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It’s hard to imagine a more compelling case of how digital transformation can actually be the main driver of a region’s economy than economic output itself. China’s east-west digital pivot may be recent, but it’s already giving a substantial boost to the region’s industrial output.

The industrial economy of western regions of China recorded rapid growth in the first quarter. What is becoming clear is that digital adoption and emerging industries are key to reinvigorating regional economic development amid uncertainties both at home and abroad, experts from industry.

Specifically, industrial output in southwest China’s Guizhou Province rose 15.2 percent year-on-year in the first three months. That’s 8.7 percentage points higher than that of the nation, according to the Provincial Bureau of Statistics.

Western regions have stepped up efforts to build a modern industrial system and develop big data and cloud computing technologies, showing strong resilience and great potential to support the development of high-tech and emerging industries. .

– Luo Zhongwei, researcher, Chinese Academy of Social Sciences

High-tech and emerging industries have seen solid growth. Firstly, the output of the new energy vehicle batteries and materials industry jumped 44.9% year-on-year in the first quarter, 29.7 percentage points higher than that of the province’s overall industrial output. . In addition, industries directly using digitization are even more numerous. Output of Guizhou’s computer, telecommunications and other electronic equipment manufacturing sector jumped 35.4 percent year on year.

Investment in the region has increased after Beijing decided to digitally pivot from east to west, meaning the country’s digital transformation is expected to shift to less-developed western regions. In the January-March period of this year, investment in high-tech industries jumped 96.1% compared to the same period a year earlier. Among the total, investment in high-tech manufacturing and service industries grew 129.6% and 66.8% year-on-year, respectively.

The government’s decision to establish eight national IT centers and 10 national data center clusters demonstrates that the country is taking steps to channel more IT resources from its eastern regions to less-developed but resource-rich western regions. The move will accelerate digital transformation and upgrade industries in western regions, Luo added.

In January, China issued a guideline to help Guizhou innovate in pursuing the rapid development of its western regions in the new era. The guideline, issued by the State Council, China’s Cabinet, stressed the importance of promoting the construction of a domestic open economy pilot zone and developing the digital economy.

Guizhou has witnessed rapid development in its big data industry in recent years, with domestic and foreign tech giants stepping up efforts to set up data centers in the province due to its cooler climate and vast energy resources. .

Chongqing, another western province, also saw its industrial output rise 8.5 percent on an annual basis in the first three months. The output of emerging industries, such as photovoltaic cells, industrial robots and service robots, increased by 92.9%, 34.1% and 20.7% respectively, which is higher than the overall industrial output of the country. first trimester.

The East-West pivot, indeed, has its inherent advantages. The western regions have abundant renewable energy and will become a key base for the development of strategic emerging industries in the country, an industry stalwart has revealed. Moreover, compared to the Yangtze River Delta and Pearl River Delta regions, labor costs are relatively low in western regions, he added.

Digital transformation has defined China’s economic rise. Just recently, industry stalwarts announced 2022 as the year of the Metaverse, the latest emerging ICT technology. Additionally, its approach to digital adoption is reflected in its drive to build over 2 million 5G bases by the end of 2022.

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