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“New Infrastructure Project” to Lead Industrial Transformation in China

Source: Taiwantrade | Updated: 04 December 2020

          To boost economic growth in the post-COVID-19 era, mainland China has plans to launch the New Infrastructure Project (hereafter referred to as “New Infrastructure”) amounting to RMB 34 trillion, of which an estimated RMB 17.5 trillion will be invested by 2025. As a result, “New Infrastructure” in China has become hot attractions in the eyes of foreign investors.

   "New Infrastructure" will not only digitize traditional industries in China, but will serve to proclaim the country’s determination to develop itself into a "digital power".“New Infrastructure”can be divided into three categories. The first consists of infrastructure for information and communication networks as represented by 5G, Internet of Things, Industrial Internet, and Satellite Internet, which will be coupled with new technologies such as artificial intelligence, cloud computing, blockchain, and the computing power of the big data center for data analysis. The second category is integrated infrastructure, which mainly refers to the use of the aforementioned innovative technologies to support the transformation and upgrading of traditional infrastructure, particularly for the development of smart cities, such as smart transportation and smart energy infrastructure. The third category is innovative infrastructure, consisting of infrastructure with public welfare attributes that supports scientific research, technology development, and product development. These include industrial innovation parks and scientific research laboratories, which provide a continuous field of innovation for the entire system.

   To further simplify its contents,“New Infrastructure”includes seven key areas:5G network, big data centers, artificial intelligence, industrial Internet, ultra-high voltage, intercity high-speed railway and inner-city rail systems, and charging stations for new energy vehicles. Looking closely at the distribution of the industries, it is apparent that over half the areas are dominated by technology firms, making the technology industry the core of “New Infrastructure”. However, the "new" in “New Infrastructure” will not be limited to emerging industries but will also cover the emerging sub-sets in traditional infrastructural fields, such as financial IT, medical IT, and ultra-high voltage and charging stations, and urban rail transit, etc.

   The title of“New Infrastructure”as proposed by the Chinese government is intended to distinguish it from the construction of traditional infrastructure such as railways, highways, and bridges. Unlike traditional infrastructure projects,“New Infrastructure” initiative will not be primarily led by the governments at all levels, which tend to spread the development projects across the country. Instead, “New Infrastructure” will be "adapted to local conditions" so as to rejuvenate the local economy. Furthermore, to avoid repeating the past mistakes of rising local debt and overcapacity problems, the Chinese government will place greater emphasis on investments from the private capital market, and the regulation and promotion of the public-private partnership (PPP) model for “New Infrastructure”.

  In the short term, the acceleration of “New Infrastructure”can help drive domestic demand and increase employment opportunities. For example, the launch of the 5G infrastructure projects alone are projected to create more than 3 million jobs. Therefore, “New Infrastructure” will help fill the output gap caused by the COVID-19 pandemic and reactivate the economic cycle. In the long run, “New Infrastructure”, if constructed with foresight, can strengthen the foundations for long-term economic development, improve overall efficiency of social operations, and help revitalize China's economy.

        “New Infrastructure” will be executed in such a way as to emphasize science and technology, and to serve as a national-level strategy to upgrade China's high technology, with a particular focus on the "localization" of semiconductors. As Taiwan has accumulated strength in IC design and semiconductor manufacturing over the decades, “New Infrastructure” may provide us with various business opportunities, especially in initiatives related to 5G base stations, semiconductors, key IC designs, and data centers. It is hoped that Taiwanese firms will pay greater attention to the wave of “New Infrastructure” so as to seize potential business opportunities.

Source: Market Development Department of TAITRA
Email: ivyko@taitra.org.tw

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