Strategic Development of Technology in China: Breakthroughs and Trends

PART I

What Will Be the Biggest Increment in the World After COVID-19 Pandemic?

CHAPTER 1

Introduction

Digital Economy

The free movement of people between countries has been greatly restricted after the outbreak of the coronavirus disease (COVID-19). In the face of the slowdown of the gross domestic product (GDP) growth in various countries, what will be the biggest increment in the world in the future?

It is the digital economy. According to Statista, digital transformation (DX) spending is expected to reach $1.8 trillion by 2022. By 2025, global digital transformation spending is expected to reach $2.8 trillion.¹

Spending on digital transformation technologies and services worldwide from 2017 to 2025 (in trillion U.S. dollars)

Source: Statista February 16, 2022.

Global Digital Competitiveness Ranking

Under the influence of the black swan of COVID-19, most countries are increasing their investment in the digital industry. The World Economic Forum has released a research report in 2021, analyzing and ranking the changes in digital competitiveness of countries around the world over the past three years. Based on the data from the World Economic Forum’s Global Competitiveness Report and supporting data from the World Bank and the International Telecommunication Union, the report proposes two core dimensions to measure a country’s digital competitiveness: digital ecosystems and mindset.²

The World Economic Forum’s Global Competitiveness Rankings

Source: World Economic Forum.

The concept of digital economy has gradually changed from digital enterprise to a deep integration with all walks of life. In December 2021, the State Council of China issued the 14th Five-Year Plan for the Development of the Digital Economy, which defines the digital economy as follows:

The digital economy is the main economic form after the agricultural economy and industrial economy, with data resources as the key element, modern information network as the main carrier, the integration of information and communication technology applications, the digital transformation of all factors as an important driving force, and promote fairness and efficiency of the new economic form with more unified efficiency.

The plan pointed out that the proportion of the added value of the core industries of the digital economy to GDP will increase from 7.8 percent in 2020 to 10 percent in 2025. According to estimates by Wu Chaoze, director of the CITIC Capital Securities Research Institute, based on an average annual growth rate of 5 percent in China’s GDP, by 2025, the added value of the core industries of the digital economy will reach 13.8 trillion yuan (about 2.17 trillion U.S. dollars), an increase of nearly six trillion yuan (around 0.94 trillion U.S. dollars) over 2020.³

The core industries of the digital economy include 5G as the information infrastructure, as well as key technologies such as chips, Internet of Things (IoT), artificial intelligence (AI), autonomous driving, robotics, quantum computing, and so on. I will answer hot questions in related fields in the subsequent chapters.

PART II

The Key Technology Driving Forces

CHAPTER 2

5G

A Brief History of Communication

From 1G to 5G, what have we experienced?

1G—The first commercially automated cellular network (the 1G generation) was launched in Japan by Nippon Telegraph and Telephone (NTT) in 1979. In order to facilitate communication between senders and receivers, standards for communication were needed. The early mobile communication standard was dominated by the standard set by Motorola. There are two important parts of this: (1) Describe the sending and receiving of information, that is, the phone number and (2) The way the information is encoded.

2G—In the 1980s, companies represented by Nokia began to develop a new generation of mobile communication devices that could make calls and send text messages. 2G cellular networks were commercially launched on the GSM standard in Finland by Radiolinja (now part of Elisa Oyj) in 1991. From the appearance, 2G mobile phones were much smaller than 1G phones, because the digital circuit used for 2G mobile phones could integrate more digital chips and save more power.

3G—The 3G communication standard increased the transmission rate of information by an order of magnitude, making it possible to access the mobile Internet. In June 2001, Japanese telco company NTT DoCoMo started a trial 3G service in a few selected areas. Data communication was possible. However, when we look back, we will find that the mobile communication network for Internet access and the original communication network for phone calls are independent of each other, and we call it a completely independent cellular mobile network (wide area cell-based network). This was the reason why we often saw fixed-line telephone companies like AT&T and mobile communication companies like Motorola always competing with each other during that time.

4G—Internet is faster. A 4G network is a combination of a wireless local area network (Wi-Fi is one of them) and a cellular network. TeliaSonera was the first operator in the world to commercially launch 4G in late 2009, in the city centers of Stockholm, Sweden, and Oslo, Norway. 4G reduces the number of times information can be forwarded during end-to-end communications. It also increases the bandwidth of the fiber between base stations. The problem is that if a lot of people are online at the same time, it is not only not fast enough, it cannot even connect. It is like there are too many vehicles on the highway, not only can’t you drive fast enough, you even have to wait in line at the entrance.

How to solve this problem?

There are two ways to increase the Internet speed:

1. Increase base station power—This is not feasible in cities because the surrounding area of the base station will become unsafe due to the strong electromagnetic radiation.

2. Continue to increase the bandwidth—This will increase the frequency range of communication and increase the frequency of radio waves. The higher the frequency of a radio wave, the less able it is to bypass obstacles. Therefore, the high-rise buildings in the city will seriously affect the communication quality. What to do? The simpler way is to build the base stations very densely so that at least there is a base station in your neighborhood, and the signal will not be blocked by buildings.

5G—The 4G standard is to establish a base station within a 1 km radius, responsible for communication between mobile phones and base stations within a radius of 1 km. South Korea was the first country to offer 5G services in March 2019. According to the current scenario, the average distance between 5G base stations is around 200 and 300 m. Responsible for communication within a radius of more than 100 m. In this way:

•The problem of buildings interfering with communication signals is solved.

•The bandwidth available to everyone has increased.

•As the communication range of the base station is reduced from 1 km to 100 m, the power is reduced and the electromagnetic wave radiation around the base station is greatly reduced.

If 5G base stations are dense enough, we will not need to install Wi-Fi at home so that eventually the Internet and communication networks will merge into one network, completing the communication revolution.

The development history of mobile communication from 1G to 5G is a process of continuously improving the information transmission rate per unit of energy, reducing the radiation of mobile devices and integrating the mobile Internet. 5G needs more base stations not necessarily because of the frequency band and larger bandwidth demand, but also because of the need to support more terminals (driven by IoT demand) and low latency (driven by applications such as Telematics, VR (virtual reality) Gaming, etc.).

Why Do We Need 5G?

It is estimated that in the next five years, half of the global data traffic will no longer come from people’s use, but will be generated by vehicles, machines, meters, sensors, medical instruments, or various other types of connected devices without any human interaction.

The widespread use of 5G technology ensures that large amounts of data can be processed and responded quickly in real time. For example, connecting industrial machinery and robots, thus enabling remote control, monitoring and maintenance operations, and industrial automation. From smart grids to drone control, energy and utilities, all can rely on 5G technology to handle connectivity needs.

In 2020 and beyond, the mobile Internet will drive further upgrades in the way human society interacts with information, providing users with more immersive and extreme business experiences such as augmented reality, virtual reality, three-dimensional (3D) ultra-high-definition video, and mobile cloud. The further development of the mobile Internet will bring a 1,000-fold increase in mobile traffic in the future and drive a new round of changes in mobile communication technology and industry. The IoT extends the scope of mobile communication services from human-to-human communication to intelligent interconnection of things and people, enabling mobile communication technology to penetrate into a wider range of industries and fields. According to the forecast of IPlytics, it is estimated that in the next 15 years, the global adoption of 5G technology will contribute up to $2 trillion to the global economy.¹

Is the 5G Rollout Slow Worldwide?

5G has been rapidly becoming mainstream. According to a Global Mobile Suppliers Association’s (GSA) report, as of June 2021, 58 countries/regions around the world already have 5G networks, up from 38 a year ago.

There are more than a dozen companies that have partially deployed 5G mobile technology. In terms of the number of years of reaching one billion users, it is estimated that 5G will reach one billion users in 3.5 years, while 4G was four years and 3G was 12 years.

GSA 5G snapshot

Source: Statista.

Who Is Leading the Global 5G Race?

This depends on the analytical factors you wish to use. If you look at the number of 5G patents owned by a single company, according to the statistics report of IPlytics, the Chinese manufacturer Huawei has more than 15 percent of the authorized and valid patents worldwide, ranking first in the world. If calculated according to the sum of the number of 5G patents of companies in various countries, South Korea’s Samsung and LG together slightly exceeded China.²

Huawei’s technical strength comes from Huawei’s large-scale investment in research and development (R&D). For example, in 2017, Huawei spent $13 billion on R&D, more than any other Chinese tech company and more than the combined R&D spending of its main competitors Ericsson and Nokia.

Among these patented technologies of Huawei, some are fundamental to the construction of 5G networks. For example, a technology called polar coding can correct data transmission errors. This technology was partially adopted as an official 5G standard in 2016. This means that even if countries, including the United States, Australia and New Zealand, have banned Huawei from participating in 5G network construction, they will have to use Huawei’s authorized patents.

Who is leading the 5G patent race?

Source: IPlytics.

As of February 2021.

*Granted and active patent families (5G SEP patent families with at least one granted patent counted).

On October 31, 2020, China’s three major telecom operators announced the official launch of 5G technology. According to a report by the State Council Information Office, China built more than 600,000 5G base stations in 2020, achieving full coverage of 5G networks in all cities above the prefecture level; the number of 5G terminal connections has exceeded 200 million. The number of 5G+