The rise of influential Chinese digital giants, including Baidu, Alibaba, Tencent and Xiaomi has shown the world that China is a global leader in digital innovation and it is not surprising that China has started to influence the global digital market. But is China exploiting its full potential in this area? To answer this question, the authors assess how big China’s digital economy is relative to the rest of its economy, and how China performs compared to the rest of the world.
This paper reviews international measures of the digital economy and compares them with those developed by Chinese officials and private sources. Given the lack of comparability, we use China’s input and output and census data to come up with an internationally comparable estimate of the size of China’s information and communication technology (ICT) sector (the core of digital economy), in terms of both value added and employment.
Based on the latest available statistics, our measurements indicate that China’s digital economy is not bigger relative to the size of the Chinese economy than the OECD average, especially in terms of ICT employment. This finding, which might look striking based on the current perception of China’s digital economy, masks large differences across regions (with Beijing, Guangdong and Shanghai ahead of the OECD average).