estimated sales volume of720.5810000 pieces, estimatedGMVreach38.66RMB100mn

2.Please refer to the Huawei Global Connectivity Index for details2019White Paper.

(Author's introduction: Cheng Shi is the Chief Economist and Managing Director of ICBC International; Gao Xinhong is the Macroeconomic Analyst of ICBC International. This article only represents the author's viewpoint. Source:FTChinese website)