New infrastructure focuses more on the application of technologies such as 5G, the Internet of Things, big data, and AI. Photo: TUCHONG

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“New” infrastructure is guided by a new development philosophy, driven by technological innovation, and is based on information networks. It provides fundamental and public services for digital transformation, intelligent upgrading, and integrated innovation. New infrastructure mainly includes three aspects: information infrastructure, integrated infrastructure, and innovative infrastructure. Therefore, the development of new infrastructure not only embodies the typical traits of infrastructure construction but also possesses its own uniqueness, contributing to the cultivation of new consumption formats and the stimulation of new consumption drivers. 

Domestic demand, stable growth

New infrastructure corresponds to significant investment and consumption demands, serving as a convergence point for expanding investment and promoting consumption, which is of crucial significance for enhancing domestic demand and driving economic growth.

On one hand, new infrastructure stimulates effective investment demand, contributing to the optimization of industrial structure. Currently, the marginal effects of traditional infrastructure construction, such as transportation facilities like railways, highways, airports, as well as power, communication, and water conservancy, on economic growth are gradually diminishing. New infrastructure, due to its large scale, strong externalities, wide-ranging upstream and downstream connections, and robust network effects, platform effects, and empowerment effects, achieves greater multiplier effects. Particularly, as a “quasi-public good,” new infrastructure exhibits strong externalities, not only stimulating the market to increase “production-oriented” investments in smart agriculture, intelligent manufacturing, and driving the digitization and intelligent transformation of traditional industries but also increasing demand for “consumption-oriented” investments characterized by intelligence, greenness, and efficiency, as well as infrastructure investment needs in areas such as education, healthcare, and entertainment. At the same time, new infrastructure focuses more on the application of technologies such as 5G, the Internet of Things, big data, and artificial intelligence, offering advanced functionality and possessing attributes such as “industrial transformation,” helping drive the continuous transformation and upgrading of traditional infrastructure while consistently stimulating greater investment demand and growth momentum. These factors contribute to establishing a connection between the upstream and downstream segments of the industrial chain.

On the other hand, new infrastructure gives rise to new consumer demands and innovates consumer scenarios. In recent years, the construction of 5G networks and the continuous expansion of personal communication bandwidth in China have fueled the growth of consumption structures and consumption scenarios in several ways.

Firstly, it innovates consumer models. Leveraging the stable operation of 5G networks, new economic models like “livestreaming e-commerce” and content industries such as “digital cultural and creative” have flourished, further stimulating consumer vitality and potential.

Secondly, it promotes consumption upgrades. Industries representing consumer electronics, such as 5G terminals, flexible displays, ultra-high definition displays, and virtual reality, have entered the fast lane of development. The level of product innovation and supply quality continues to improve, becoming an important hotspot for sustained growth in the consumption sector.

Thirdly, it enlarges the consumer base. The upgrade and transformation of urban and rural information infrastructure have driven the development of areas such as collaborative office work, online entertainment, distance education, remote healthcare, and e-government services, sparking enthusiasm for consumption among different demographic groups.

Fourthly, it expands consumer scenarios. New infrastructure propels the cross-integration of traditional industries with new industries such as new energy, new technology, and new materials. This has given rise to more new models, new industries, and new ecosystems. Simultaneously, it has expanded new consumer scenarios, meeting the personalized, diverse, and high-quality consumption demands of the general public.

Highlighting strengths

Due to China’s commitment to moderately advanced infrastructure investment, the scale and application level of its networks have achieved global leadership. Key areas of new infrastructure construction, such as 5G communication, big data centers, and the industrial internet have also shown positive results. By the end of 2022, China had cumulatively established and opened 2.312 million 5G base stations, with 561 million 5G users, both accounting for over 60% globally. One hundred and ten cities nationwide have met the gigabit city construction standards, and gigabit optical networks have the capacity to cover over 500 million households. The number of users of mobile IoT terminals has reached 1.845 billion, making China the first country among major global economies to achieve a state of “things surpassing people.” The total scale of data center racks in China exceeds 6.5 million standard racks, with an average annual growth rate exceeding 30% over the past five years. The total computing power of active data centers exceeds 180 EFLOPS, ranking second in the world. The industrial internet has achieved coverage of 85% of industrial categories, and the identification resolution system has been comprehensively established. Key platforms are connected to over 80 million devices. The development of connected vehicles has expanded from single-road testing to regional demonstrations, with over 5,000 kilometers of roads having completed intelligent transformations.

However, there are still evident shortcomings and inadequacies in the development of new infrastructure in China, accompanied by pronounced disparities in development. Firstly, there are regional and structural issues. The coverage and per capita deployment of new infrastructure in economically underdeveloped regions are far below those in developed areas. The digital industry still has considerable room for development and has not fully leveraged its promotional role in boosting domestic demand. 

Secondly, there is an imbalance between construction and application, with an emphasis on independent development rather than integrated collaborative development. The feature of “one-point access, network-wide service” in new infrastructure enables its investment scale to adapt flexibly to demand changes, significantly reducing the initial investment threshold. However, this has also led to issues such as blind investment, redundant construction, and difficulties in unifying technical standards. The development of data centers and artificial intelligence, for example, has been relatively independent, and a pattern of collaborative development and complementary advantages has yet to be formed. 

Thirdly, breakthroughs are needed in critical core technologies, and the risk of being technologically constrained still exists. Technology forms the core of new infrastructure, and China exhibits a significant dependence on external critical core technologies in various fields, requiring solutions to address technological bottlenecks. While new infrastructure promotes the interconnection of all things, there are still vulnerabilities in the security models and regulations of certain new technologies, products, and formats. The security protection capabilities of various data platforms need further improvement.

Orderly layout

Firstly, it is essential to strengthen top-level design and implement a scientifically organized layout. This involves adhering to the laws of development to achieve an orderly arrangement. By understanding the developmental patterns of new infrastructure based on the actual conditions in different regions, we can expedite the construction of information infrastructure, comprehensively develop integrated infrastructure, and proactively plan innovative infrastructure to achieve hierarchical and categorized progress. Secondly, it is crucial to maintain a unified national strategy and enhance coordination among various departments and regions. This includes reinforcing the coordination of major engineering projects with supportive policies, strengthening the synergy between new infrastructure and urban-rural construction planning, and striving to facilitate the joint construction and sharing of facilities such as communication networks and data centers. Thirdly, emphasis should be placed on evaluation to achieve comprehensive scale benefits. This involves expediting the formulation of various standards and evaluation systems for new types of infrastructure, as well as strengthening dynamic monitoring and comprehensive evaluation of new infrastructure across various fields.

Next, we need to focus on breakthroughs in core technologies and talent development. Firstly, it is crucial to strengthen support for technological elements. By coordinating the efforts of government, enterprises, and social organizations, we can actively engage in key breakthroughs in core technologies like core electronic components, high-end chips, basic software, semiconductor materials, and major equipment. This will center on the forefront of information, life, and material science and technology, enhancing disruptive technological innovation and leading the industry in achieving breakthrough development. Secondly, we need to precisely and rapidly recruit and cultivate versatile talents required for new infrastructure, encourage research institutions, universities, and leading enterprises to carry out specialized talent training programs, and improve a multi-level talent training system. It is essential to construct a globally competitive talent system, establish a well-ordered mechanism for talent mobility, and develop talent incentive mechanisms that are aligned with innovation.

Meanwhile, we must also establish a financing model guided by the government, led by enterprises, and operated by the market. Firstly, it is essential to diversify the sources of capital by effectively utilizing financial instruments such as special bonds, discounted loans, funds, corporate bonds, and financing leases. This will facilitate collaboration between the government and social capital through Public-Private Partnerships (PPP) and expedite the use of Real Estate Investment Trusts (REITs) to support major new infrastructure initiatives. Additionally, leveraging state-owned capital and incentivizing state-owned enterprises to actively undertake new infrastructure projects is crucial. Furthermore, the utilization of various infrastructure investment funds and the enhancement of the funding guarantee system covering the entire lifecycle of new infrastructure are imperative.

Secondly, there is a need to innovate the participation of enterprises in the investment and financing mechanism. This can be achieved by relaxing the entry threshold for new infrastructure investment, implementing a negative list for market access, and broadening investment channels for enterprises and social capital. Furthermore, supporting high-quality enterprises in the new infrastructure sector to list on the Science and Technology Innovation Board, the Growth Enterprise Market, or the “New Third Board,” and seeking financing through regional equity markets will encourage greater participation and investment in new infrastructure projects.

Last but not least, it is important to deepen industry application integration and build a collaborative ecosystem. By adhering to a demand-oriented approach, and prioritizing the needs of different sectors such as manufacturing, telecommunications, transportation, and agriculture, we can facilitate the seamless integration of new infrastructure with the real economy. Emphasizing the synergy between technology and practical applications, we should focus on maximizing the value of this integration and promoting the conversion of scientific and technological advancements into tangible solutions. Enterprises should be encouraged to innovate in their applications and business models to meet industry demands. Through pilot demonstrations and the development of demonstration bases and parks, we can establish a series of practical cases that can be replicated and scaled. Furthermore, the incorporation of new infrastructure elements into traditional infrastructure construction should be deepened, leading to the establishment of a unified and efficient operational model. This will ultimately drive the transformation and modernization of traditional infrastructure development.

Zhang Hangyan is an associate research fellow from the Institute of Industrial Economics at the Chinese Academy of Social Sciences.

Edited by WENG RONG