Social Sciences in China (Chinese Edition)

No. 11, 2021

Scale Measurement and Structural Analysis of the Value-Added  of China’s Digital Economy

(Abstract)

Cai Yuezhou and Niu Xinxing

On the basis of digital technology/ICT’s features of pervasiveness，substitution and synergy, we clarify the value creation mechanisms of the digital economy, including the substitution effect and synergy effect. Our study divides the digital economy into “digital industrialization” and “industrial digitalization,” using tools such as national economic accounting, growth accounting and econometric analysis to measure the scale and analyze the structural characteristics of China’s digital economy. Our findings show that: (1) from 1993 to 2018, the value-added of China’s digital economy grew at an average annual rate of 17.72 percent, reaching 15.776153 trillion yuan in 2018 and accounting for 17.16 percent of annual GDP, constituting important support for China’s economic growth; (2) since 1993, the value-added contribution of both the digital industrialization and industrial digitalization sectors has been growing rapidly, with the size of the two sectors standing at 7.3 trillion yuan and 8.5 trillion yuan respectively in 2018; (3) in terms of digital industrialization, ICT manufacturing and software and ICT services, as the basis of the digital economy, will remain dominant for a long time and maintain a high growth rate. Emerging sectors such as e-commerce and digital media are growing rapidly and are a priority for future development; and (4) the overall pervasiveness effect of ICT is still insufficient. The average share of industrial digitalization in the value-added of traditional industries is only 9.74 percent: six out of the seventeen sub-sectors have a share of less than 5 percent, and only four have an above-average share. Therefore, an important direction for accelerating the development of the digital economy should be increasing ICT penetration in traditional industries.