Mobile Economy China 2022
Mobile will be vital to a thriving economy post pandemic
In 2021, mobile technologies and services generated 5.6% of GDP in China, a contribution that amounted to nearly $900 billion of economic value added.
Smartphone adoption rising as subscriber growth wanes
By the end of 2021, over 1.2 billion people subscribed to mobile services in China, equivalent to 83% of the population. While this places China among the world’s most developed mobile markets, unique subscriber growth is slowing. Nevertheless, smartphone adoption and mobile internet usage continue to grow steadily as operators focus on expanding access to digital services such as video. Increasing engagement with bandwidth-hungry applications will drive the rise in data traffic, which is set to grow by almost 3.5× by 2027.
The mobile ecosystem looks to frontier technologies
The metaverse – broadly defined as myriad virtual environments blended with the real world to enable immersive user experiences – is receiving huge interest around the world. This emerging phenomenon is being explored by tech firms across China, as well as mobile operators, which could use 5G as a main pathway to engage in this space. Operators are looking to combine best-in-class telecoms networks with frontier technologies to make an impact in key sectors, including manufacturing and mining. China Mobile, China Telecom and China Unicom all unveiled new strategies in 2021, which aim to augment their computing capabilities in order to support large-scale digitisation of enterprises and the broader economy.
5G deployments and take-up increase across China
4G adoption peaked in 2020 and fell throughout 2021 as consumers increasingly switched to 5G packages. Due to the rapid take-up of 5G in
China, the region is one of the global leaders in terms of 5G adoption. In 2021, China added more than 285 million 5G connections, with its share of global 5G connections equivalent to 75%. Growth in 5G adoption in the region is supported by a growing device ecosystem, an increasing number of compatible handset sales and aggressive network rollouts. Operators in mainland China have now deployed over 1.4 million 5G base stations, while network coverage in Hong Kong currently exceeds 90% of the population. As consumers signal relatively strong upgrade intentions, GSMA Intelligence expects that China will be home to 892 million 5G connections in 2025 (representing 52% adoption). Further, with 80% of smartphone users in mainland China willing to pay more for
a 5G than 4G subscription, we project consistent positive core revenue growth over the coming years.
The mobile industry continues to tackle digital exclusion and social challenges
Mobile operators play a key role in efforts to achieve the UN Sustainable Development Goals (SDGs), primarily by delivering the connectivity that enables access to life-enhancing services and tools, and providing a platform for industrial transformation. As a consequence of operators’ heavy network investments, more than 1.04 billion people in China now use mobile internet services. This figure is expected to increase by a further 146 million by 2025, reducing the proportion of unconnected people to 20% of the population. Meanwhile, operators are increasingly taking steps to support SDG 13: Climate Action and the global transition towards a zero-carbon economy. This includes, for example, disclosing and reducing their their carbon emissions, cutting energy consumption and making investments in energy-saving solutions.
Policies look to support digital progress after Covid-19
During the Covid-19 pandemic, society has relied heavily on communications and digital technologies, which have acted as a lifeline for citizens, businesses and institutions. In a post- pandemic world, supportive investment-friendly policies will be fundamental to stimulating telecoms infrastructure build-out, which will be a central pillar of economic recovery and future crisis resilience. In mainland China, the regulator’s facilitation of commercial network-sharing agreements is a case in point, as it has enabled fast base station deployments and considerable cost savings for operators. Moreover, fully realising the mobile opportunity will require forward- looking policymaking, particularly with respect to spectrum. To this end, regulators should aim to make a total of 2 GHz of mid-band spectrum available to support the growth of 5G over the 2025–2030 period.