Digitalization with Chinese Characteristics

One billion Chinese citizens are online — nearly three times the total population of the United States. Practically nowhere in the world is the smartphone as deeply rooted in everyday life as it is here.

The strength of the Chinese digital economy is a critical driver of this development. While it initially emerged as a copy of the California model, primarily in the so-called “Special Economic Zones” established by the Chinese government to experiment with economic liberalization, it has now developed into an independent pillar of modern Chinese society, and Chinese IT corporations have built up immense power and their executives have become extraordinarily wealthy in the process.

The growth of the Chinese digital economy was facilitated by an unprecedented state infrastructure policy that resulted in industrialization with a clear focus on IT. Moreover, the country’s industry exhibits a culture of independent start-up experimentation — few companies are as agile in reacting to customer wishes and changing conditions as the Chinese. But the state that President Xi Jinping still defiantly describes as the “largest developing country in the world” increasingly views that power as a problem, with the party and state leadership even declaring “unequal development” to be the primary contradiction in Chinese society today.

At first glance, the situation in China appears to be characterized by contradictions — a state-led policy that pushes a digital industrial modernization agenda on the one hand, and a dynamic private capitalist digital sector on the other, all guided by Deng Xiaoping’s credo of incremental trial and error at all levels. What characterizes the Chinese variant of digital capitalism á la Silicon Valley? Where are the parallels to the Western digital economy, and where are the differences? And to what extent does the Chinese party and state leadership hold the reins? Can it control development, or has development developed a momentum of its own?

In this series, author and theorist Timo Daum takes a closer look at the digital China of our time and attempts to view it not only in comparison to Western models, but as an independent path of development. After all, China has long ceased to merely copy the West. China is learning and treading its own paths — also and especially in its specifically Chinese variant of digital capitalism — and in turn becoming a role model for the rest of the world.