In the third year of COVID-19, China witnessed slower-than-expected growth but continued to improve its growth quality through innovation and openness. The R&D expenditure topped 2.55% of its GDP, reaching RMB 3 trillion in 2022. China’s ranking in Global Innovation Index improved from 29th in 2015 to 11th in 2022. China remained the largest trading nation, registering foreign trade of RMB 40 trillion.

This tenth edition of the Annual Greater China Competitiveness report presents the latest competitiveness rankings of the 34 economies and five regions of China. In addition, it zooms into the digitalisation and digital divide in Mainland China. The study found that Guangdong and Jiangsu have been the most competitive economies since 2011. Their strengths in Regional Economic Vibrancy, Attractiveness to Foreign Investors, Government Policies and Fiscal Sustainability underlie their top positions.

The regional competitiveness rankings also show the significant decline of North-eastern China from 3rd place in 2009 to 5th in 2019. A case study argues that the region suffers from the singularity of growth drivers, slow progress in industrial upgrading, an ageing population and talent outflow. This highlights the urgency of industrial upgrading in this old industrial base.

The policy chapter examines the digitalisation and digital divide in the Mainland provinces. The study constructs a digital competitiveness index, spanning five categories: Digital Infrastructure, Core Inputs, Digital Utilisation, Digital Outputs and Institutional Capacity. The findings show that Eastern China’s digital competitiveness outperforms the other three regions in all categories. Central, North-eastern and Western China lagged much behind. Even their strongest 20% indicators may be below the national average. The regional digital divide in China is mainly caused by imbalanced economic development across regions. With stronger digital competitiveness, more job opportunities emerged, and more digital talents were attracted to these provinces. This process magnifies the first-order digital divide in infrastructure to the second and third-order divides in utilisation and outputs.

Four provinces — Guangdong, Anhui, Guangxi and Liaoning are selected for case study as representatives of Eastern, Central, Western and North-eastern China, respectively, to explore the details of the digital divide across China. Government supports, such as preferential industrial policies and efforts to improve the e-business environment, play an important role in enhancing the digital competitiveness of the four provinces. Nonetheless, the unequal development in infrastructure and industrial foundation hampers digitalisation in Central, Western and North-eastern China. To mitigate such gaps, comprehensive policies are outlined in the 13th and 14th Five-Year Plans.

By ZHANG, Xuyao, LI, Jingwei, HUANG, Yijia