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Date: 11 December 2020 Author: Paweł Paszak
5G Network in China: Development, Opportunities and Threats
Over 700,000 5G base stations have been set up in China by the end of November 2020, allowing to connect more than 180 million terminal devices in the new technological standard. The pandemic did not slow down the modernization of telecommunications infrastructure – the achieved result exceeded expectations from the beginning of the year by over 200,000. However, this is only the initial phase of a five-year “long march” to dominate the telecommunications technology sector. On top of that, one million base stations are planned to be built in 2021, while their number is expected to reach almost five million by 2025. The projected value of investments in the network and related sectors between 2021 and 2025 is over CNY 4.7 trillion (about USD 800 billion). They are expected to increase the number of 5G users to 1.28 billion and create the largest data lake in the world, on the basis of which artificial intelligence, fintech and smart cities will be able to develop.
These activities are part of the development concept, outlined in the proposals for the 14th Five-Year Plan, which focuses on “innovation-driven development” (创新驱动发展), the “new infrastructure” (新基建), and “strategic emerging industries” (战略性新兴产业). 5G, along with other high-tech sectors and services, is expected to provide an additional stimulus to the PRC’s economy, which have been slowing down in recent years.
Not without a reason, the 5G technology and subsequent generations are considered the foundation of the emerging digital economy. Increasing the interconnection capacity by up to 100 times will enable the transfer of huge volumes of data, which, from the standpoint of multinational corporations and telecommunication giants, serve as the “currency of the 21st century.” However, 5G will allow not only for a higher throughput, but also for connecting up to one million devices per square kilometer. This is a huge qualitative and quantitative leap, compared to the limit of 2,000 linked 4G devices. This parameter is vital in terms of the expansion of the Internet of Things (IoT), which is based on communication and exchange of information between mobile devices or individual elements of smart cities, industry, homes, and power plants. 5G will serve as an essential link in the processes of robotization and automation of production within closed, guarded networks of individual manufacturing plants. Moreover, the expansive development of smart cities, which are based on data flow and communication in order to manage the available resources in the most efficient way, will be impossible without 5G.
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According to data from the China Academy of Information and Communications Technology (CAICT), the total value of investment in the 5G network will reach CNY 1.2 trillion (about USD 215 billion) by 2025. Certainly, this is much more than the total value of investment in the 4G infrastructure, which cost USD 100 billion between 2013 and 2018. However, CNY 1.2 trillion is only an amount that is directly related to the 5G network, and it should be enhanced by investments related to the adaptation of the industry (upstream and downstream) to new opportunities offered by 5G. Investments in related sectors is expected to reach CNY 3.5 trillion (about USD 600 billion). If we consider these various fields, then the full scale of investments in new infrastructure will exceed USD 800 billion by 2025.
However, the Chinese 5G network is associated not only with a huge cost, but also an opportunity to digitize economic and social life, a distinct feature of which is the world’s largest fintech and e-commerce market. The CAICT estimates that the indirect profits of Chinese economy from the implementation of the 5G network across the country will amount to about CNY 24.8 trillion (USD 3.79 trillion) between 2020 and 2025, and create three million new jobs.
The progressive digitization of social and economic life, accompanying the mass introduction of 5G systems, raises doubts about their future use. In economic terms, the new technology creates many opportunities, but in political terms, threats are also observable. PRC’s authoritarian system, in conjunction with powerful telecommunication tools, has the potential to become a digital totalitarian state. In the worst-case scenario, access to citizen’s data regarding their private and professional sphere, ubiquity of cameras and face recognition technologies, or social credit systems, may lead a to digital dystopia.
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