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Digitimes Research: China boosting economic transformation via developing IoT, big data, cloud

Benson Wu, Taipei; Joseph Tsai, DIGITIMES Asia 0

In March 2015, China's Premier Li Keqiang announced the Internet of Things (IoT) plus concept, looking to accelerate industry transformation and will treat the concept as a new core of the country's economic development. Digitimes Research has found that China's strategy to raise its GDP growth by relying on its strong exports in the past several decades is no longer working and the government has started turning to focus on expanding domestic demand as the new economic growth engine.

According to estimates of China's Ministry of Industry and Information Technology (MIIT), China's information consumption will reach CNY3.2 trillion in 2015 and its contribution to the country's GDP will also reach a new high at 13.3%. This means that the China government is looking to achieve both industry transformation and economic growth via expanding the scale of its Internet development.

China's broadband network development policies have experienced three different phases of transformation since 2010. Prior to 2013 was the first phase when the country's policies were mainly focused on ICT infrastructure establishment. From 2013-2014, broadband network development was raised to a national strategic level. In 2015, concepts such as IoT, big data and cloud computing have been appointed by China's State Council as core values of the country's next-phase of national economic transition.

In fact, China's fixed broadband infrastructure has been greatly improved since 2013 thanks to two waves of enhancement projects led by MIIT, especially optic fiber network establishment, which achieved much better progress than expected.

By the second quarter of 2015, China's optic fiber network covered 330 million families, accounting for 77% of the country's total number of families. China has over 90 million optic fiber network users, making the network the mainstream technology of the fixed broadband market, surpassing xDSL.

However, observing the country's fixed network popularization and overall transmission speed, China still has a large gap compared to countries with mature network development because the market lacks competition and the country's urban-rural gap is still too large.

Although China Mobile obtaining a fixed broadband network operation license between 2013-2014 and the foundation of the China Radio and Television Network have increased the number of competitors in the fixed broadband network market to four, the move has not triggered much competition.

With IoT plus policies becoming official, the China government is aggressively pushing related players to reduce their prices and raise transmission speeds and has even allowed non-official players to start operating in the fixed broadband market, but Digitimes Research believes these moves will only have a limited effect on loosening up China's fixed network market, which has been monopolized by a few players.