24 March 2019
Chinese Premier Li Keqiang speaks at the opening session of the National People's Congress (NPC) in Beijing on March 5. During the speech, he reiterated the ‘Digital China’ goal. Photo: Reuters
Chinese Premier Li Keqiang speaks at the opening session of the National People's Congress (NPC) in Beijing on March 5. During the speech, he reiterated the ‘Digital China’ goal. Photo: Reuters

Why China wants to step up rural digitalization

China has announced plans to abolish domestic data roaming fees and bring down rates for mobile internet services as part of efforts to promote a digital economy.

It is good news for mobile phone users and internet enthusiasts, but puts pressure on the nation’s big three telecoms operators, who must now work harder to explore new revenue streams to offset a potential slide in service fee income.  

On Monday, Chinese Premier Li Keqiang, delivering a work report at the opening session of an annual parliament gathering, said the government will press on with reforms and take steps to accelerate the development of a “Digital China”.

Among the measures, the rates for mobile internet services will be cut by at least 30 percent this year, Li said, adding that domestic data roaming fees will be scrapped to reduce the costs for people who seek to go online.

“China will do more to speed up broadband and bring down internet rates, achieve high-speed broadband access in both urban and rural areas, and make free internet access available in more public places,” the premier said in the work report.

The document made it clear that Beijing will continue to push telecom operators to provide cheaper or even free services to Chinese people across the nation in the future.

From the government perspective, such policy can help in bridging the digital gap between urban and rural areas of the nation, a task seen critical if the country is take its economy to the next level. 

Authorities have in recent years been prodding state-owned telecoms operators to expand fiber broadband and mobile network coverage to rural villages.

Among other economic benefits, such infrastructure can help boost consumption as it will enable rural folk to buy things such as electronic appliances and daily necessities online.  

Also, farmers can keep track of agricultural commodity prices and try to get the best deal for their output. Rural communities will be able to utilize e-commerce platforms to sell agricultural produce to urban consumers.

Rural e-commerce, as a matter of fact, has been one of the hottest segments in China’s so-called new economy in the past few years. Online retail in rural areas was worth more than 1.24 trillion yuan in 2017, up 39.1 percent from the previous year, according to the nation’s commerce ministry.

Over 9.8 million online shops were based in villages, up 20.7 percent from a year ago, creating over 28 million jobs, state media reported in January. 

China Post, the state-owned postal service provider, has been the front-runner in the rural e-commerce field as it leveraged its extensive post-office and franchised store network in the countryside to serve as the offline platform for e-commerce service, a joint venture between China Post and TOM Group, recorded 47 billion yuan in gross merchandise value in the first six months of 2017, with more than 400,000 retail stores in rural China on the e-commerce platform.

Some of the rural shops involved in the trade conduct their business via smartphones, connecting to the internet through 4G networks. The rural network infrastructure is helping transform the economy by boosting personal consumption.

Among the economic gains, better network coverage in rural areas is leading to increased tourism and travel. As people check out attractions online, there is greater interest among villagers to make trips to urban areas or to other rural villages to see discover or experience new things first-hand.

According to the Chinese commerce ministry, online tourism has emerged as the fastest growing niche market, expanding by 66.8 percent last year. Areas in eastern China accounted for the lion’s share of the total rural e-commerce market, while northeastern villages posted the strongest growth.

Now, as network coverage improves and mobile internet costs are brought down, other regions too will have a chance to witness fast growth in rural e-commerce in the coming years. 

Lower internet costs and network expansion can also lead to better livestock management in rural communities. 

Last year, China Telecom teamed up with Huawei and another firm to create a product called UCOWS targeted at the livestock sector. The system uses the latest Narrowband-Internet of Things (NB-IoT) technology to transmit data from a small piece of equipment attached on cows.

Data goes to a cow data management platform hosted on China Telecom’s eCloud, which can then be accessed by dairy farm managers, farmers, and vets to gain real-time information on cows’ vital signs.

China Telecom has extended its service target to the livestock sector, realizing the need to capture new revenue opportunities. The initiative marks a reflection of the fact that mobile technology and services need broader focus, targeting not only people-to-people communication but also thing-to-thing communications.

Such initiatives can help transform China Telecom from a pure telecoms infrastructure firm into a services company leveraging on its network niche. 

Now, as the government has re-emphasized the “Digital China” mission, it is a message to all the telcos that they need to step up their game in line with Beijing’s overall economic objectives.

Rural digitalization is seen as key to improving the quality of life of hundreds of millions of people living in the countryside, something that is essential as China seeks to resolve social tensions and narrow the urban-rural divide.

If the nation succeeds in its efforts, it could serve as a reference for developing countries elsewhere that are waging their own battles to create a model of sustainable growth and social inclusiveness.

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EJ Insight writer

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