Development of digital sector will boost global economy

China's accession to the World Trade Organization in 2001 dramatically changed the structure of global trade. Twenty years later, digital technology, especially in the services trade, is changing the global trade landscape once again.

And since the development of the digital economy will boost the global economy, China formally applied to join the Digital Economy Partnership Agreement on Nov 1. Formed by Singapore, New Zealand and Chile in June 2020, the DEPA is a new type of trade partnership agreement aimed at bolstering digital trade by regulating issues related to the digital economy, including digital inclusion, data flow and protection, and artificial intelligence.

China's decision to join the DEPA reflects its determination to further deepen reform and expand high-level opening-up. By joining the DEPA, China can strengthen cooperation with the other member states in new areas, as well as promote innovation and sustainable development.

China's decision will also accelerate the development of the digital economy in the post-pandemic era when the third wave of trade globalization driven by digital technology is changing the mode and objectives of service trade.

Digital technology has helped transform traditional service trade into e-commerce. For example, 3D printing is being increasingly used in manufacturing and architecture, which has boosted cross-border software trade. And the COVID-19 pandemic has further deepened reform of the digital services trade, and boosted the development of digital service trade.

In this regard, as the first digital-only trade agreement, the DEPA's aim is to improve digital trade, strengthen the conflict resolution mechanism, improve the business environment, and promote global cooperation among enterprises.

On the other hand, China has been experimenting with new digital economy models, and taking measures to boost the development of the digital services trade. Last year, China's digital trade in services was worth $294.76 billion, accounting for 44.5 percent of its total service trade. China's entry into the DEPA will help break barriers of regional digital trade markets, create a friendly political environment for global cooperation, and make cross-border trade more convenient and transparent.

Besides, the digital service model requires new regulations. Countries need to integrate their industrial development, national security systems and even cultural values－and implement reform－to regulate digital services.

The DEPA is more flexible than traditional trade agreements, and can help members to reach a consensus on certain issues in a relatively short time, and maintain a more open and inclusive digital market that benefits all.

Yet to become a member of DEPA, China has to regulate the rapid development of its digital market, further open up different sectors of its economy, and accelerate international data transfer and private information protection. In fact, the Chinese government has implemented laws and established mechanisms for the purpose.

By joining the DEPA, China, as the world's second-largest economy, can establish a safer and more flexible digital management system. The DEPA can also help China promote win-win cooperation with the aim of narrowing the digital gap between developed and developing countries. At present, developed countries have a bigger market share of digital trade. For example, 80 percent of the global digital service exports in 2020 came from 17 countries, but China and India were the only developing countries among the top 10 digital trade countries.

The global digitalization trend, along with the developed countries' ownership of, and innovation capability in, information technology, has further widened the digital gap between the developing and developed countries. That's why the DEPA's aim is to develop a new digital economy system, in order to deal with spam messages and protect private information.

The DEPA is not only open and inclusive but also complements the World Trade Organization negotiations on e-commerce and builds on the efforts underway in the Asia-Pacific Economic Cooperation, the Organisation for Economic Cooperation and Development and other forums.

China has been striving to promote global cooperation in digital trade, further open up its digital market, and develop a Digital Silk Road. As such, China's joining the DEPA will help it contribute Chinese wisdom to the management of the global digital economy, balance its development and security, and expand the DEPA's influence in the Asia-Pacific region, as well as encourage other developing countries, especially those involved in the Belt and Road Initiative, to boost their digital economy and narrow their digital gap with advanced countries.

And by joining the DEPA, China can deepen digital trade cooperation, participate in the global digital management system and boost digital innovation.

The author is a researcher at the Policy and Economics Research Institute of the China Academy of Information and Communications Technology.

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