China IT Market

China's digital economy

Main article: China's digital economy

China Chip Market

Main Article: Semiconductor Market in China

Smartphones (China Market)

Main article: Smartphones (China market)

Cloud Services (China Market)

Main Article: Cloud Services (China Market)

Internet of Things in China

Main article: Internet of Things in China

2024: AI startups from China migrate to Singapore to access foreign technology and capital

Chinese AI startups are heading to Singapore in search of global growth. Their founders are attracted by access to foreign capital and technology. It is difficult for young AI companies to enter the global market from China. Equally important for the AI startup is that, in a politically neutral island nation, they can buy Nvidia's latest chips and other advanced technology, something that would not be possible in China because of American export controls.

2023

Market growth of 13.4% to 12.33 trillion yuan

At the end of 2023, the volume of the Chinese IT services and software market reached 12.33 trillion yuan, or approximately $1.73 trillion. This is 13.4% more than the result for the previous year. Moreover, the growth rate was 2.2% more than in 2022. Such data are given in the materials of the State Council of the PRC, published on January 27, 2024.

According to the Ministry of Industry and Industry, the information technology China number of companies in the local IT sector with annual income of more than 20 million yuan (approximately $2.75 million at the exchange rate as of June 27, 2024) exceeded 38 thousand in 2023. The profitability of the industry remains stable: gross profit amounted to almost 1.46 trillion yuan (about $200 billion), which is 13.6% more compared to 2022. Profit growth rate year-on-year increased by 7.9%.

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At the same time, as noted, at the end of 2023, Chinese exports in the software segment decreased by 3.6%, amounting to $51.42 billion. China is in tense relations with the United States, which are increasing sanctions pressure. Against this background, import substitution programs are being actively implemented in the PRC - both in the field of software and in the field of semiconductor products. In particular, the Chinese government has issued a directive ordering state-owned companies to completely abandon American software. In addition, a ban was imposed on the use of Intel and AMD processors in computer systems for government agencies.

It is noted that by the end of 2023, the number of zones of high-tech industrial development in China was about 180. They contain approximately 80% of key national laboratories and 70% of national production innovation centers. Such zones are an "important engine of economic development" of the country.

The published materials say that in 2023 the number of Chinese enterprises conducting research and development in the field of artificial intelligence exceeded 4,000. The volume of the AI industry in China reached 578.4 billion yuan (approximately $79.67 billion), which is 13.9% more than in 2022. The level of introduction of generative AI by Chinese companies and organizations was 15%, and the size of the corresponding market is estimated at 14.4 trillion (about $1.98 trillion). It is said that China continues to actively expand its capabilities in the field of AI - both in the software segment and in the field of hardware solutions.

We are seeing the Chinese ICT sector enter a new phase of transformation characterized by the widespread integration of artificial intelligence, says Wu Lianfeng, vice president and chief analyst at IDC China.

According to him, many Chinese companies and enterprises prioritize the introduction of AI to stimulate business growth. In the financial sector and retail to trade China, the cumulative annual growth rate of spending on digital transformation is expected to be more than 20% between 2024 and 2027. IDC analysts also forecast skyrocketing spending on generative AI in. China It is estimated that approximately 28% of businesses surveyed achieved a return on investment within one year of implementing solutions in the relevant area. In general, China is actively promoting the integration of digital technologies into various industries. According to IDC, China's investment in AI will reach $38.1 billion in 2027, which will amount to approximately 9% of the global total. In addition, it is expected that by 2027 the level of penetration of digital instruments in the field of research and development at large enterprises in the PRC will exceed 90%.^[1]

China begins to develop metaverse standards

information technology China The Ministry of Industry and (MIIT) announced the creation of a working group to develop standards. metauniverse According to representatives of the ministry, the lack of standards has led to the chaotic development of this area. This became known on September 19, 2023.

Such a move is part of Beijing's regulatory initiative aimed at accelerating the standardization of the metaverse and adhering to international development trends. MIIT expressed concerns about the use of sensitive personal information, the dissemination of digital identifiers, financial feats and online violence. Information security issues are also a matter of concern.

MIIT also stated that some capital and enterprises used the popularity of the metaverse for speculation, which significantly alienated its concept from real value and to a certain extent limited the development of the metaverse industry.

The working group will include experts from enterprises, research institutes, universities and other organizations specializing in metaverse. One of the main tasks of the group will be to formulate basic common standards, such as metaverse terminology, key technical standards, identification systems, digital content creation and cross-domain compatibility.

The first priority is to develop metaverse standards related to industrial production. MIIT said the development of the industrial metaverse will transform the manufacturing industry and become "one of the important points of the new industrialization." This statement was made as part of a three-year strategic program for the metaverse. It names the metaverse as one of several tech sectors in which China will seek global leadership. Standardization in this area is recognized as a key task.

Earlier, China Mobile put forward the idea of ​ ​ introducing a digital identifier for all users of metaverses and the online virtual world, which will contain, among other things, information about physical traits, social properties and the profession.

In addition, in January, a professor in AI and spatial computing at the University of Liverpool, David Reid, warned of possible risks and threats in the developing metaverse. In his opinion, the metaverse will inherit all the problems of the Internet, but in a more intensified form, including the risks of data theft, fraud and social engineering. Reed calls for early intervention by regulators and law enforcement to prevent these problems^[2].

China has published a roadmap for the development of metaverse

On September 8, 2023, China unveiled a new metaverse development program for three years. It is assumed that the initiative will contribute to the growth of the digital economy.

The Ministry of Industry and Information Technologies of the PRC, the Ministry of Education, the Ministry of Tourism, the National Directorate of Radio and Television, as well as the State Council of the PRC took part in the preparation of the document. The roadmap sets out an action plan for the period from 2023 to 2025, and special attention is paid to the application of the concept of the metaverse in various areas, such as the production of household appliances, the automotive industry and the aerospace industry. In addition, the technology is proposed to be used in manufacturing industries, including steel and textile production, to optimize planning, calculation of materials and other operational processes.

China has published a roadmap for the development of metaverse

In the long term, China wants to create a mature metaverse for industrial use that will help stimulate growth in many areas. The project assumes the active use of blockchain, artificial intelligence, the latest electronic components and advanced hardware solutions. Virtual, augmented and mixed reality tools will also be used.

The program is focused on accelerating the adoption of the metaverse concept, which is claimed to potentially contribute to the emergence of the "next generation Internet." In the industrial sector, it will be possible to create smart and environmentally friendly industries. China aims to create "three to five industrial clusters" developing metaverse by 2025. Some local governments of the PRC have developed their own policies for encouraging companies developing the appropriate direction.^[3]

How China is developing Open Source projects

The Ministry of Industry information technology China and (MIIT) has prepared a 5-year plan for the development of an open in software the country. This became known in early September 2023.

According to Forbes, for the development of Open Source in China, the department has identified three key principles:

• the project code must be placed in the national repository;
• the code must use the Chinese Mulan license approved by the Open Source Initiative (OSI, an open source software promotion and technical support organization);
• the software manufacturer owning the project must be a Chinese company.

China has prepared a 5-year plan to develop open source software

The Gitee service was chosen as the national repository, which by the beginning of September 2023 has 8 million users and 20 million projects. The Open Source Foundation, the Open Atom Foundation, also operates in China. n created by large local IT corporations Alibaba Group Holding, Tencent Holdings, Huawei and Baidu. A number of projects were transferred by commercial companies to the management of the fund. One of these is the OpenHarmony operating system for the Internet of Things (IoT), which has switched from Huawei. Thanks to this, the project is actively developed by developers of many commercial companies.

Open source software in China is developing in the context of strict censoring of content, this also applies to files in the national repository. So, in May 2022, thousands of developers discovered on one day that public repositories were forcibly transferred to private mode as a result of suspected use of profanity, pornography and politically sensitive words. Following the censorship policy on the platform meant studying each project on request: developers must fill out a special form that is sent to the relevant ministry - this is confirmation that there is nothing illegal in the repository.^[4]

2022

Beijing has developed a roadmap for the development of NFT and metaverse technologies

The authorities Beijing have developed a roadmap for the development of technologies NFT and. metauniverses The corresponding plan, designed for 2022-2024, was presented on August 23, 2022.

The document developed by the administration of the Chinese capital considers the metaverse as the next generation of information and technology integration and innovation, contributing to the development of the Internet in the direction of Web3. According to Cointelegraph, the plan aims to stimulate metaverse-related industries and should help Beijing create a benchmark city for the digital economy.

Beijing has created a roadmap for the development of NFT technologies and metaverse

According to the plan, various areas are supposed to build technological infrastructure at the city level and encourage its use in various areas, including education and tourism. The development program provides for the integration of technical means, such as 3D visualization and geographical information system (GIS), to form a visual digital platform of urban space and the development of digital intelligent infrastructure.

Promote digital education, maintain close cooperation between metaverse-related technology companies and educational institutions, expand intelligent and interactive online learning models, and develop industry-wide digital teaching platforms, the text says.

Within the framework of the program, districts and municipalities are instructed to provide financial and personnel support to projects to create virtual reality. Beijing authorities also ordered to monitor trends in the development of NFT technology and study experimental legal regimes to support innovation.

Earlier, a development plan focusing on the metaverse and the NFT introduced another major Chinese metropolis - Shanghai. According to observers, the growing interest of the Chinese authorities in Web3 technologies may accelerate their implementation in the country.^[5]

Large companies banned from buying foreign-made printers in China

In early July 2022, it became known that large companies in China were banned from purchasing foreign-made printers and multifunctional devices (MFPs). The law, which will come into force in early 2023, says that said products up to key parts, such as chips and laser components, are designed, developed and manufactured in China.

China's new national technology standards show a broader push by the Chinese government to restrict foreign manufacturers, putting them ahead of a potential choice between divulging vital design details and pulling out of a vast market. This goes beyond the earlier emphasis on protecting security technologies and aims to create self-sufficient Chinese supply chains.

Large companies banned from buying foreign-made printers in China

Critical information infrastructure providers will have to purchase products that meet Chinese national standards. Foreign technology suppliers already excluded from government procurement lists could be cut off from a wider range of customers.

Chinese buyers purchase from 900 thousand to 1 million multifunctional copiers per year, which is 40% more than in Japan, another large market. Public procurement accounts for about 30%, but if you add infrastructure and other areas considered a priority for the state, such as education and medicine, the share will increase to more than half.

In 2022, two departments, the Office for Standardization and the State Office for Market Regulation, will issue a proposal for public comment with a view to implementing it in 2023. Later, standards can be expanded to cover personal computers and servers.

According to Nikkei Asia, central government agencies and the state corporation of China until 2024 will refuse to use personal computers (PCs) of foreign brands in favor of domestic analogues. The agency notes that the prices for shares of Chinese companies related to production, against the background of a government decree, added about five percent in value.^[6]

China will give money to 3 thousand startups for a technological confrontation with the United States

On February 28, 2022, it became known that China it was accelerating startups its ambitious support program in industries such as chip manufacturing and biotechnology, which is part of its efforts to combat USA critical technologies.

Industry information technology China Minister and Xiao Yaqing said at a media briefing Beijing that in 2022 about 3,000 startups will receive government funding to develop innovation in the country. The total number of such "little giants" receiving state support will reach 8,000, which will be the most intensive expansion as part of the president's latest attempt Xi Jinping to strengthen China's technological potential in the face of fierce competition with the United States, reports. Bloomberg

China accelerates its ambitious start-up support program

The start-up status allows young companies to enjoy perks and simultaneously signals to investors and employees that these companies enjoy special approval from Beijing. The small giants "innovative capabilities, as well as sales and profitability, have" clearly improved "compared to other companies without that status, Xiao said. The government will help create a better supply chain environment for these companies, he said. It will also encourage large companies to make their markets, technology and talent available to such start-ups, the minister said, without elaborating.

From 2019 to 2021, China's Ministry of Industry and Information Technology has identified 4,762 small giants, many of whom work in the semiconductor, engineering and pharmaceutical industries. Typically, this title is accompanied by beneficial incentives from the central government or provincial authorities, including tax cuts, generous loans, and favorable talent attraction policies.^[7]

2021: China bans 60-hour, one-day week for IT companies

In early September 2021, the Chinese government to improve the working conditions of workers prompted IT companies to reduce long hours of mandatory overtime, but not all employees are happy with this.

Some ByteDance employees were surprised that their salary for August 2021 was down 17% as the company ended the policy that its employees in China worked a six-day work week every second week.

My volume of work has practically not changed, but wages have fallen, - said the product manager of ByteDance.

Over the 2011-2021 year, Chinese technology companies have been known for their grueling business culture under the 996 tag, which usually means working from 9 am to 9 pm 6 days a week, but in some cases this tag was considered a badge of honor and a competitive advantage over American and European competitors in the world market.

China bans 60-hour, one-day week for IT companies, workers unhappy with decision

It was also a guarantee of higher wages, as Chinese law qualifies workers for double pay for weekend overtime and three times holiday pay.

Another boon for workers "rights has been that over the past few weeks, the transport market giant Didi Global and the company e-commerce JD.com have formed unions with government support, helped by unprecedented development in technology, where organised labour has so far been very rare.

Officials are also working to oblige workers to take more breaks, especially in the food delivery sector, where companies are accused of forcing drivers to work on tight deadlines at the expense of safety.

Low pay can also cause employee retention problems and the topic of whether companies should raise employee pay to make up for the loss of their overtime has become more popular than ever among IT professionals.^[8]

2020

Chinese companies obliged to provide detailed reports on the impact of IT equipment on national security

At the end of April 2020, China prepared new safety rules for local companies that purchase network and other technological equipment not intended for internal use. The government requires detailed reports on the impact of purchased IT equipment on national security.

The amendments are part of the draft cybersecurity rules submitted by the Cyberspace Administration of China (CAC) in 2019. The new rules are due to come into force on June 1, 2020.

China has prepared new safety rules for local companies that purchase network and other technological equipment not intended for internal use

Work on new cybersecurity rules has unfolded at a time of mounting tensions between China and the United States, which have questioned the security of 5G equipment from Chinese suppliers. The decisions prompted many countries to conduct a formal security review of their IT equipment, and as a result, the New Zealand and Australian governments also banned operators from using Huawei products to deploy 5G networks. The UK government did not boycott the company, but decided to introduce additional security measures excluding "high-risk suppliers."

However, when the Chinese government promised to introduce similar measures, American companies expressed concern. They believe the proposed IT equipment procurement reviews could put overseas companies at a disadvantage in China. Nevertheless, the CAC statement says that the new rules are aimed solely at preserving national security, and not at restricting or discriminating against foreign companies.

Local companies will have to submit procurement documents and details to the government about the potential national security impact of the purchased IT equipment. It is assumed that the check will take 45 days, but in practice it can last up to three months.^[9]

2019

China began to completely abandon foreign computers and software

On December 9, 2019, China announced a plan to completely abandon foreign computers and software. The authorities want to implement 100% import substitution by 2022. Read more here.

The PRC government adopted the first encryption law in the history of the country

On October 26, the PRC government adopted the first data encryption law in the country's history. The law provides for the division of cryptographic standards into types and the provision of control over them to the competent authorities^[10] of the^[11].

According to the Xinhua news agency, the purpose of the law is to prevent data leaks that could harm Chinese government agencies, companies and individuals. The document also spelled out penalties for violations of established safety principles.

Under the new law, encryption standards fall into two categories - "key and generally accepted" and "commercial." Standards from the first category will be used by authorities and government agencies, and standards from the second will be developed for commercial purposes. The law provides that all commercial entities, including enterprises funded from abroad, should be treated equally in matters of "study, development, production, maintenance and sale" of standards from the second category.

Among other things, the document assigns to the government the responsibility of stimulating the training of qualified specialists in the field of cryptography and their work in the national interest. Authorities should also encourage government agencies, commercial companies and individuals to use Chinese cryptographic standards.

The document was adopted the day after Chinese President Xi Jinping called on Chinese specialists to accelerate the development of blockchain technologies in the country and will enter into force on January 1, 2020.

In China, there are more technology companies worth from $1 billion than in the United States

On October 21, 2019, the Hurun Research Institute reported that China had more unicorn tech startups than the United States. This was facilitated by the policy of the PRC and the hopes of venture capitalists to find a new Alibaba.

By June 30, 2019, there were 206 information technology developers in the Celestial Empire, whose market value exceeds $1 billion. The first place among them was taken by the fintech company Ant Financial, which is estimated at more than $150 billion.

The Hurun Research Institute reported that China has more unicorn tech startups than the United States. This was facilitated by the PRC policy and the hopes of venture capitalists to find a new Alibaba

In second place among the most expensive IT startups is the Beijing Bytedance Technology media conglomerate, which, according to investors, costs $75 billion. The leading three included the Didi Chuxing taxi ordering service ($55 billion).

The fourth position went to the provider of corporate cloud services Infor, which was valued at $50 billion. This is the most expensive American startup. The top 10 from the United States also includes Juul Labs, Airbnb and Space X.

The Hurun Research Institute counted 494 unicorns, which are based in 25 countries and 118 cities. They were created about seven years ago, cost an average of $3.4 billion and $1.7 trillion in total. The total cost of the 10 most expensive IT startups in the world is estimated at $542 billion. China, the United States, and is home to 83% of India Great Britain unicorns.

The rest of the world needs to wake up to create an environment that will allow unicorns to flourish, "said Rupert Hoogewerf, chairman and senior analyst at the Hurun Research Institute.

Many Chinese startups in the ranking were created by separating from large companies. Ant Financial left Alibaba, and the $38 billion Lufax fintech company is controlled by Ping An Insurance, China's largest insurance company.

Hurun Research Institute's ranking is led mainly by e-commerce and financial technology companies.^[12]

2018

China's largest ICT companies. List

Financial data for the 2017/2018 financial year

Every 4 days in China appears a startup worth from $1 billion

At the end of January 2019, the Hong Kong research company Hurun Report published a report in which it reported that almost every four days a so-called "unicorn" appears in China - a startup with a market capitalization of $1 billion or more.

In 2018, 97 companies received such an assessment, the total number of "unicorns" reached 186 companies, and their total value exceeded 5 trillion yuan (about $736 billion).

Areas where companies worth from $1 billion appeared most often in China, Hurun Report data for 2018

Ant Group, the operator of the Alipay payment system, affiliated with Alibaba Group, is named the most expensive non-public company in China. The capitalization of Ant Financial Services by the end of 2018 exceeded 1 trillion yuan.

The second place among startups was taken by the popular news aggregator Jinri Toutiao (owned by Beijing-based ByteDance) with an estimate of 500 billion yuan. The operator of China's largest taxi ordering service Didi Chuxing has entered the top three most expensive startups with an indicator of 300 billion yuan.^[13]

According to the Hurun Report, the total capitalization of the 18 leading unicorn companies more than doubled in 2018. The largest growth - about four times higher than other startups - was shown by the developer of applications for the exchange of photo and video content Kuaishou (Jinri Toutiao) and the seller of agricultural products on the Internet Meicai.

electric vehicles The maker of Leap Motor, founded in 2017, became the youngest Chinese "unicorn" with an estimate exceeding 7 billion yuan.

Most private Chinese companies, worth from $1 billion, are engaged in the development of information technology. The segments of online services, e-commerce and payment products are leading. The total value of companies developing financial Internet projects exceeded 1.6 trillion yuan at the end of 2018, the study says.

Shares of smartphone suppliers in the Chinese market

PwC predicted China to turn into a blockchain power

At the end of August 2018, the consulting company PwC published the results of a study of the blockchain technology market and their application. As part of the study, 600 leaders in 15 territories were asked if they use blockchain and what they see its potential in. According to a survey, PwC predicted China to turn into a blockchain power.

Four out of five executives around the world (84%) report that they have begun to implement blockchain technologies, and a quarter of them (25%) have already launched ready-made or pilot projects. Of the 15% of respondents surveyed with working blockchain applications, 88% were either leaders or active members of the blockchain consortium. But despite the potential that blockchain has, the lack of specialized legislation and the transparency of all operations remain the main obstacles to the wider introduction of technology into business.

The survey results reflect the dominance of the sphere of development of financial services, and almost half of the respondents (46%) consider it the leading sector of blockchain technologies in the near future (from three to five years). Many consider power (14%), healthcare (14%) and industry (12%) as other potential areas of application of blockchain.

Judging by the diagram below, in 2018, many executives (29%) give the United States leadership in terms of blockchain development. 18% of respondents voted for China. However, respondents believe that within three to five years the center of influence and activity of blockchain development will move to China (30%), which will leave the United States far behind (18%).

Study participants answered the question of which country is more advanced in terms of the development of blockchain projects

Organizations that want to introduce blockchain technologies into production, the study recommends focusing on four key points: developing a business plan, creating a specialized ecosystem for workers in various areas, trusting relationships with employees and working in conditions of legislative uncertainty.^[14]

China becomes leader in startup investment for the first time

In the second quarter of 2018, China beat North America in venture capital for the first time, helped by a record fundraising of $14 billion by Ant Group, a financial technology company. Read more here.

Launch of $15 billion IT Investment Fund

In early July 2018, it became known about the creation of an information technology investment fund in China. It was a response to a similar project by Japanese telecommunications giant SoftBank - Vision Fund. Read more here.

IT professionals in their 30s are not hired in China

In early May 2018, Bloomberg released an article from which it became known about the difficulties for age-old IT specialists to get a job in China. Many companies simply do not take people who are over 30 years old.

Three-quarters of technicians in the country are under the age of 30, according to China's largest job search site Zhaopin.com. Shanghai-based IT market personnel specialist Helen He says her company's management is now not hiring anyone over 35.

IT specialist in China as a professional athlete - after 30 no one needs

Many people in their 30s are married and must take care of their family. They can't focus on very hard work... If the 35-year-old candidate does not want to be a manager, the recruiting company will not even take a look at his resume, "said 38-year-old He.

As Bloomberg notes, the idealization of youth comes from the American IT industry., and Steve Jobs Bill Gates Mark Zuckerberg dropped out of college to create, and Apple Microsoft Facebook accordingly, became examples for those who decided to leave school. Since 2015 Google , he has been a defendant in a class action lawsuit in which employees accuse the company of age discrimination. The same infringement occurs in: according IBM to the investigative journalism website ProPublica, since 2013, the corporation has fired more than 20 thousand American employees aged 40 years and has sharply increased the hiring of specialists born after 1980.

It turns out that even younger people face age discrimination in China. The irony is that most of the well-known technology companies in the Middle Kingdom are founded by men over 30 years old. Lei Jun established Xiaomi when he was 40, Jack Ma created Alibaba Group at the age of 34, and Robin Li launched the Baidu search engine at 31. The only exception is Pony Ma, who at the age of 27 created the Internet giant Tencent. True, there are cases of early business creation, which later became extremely successful. Thus, Wei Cheng and Zhang Yiming founded the taxi ordering service Didi Chuxing and the news application Toutiao, respectively, when they were just over 20 years old.

Age discrimination in the Chinese IT industry has become an increasingly serious problem. In December 2017, a very resonant story occurred when research engineer Ou Jianxin, who was fired from ZTE, committed suicide by jumping out of a 26-floor window of the company's R&D center. Four days after the incident, Ou's widow wrote a message on the Internet that ZTE refused to explain to her husband the reason for the dismissal, and the deceased himself told his wife that there were internal conflicts in the company, and that he was likely to be their victim. According to numerous rumors, Ou Jianxin fell under the reduction due to his age - he was 42 years old.

Tens of thousands of vacancies have Zhaopin.com posted on the website, in which one of the requirements from the candidate is the age of up to 35 years. So, the site for tourists Ctrip is looking for people in the age range from 20 to 28 years. One Beijing software company told Bloomberg that they are ready to ease education requirements, but do not intend to take people over 30.

Working in technology is like a professional athlete. You work very hard from the age of 20 to 40 and hope to achieve something big. After that, it's time to do something else and allow younger people to try themselves, "said businessman Robin Chiang, who has invested in companies such as Xiaomi and Twitter.[15]

Exempting chipmakers from taxes

At the end of March 2018, it became known about the exemption from taxes of chipmakers in China. The local Ministry of Finance has decided to introduce tax breaks for chipmakers produced in the country in order to reduce dependence on foreign vendors in connection with the emerging tensions in trade with the United States, reports Reuters.

Chipmakers will be exempt for two to five years, according to a statement posted on the ministry's website. The indulgences will affect a wide range of products - from simple to state-of-the-art microcircuits for use in computers, smartphones and other electronic devices. It is reported that the new rules officially entered into force on January 1, 2018.

China exempts chipmakers from taxes

Manufacturers of high-performance chips using 65 nanometers or lower technology, requiring investments in excess of 15 billion yuan ($2.39 billion), will be exempt from income taxes for five years, according to the Chinese Ministry of Finance. Companies that make chips based on technology of 130 nanometers or less will be exempt for two years.

While Chinese authorities acknowledge that their initial idea of taking the country to the lead in the semiconductor industry may not be feasible, the government remains committed to finding ways to reduce chip imports.

According to Bloomberg, the introduction of tax breaks will help increase the productivity of companies engaged in the development of advanced technologies, as part of the plan "Made in China 2025." The new rules are mainly aimed at China's largest chipmakers, which are engaged in mass production.

China has been cutting taxes on integrated circuit companies since at least 2012 to support technology development. The list of companies eligible for the deduction was supplemented in late March 2018 to cover more modern developments.^[16]

China is 10-15 years behind the United States in technology development

The PRC is another 10-15 years behind the United States in technology development, although the Chinese technology sector is growing rapidly and in certain areas, such as e-commerce and mobile payments, is already ahead of the United States. This was reported on February 20, 2018 by The Economist.

The technology industry of the Celestial Empire is coming to parity with the American one faster than expected. For example, five years ago, the PRC was far behind the United States in venture capital investments, but if in 2013 the volume of venture financing in China was only 10% of the American, then as of the beginning of 2018 the ratio rose to 80%, Xinhua notes.^[17]

China is another 10-15 years behind the United States in technology development, although the Chinese technology sector is growing rapidly and in certain areas, such as e-commerce and mobile payments, is already ahead of the United States

The Celestial Empire is catching up with the United States in terms of basic research. So, according to the number of studies in the field of artificial intelligence, which are then referred to by third parties, China has practically caught up with America. The PRC government aims to take a dominant position in the field of AI technologies by 2030.

As for online trade, the United States and China went "nostril to nostril" five years ago, and now, in 2018, the volume of online transactions in the Celestial Empire is 75% higher than the United States. Even stronger, the PRC has taken the lead in mobile payments, where China's superiority reaches 1068%.

The Celestial Empire is the world leader in mobile payments. According to the Ministry of Industry and Information Technology of China, as of October 2017, the total amount of such transactions in China amounted to 81 trillion yuan (about $12.77 trillion), which is the most mobile payments made in the country in 2016 (58.8 trillion yuan).

And yet, despite impressive progress, the PRC technology industry is still far from American. Technology firms in the Middle Kingdom are significantly lagging behind in terms of foreign sales, investment and R&D costs, and their total market value is only a third of the corresponding US indicators.^[18]

2017

Investors have invested more in Chinese AI startups than in American ones

In 2017, investments in startups from around the world occupied by artificial intelligence technologies grew by an impressive 150% and reached $10.7 billion, while in 2016 the amount of investments was $4 billion. Chinese AI companies took the lead in terms of attracted investment and outstripped their American counterparts. This is reported in the ABI Research study.

In 2017, investments in startups from around the world occupied by artificial intelligence technologies grew by 150% to $10.7 billion

According to experts, in 2017, American AI startups received $4.4 billion under 155 investment programs. At the same time, on the account of the representatives of the PRC - 19 investment projects totaling $4.9 billion.

Experts note the key role of the Chinese authorities in attracting investment in AI startups.

Bullish sentiment among many Chinese investors is a clear sign that the PRC is betting on artificial intelligence technology. The Chinese government is creating clear policy principles regarding the development of AI in the future, to which startups respond by developing advanced AI technologies in various industries, "comments Lian Jye Su, chief analyst at ABI Research[19]

Among Chinese AI startups, investors provided the most significant financial support to Bytedance, the creator of the personalized news aggregator Toutiao and the popular short video sharing platform Douyin, which received more than $3 billion.

In addition, significant investments were attracted by technology developers face recognition SenseTime and, Face++ whose AI algorithms are already widely used by PRC law enforcement agencies, payment services and online retailers.

Chinese startups have focused not only on software, but are also involved in creating chipsets for artificial intelligence systems. For example, Cambricon Technologies and Horizon Robotics, which work on specialized AI chips for machine vision, received $100 million from investors during series A funding rounds.

Experts believe that the successes of Chinese AI startups are just beginning, and in 2018 and beyond they will demonstrate even more impressive achievements.

Construction of a technopark for $2 billion

In early 2018, it became known about the construction of a technology park in China, which will specialize in the development of artificial intelligence (AI) technologies. Investments in the project are estimated at 13.8 billion yuan ($2.1 billion).

The park, which they want to build in five years, will be located in Mentugu district in western Beijing. Its area will be almost 55 hectares. About 400 companies will operate on the territory of the complex, which together will produce products worth 50 billion yuan ($7.7 billion).

Pequié

The new technopark will be developed by Zhongguancun Development Group, controlled by the Zhongguancun Science Center, which has received the nickname "Chinese Silicon Valley." It was created back in the 1950s to integrate formations science in the country as well.

Zhongguancun Development Group intends to attract several local and foreign partners, including research institutes and large corporations, to create research laboratories. One of them is to focus on the development of artificial intelligence "at the national level," Xinhua reports.

In addition to artificial intelligence, the technopark will develop ultra-fast transmission of large amounts of data, cloud technologies, biometric identification and deep learning. The technological structure of the park will include a fifth-generation mobile network, a supercomputer and cloud services.

In 2017, the PRC government announced a plan according to which China should become a world leader in the field of artificial intelligence by 2030, and the volume of the industry will exceed 1 trillion yuan. Beijing expects a massive breakthrough in this area by 2025 and further successful monetization.

As Xinhua notes, China is implementing plans for the accelerated development of AI against the backdrop of heightened tensions between Beijing and Washington over the use of such technologies for military purposes.^[20]

2012: IT expenses

Healthy IT spending growth in China will drive the adoption of server and workstation virtualization technologies, SaaS, and further increase tablet penetration, according to the Hype Cycle 2012 study by Gartner.

According to Gartner, IT spending by end-Chinese users (both firms and individuals) increased by nearly 14% in 2011, compared with, for example, 5% growth in the same indicator in the United States. According to the company's analysts, spending on end-user IT in China will increase from $227 billion in 2011 to $312 billion in 2012 (an increase of about 12.6%).

According to Jim Longwood, vice president of Gartner, despite concerns that macroeconomics problems will affect local and multinational companies in China, the twelfth five-year plan of the Chinese government, launched in 2011, will continue to reinforce IT initiatives of local enterprises until 2015. "IT consumerization will also be of great importance for China, which currently ranks first in the world in terms of the number of Internet users and mobile device owners, is the world's largest PC market and the world's second largest equipment market," the expert noted.

End-user IT spending in China rose nearly 14% in 2011, compared to 5% growth in the US

According to 2012 Hype Cycle, all this together will lead to the fact that some IT technologies will be even more widely represented in China by 2014-2015. The stages of "holy interest," for example, have already reached technologies such as blade servers and industrial-class solid-state drives. At its peak, software products such as ERP and supply chain management (SCM) systems.

Traditional infrastructure solutions and communication outsourcing services, print service management BI , services and type models IaaS SaaS and are at the peak of consumer expectations, as most Chinese enterprises are looking for new models of their own work, data centers management and data analysis.

Private clouds and PaaS are rapidly developing. China is also growing interest in cloud development, healthcare solutions, open source systems, shared services, smart cities and green IT.

Among the technologies that at the moment bring maximum benefit to the Chinese economy are LTE, SaaS, as well as the growing penetration of private clouds, social networks and tablets (the last three factors work in aggregate).

See also

China's economy

Notes