Building a New Global Industrial Chain with 5G

by Bian Yongzu

The impact of the COVID-19 pandemic on the global economy is growing and causing increasing concern. After testing different prevention and control strategies， countries around the world have gradually adopted similar approaches involving restraining the flow of people to slow the spread of the virus. China now has the virus essentially under control， but many countries and regions， including Europe and the United States， are still struggling with the ongoing pandemic and have little hope of returning to normal quickly.

The coronavirus crisis has already dealt a heavy blow to the global economy and will profoundly change the current globalization landscape. With the pandemic exploding， major Western countries have been unable to carry out normal economic activities， which has catastrophically interrupted the global supply chain system. As the worlds largest goods trading nation， China has been affected enormously. External demand has weakened significantly. Many export-oriented enterprises in China have no new orders， and even already-placed orders risk cancellation. At the same time， export logistics costs and risks are mounting. Due to the substantial reduction in international flights， freight rates have soared. Many customers cannot cover such high logistics costs， and flights could be cancelled at any time due to the pandemic. As the pandemic continues to ravage humanity on a global scale， many enterprises will likely go out of business， which greatly increases the risk of Chinese export enterprises getting stiffed on payment.

The pandemics remaining impact on Chinas economy is mainly in the field of foreign trade， with gradual recovery of Chinas investment and consumption underway. However， the impact on developed Western countries is comprehensive. Statistics show that the current hardest-hit countries have been the United States and those in Europe， which show no signs of bringing the virus under control in the short term. Most countries are now facing the dilemma of choosing between epidemic control and economic development. Containing the virus as quickly as possible demands strict social distancing measures. However， such measures heavily impact regular economic activities and order. Most experts agree that complete control of the pandemic cannot be realized within a short time， leaving them pessimistic about the prospects for the global economy. Recently， Kristalina Georgieva， managing director of the International Monetary Fund， predicted that global growth would veer sharply negative in 2020， adding that “we anticipate the worst economic fallout since the Great Depression.” The World Bank also downgraded global growth forecasts.

The pandemic has weakened multinational corporations ability to manage the entire industrial chain and may deprive them of capabilities in global R&D， sales， and services. When it faced the pandemic， China flattened the curve and turned the tide in a short period of time rather than drawing out the decision-making process. Many multinational corporations are realizing that when major natural disasters strike， China can maintain a safer and more stable business environment and continue to provide the products and services that Western countries need. Therefore， quite opposite to many early predictions that the outbreak would cause factories to move out of China， many multinational companies are now accelerating transfer of more high value-added production to China to ensure normal business operations. Recently， Volkswagen CEO Herbert Diess revealed that the pandemic left his company without any sales or revenues outside the Chinese market. In fact， Chinas comprehensive industrial support system will further reduce logistics costs for international enterprises， and the effect of aggregation of the whole industrial chain will become more evident.

Multinational enterprises from Western countries have played a lead role in globalization. They have determined the global layout of factories and formulated industrial standards such as product specifications and business rules to create a large and closely interconnected industrial chain. Chinese companies seeking to climb up the industrial value chain still have plenty of hard work ahead. The most important task remains to accelerate the construction of a 5G-based new global industrial chain.

The impact of the pandemic on globalization has been seen most clearly in impeding flow of logistics and people， which is demonstrating the greater importance of the next generation of information technology. At the G20 Extraordinary Virtual Leaders Summit on COVID-19 on March 26， 2020， Chinese President Xi Jinping emphasized the importance of information sharing and building a unified information platform. During the outbreak， students of Chinas primary and secondary schools as well as universities attended classes from home. For the first time， online education has been embraced on a large scale. Many Chinese people are working online. They attend teleconferences， carry out online discussions and even conduct business negotiations virtually. Various economic activities are increasingly moving online. Chinas domestic economic activities have essentially maintained normal operation largely because China built a relatively developed and comprehensive network ecosystem. Some expect the COVID-19 pandemic to accelerate the fourth industrial revolution and usher in a new era.

With its advantages in 5G， China has the potential and ability to lead the new industrial revolution. Chinese manufacturers such as Huawei， Xiaomi， OPPO， Vivo， and ZTE are becoming leading providers of 5G terminals. Chinese companies contribute 38 percent of the worlds 5G standard patents， far higher than the 25 percent of South Korea and the 14 percent each of the United States and Finland. Leveraging the advantages of next-generation information technology to accelerate the restructuring of the global industrial chain and re-activate the world economy is in the interest of all countries and conducive to building a community with a shared future for humanity.