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The State Governance in the Coming Digital Age: Implications for China
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The State Governance in the Coming Digital Age: Implications for China
Аннотация
Код статьи
S032150750028647-3-1
DOI
10.31857/S032150750028647-3
Тип публикации
Статья
Статус публикации
Опубликовано
Авторы
Чэн Го  
ORCID: 0000-0003-4927-6596
Должность: Научный сотрудник, Школа иностранных языков, Нанкинский университет науки и технологий; аспирант кафедры политического анализа и управления, РУДН
Аффилиация:
Нанкинский университет науки и технологий
РУДН им. Патриса Лумумбы
Адрес: КНР, Нанкин; РФ, Москва
Выпуск
Выпуск №11
Страницы
63-70
Аннотация

The digital transformation, as the main trend in this coming Fourth Industrial Revolution (Industry 4.0.), is not only leading a new round of economic and industrial transformation, but also reshaping society and fundamentally transforming state governance.

How to manage the state governance in this digital age is becoming the vital question for many countries in the post COVID-19 era. How to adjust the state governance rules and methods in accordance with the emerging digital technologies to boost the socio-economic growth and development?

This article provides the analysis of state governance in the digital age both at theoretical and practical levels, from Chinese perspective. It focuses on the governance changes that digital transformation brings with the traditional institutionalism, defines the state of the coming digital era, observes China’s state governance transformation in this process, and finally offers the implications of “Chinese model” in terms of state-led development in this digital age. The main research methodologies mainly contain analytical, comparative, and inductive.

Ключевые слова
State Governance, Digital Transformation, Digital Economy, Digital Technologies, Chinese Model, Institutionalism, Governance Change
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Получено
19.06.2023
Дата публикации
23.11.2023
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10
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1 INTRODUCTION
2 The world is dramatically transforming in the context of the Fourth Industry Revolution (Industry 4.0.), digital transformation is the most macro era change faced by state and non-state actors. This change triggered and shaped by the widespread dissemination and application of digital technology, which leads to the creation of the digital economy as a new development model, has not only brought significant change for individuals and organizations, but also has a profound impact on state governance.
3 In the recent years, there were many proposals to realize the modernization of the state governance system and its capabilities, and the discussion on state governance has gradually become a main topic among the academic circle. Relevant studies have provided theoretical outlook and empirical research in terms of the power allocation form and content of state governance, and the structural characteristics of the state governance system, which has enriched the understanding of the actual status and goals of state governance. Existing research focuses on the analysis of the structural linkages between governance subjects at the micro and macro levels, and the discussion of specific services and management activities. However lack of the macroscopic meaning of state governance, particularly the connotation of the overall government performance leads to the relatively limited effectiveness of general governance efforts in the coming digital era.
4 In fact, state governance not only involves specific activities, but also includes national strategies, legislations and regulations that go beyond specific governance activities and take into account the development of social life. At the same time, differ from Western school of governance theories, which tend to “de-centralize” government authority (“small government” theory) and insist on a polycentric orientation, China’s concept of state governance advocates that state is a symbol of combined public and administrative power, and focuses on the state role of governing and management [1]. The organic combination of the reasons of governing is the process in which the authorities allocate power and resources through administrative, legislative and judicial organs, and implements the Whole-of-Government approaches.
5 Although some studies have focused on the digital transformation as the emerging factor and its impact on governance activities, they have limited this digital factor to specific areas such as digital government and smart communities, ignoring the systematization and integration of society brought by the unique characteristics of digital technology, and the resulting changes in the process and effect of state governance.
6 GOVERNANCE CHANGES
7 The term “governance” originated in the 14th century, and it has a special meaning since the transformation from “government” to “governance” in the 1980s [2].
8 Governance refers to the formation and maintenance of rules and order, but in this process, due to the dynamic development and changes of the objects of governance as the social elements and relations within the scope of governance, structural imbalances and deviations will gradually accumulate and lead to social contradictions. If these contradictions cannot be digested and resolved in the original governance mode, governance changes will become inevitable. Governance change is an important content of state governance research, and it is also a dynamic and overall grasp of governance issues.
9 Institutionalism and social transformation theory are the key theories in research of governance. Institutionalism, as a general approach to governance, includes a wide range of theoretical schools; both old institutionalism and new institutionalism tend to believe that institutions are an important factor [3]. The difference between the both is that old institutionalism is lack of comparative research to describe measures and policy outcomes, while new institutionalism emphasizes the endogenous nature of institutions; the form and function depend on the conditions under which it is produced and maintained [4]. When discussing governance issues, institutionalism regards institutions as the key to explain governance mechanisms, models, and effects, which defined differently according to the case analysis.
10 Historical institutionalism believes that institutions are the means to promote the development of history of a nation along a certain path [5]. Some historical institutionalists believe that institutions are the only factors that produce historical effects, technological elements are clearly rarely included in their analytical framework [6]. Meanwhile, historical institutionalism emphasizes the continuous role of institutions and the path-dependent characteristics of national development, when comparing countries, relevant analysis tends to type and copy the way of state governance mainly based on Western schools, ignoring the differences of institutional environments between countries. The commonality of governance that may arise when similar problems also lose their explanatory power in the face of dynamic facts such as the country’s adaptation to the environment through reforms and the proactive adjustment of governance methods.
11 Compared with historical institutionalism, which is good at explaining “invariance” in governance, the Great Transformation theory provides another way of state governance research, which is more suitable for explaining “change” in governance [6]. The theory of social transformation is not limited to the description and division of governance types at the organizational or national levels, but based on the macro background, it explores how the market economy and the high development of free capital in industrial society have brought about the mismatch between economic elements and the original social structure, which would lead to inequality and social instability.
12 This idea also incorporates technologies and other elements into the analysis framework. Relevant research such as the governance crisis in post-industrial society and network society can be regarded as technological changes and the continued development of social transformation theories, all of which are derived from the social aspects inherent in state governance, from the perspective of various elements and the balance (imbalance) relationship between elements, and then analyze state governance and its changes [7]. Entering into the digital age, digital technologies and the subsequent social systemic changes have reshaped the balance of the original society, and thus are becoming the key factor to state governance.
13 THE ERA OF DIGITAL TECHNOLOGIES
14 Research on digital technology has become a highly-focused topic in the context of the rapid development of technology and the continuous diffusion of social influence. Technological progress has always been considered as an important driving force of socio-economic change, the technological determinism theory even regarded technologies as a determinant of social change [9].
15 The general definition of digital technologies and digital transformation is still in formation as it dynamically continues upgrading and modernizing [10, pp. 272–273]. At current stage, digital technologies mainly contain data-driven cutting edge sectors as ICT, AI, big data, cloud computing, and blockchain [11]. The digital economy functions as combination of applied digital technologies and plays the leading role in today’s global economic growth and post-COVID recovery. Furthermore, digital technology has brand-new characteristics in which different from previous agricultural technology and industrial technology, making it present a unique logic mechanism when it exerts influence: on the one hand, digital technology is flexible and scalable, that is, the coding, components, and modules of digital technology can be replaced and upgraded relatively easily at low cost; on the other hand, digital technology is generative and innovative that could achieve improvement and functional leap through self-replication and multiple iterations, and is more suitable for adapting to complex environmental changes.
16 CHINA IN THE DIGITAL TRANSFORMATION ERA
17 The core factor of China’s rise since the new century can be summarized as its state governance efficiency in accordance with its political system, China’s state governance model generally provides its cohesive and long-term socio-economic policies under its stable domestic political climate, has promoted China’s outstanding economic development with certain universal significance. In particular, at the leadership level, many officials are appointed for their technical expertise, making China in a “technocracy” in this coming digital age.
18 As a result, this factor shows its comparative advantage: in recent years, Chinese government took the lead in implementing its “digital governance” policy, focusing on the major digital construction such as smart governance, smart city, government cloud, and government big data market. The increasing use of social media platforms, portals, and planning support systems have generally and effectively promoted smart governments and services, and related e-participation [12].
19 China demonstrates to the world its huge potential as a digital power. China’s digital economy has grown exponentially in the past decade, becoming its dominant economic force. From 2014 to 2019, the contribution of the digital economy in China’s GDP growth was significant and exceeded 50% [13].
20 Despite the COVID-19 pandemic, the scale of China’s digital economy reached $5.8 trillion in 2020, accounting 38.6% of China’s GDP. It reached to $7.1 trillion in 2021 and then grew to $7.25 trillion in 2022, ranking second in the world. By 2023, 51.3% of China’s GDP is expected to be linked to the digital economy [13].
21 Table. Main Government-led Digital Initiatives and Regulations in China
Main Government Initiatives Main Regulatory Legislation The Related Core Concept from the Past Chinese Leadership
January 2022: Fintech Development Plan for 2022-2025: development of digital finance domestically; February 2022: “Eastern Data, Western Computing” Plan: creation of 4 regional hubs to enhance national computing capacity; July 2022: Measures for Data Export Security Assessment: measures detailing requirements for security reviews for cross-border data transfer February 2021: New Anti-Monopoly Guidelines: prevent market monopoly by giant internet platforms, increase scrutiny of e-commerce marketplaces, and safeguard consumers; June 2021: Data Security Law: legal framework on information security and data privacy protection; November 2021: Personal Information Protection Law: data privacy protection Chairman Jiang Zemin: Three Represents Concept: represent the development trend of China’s advanced productive forces; Chairman Hu Jintao: Scientific Development Concept: incorporates scientific socialism, sustainable development, social welfare, a humanistic society through accelerating the transformation of the economic development pattern and promote growth led by innovation
Compiled by the author based on: National Development and Reform Commission. Promoting the Healthy Development of the Digital Economy in China. Qiushi Journal. 2022. >>>> (accessed 30.05.2023)
22 At the policy level, Chinese government has made the digital economy a critical part of its national strategy. Both the 13th and 14th Five-Year Plans provide the coherent and detailed roadmap and incentives to develop this new economic model [14].
23 The digitalization of Chinese enterprises under strong government support serves as the cornerstone of China’s progress in its digital economy. Enterprises in the fields of fintech (Financial technologies), ICT, and IoT (Internet of Things) play the leading role in this digitalization round and invested heavily in digital technologies.
24 Another milestone of China’s digital transformation efforts is the launch of digital renminbi. Over the past years, Chinese government has effectively promoted its digital renminbi. During the pandemic, the central government piloted the launch of digital renminbi in its megacities and then expanded to its major regions, now China is becoming the first major economy to launch an official central bank digital currency [10].
25 Table partially shows China’s state governance rules in this digital age that could be characterized as “government regulation takes first step in policymaking, government plans can be coherently initiated under the regulations”. This differs from the US-led Western state governance philosophy which creates monopoly efforts in the vertical integrated market systems in digital world and advocates de-regulation efforts in favour of big tech companies and interest groups. Furthermore, the Three Represents Concept was proposed during the initial step of the digital transformation process, then the Scientific Development Concept provides the strategic direction for China’s long-term development in this digital age.
26 CHINA’S DIGITAL ECONOMY-DRIVEN DEVELOPMENT MODEL: IMPLICATIONS
27 When institutionalism explains the effectiveness of state governance, it often takes the institutional type and state governance model as the starting point. Some researchers offer the case analysis from historical perspective [15]. With the advent of the digital age, some latest research attempts to explain the differences in the development of the digital economy in various countries from the perspective of business environments such as institutions and laws [16]. The rapid development of China’s digital economy is often considered to be supported by the government and as a result of being driven by the institutional environment [17].
28 Although strong government support provides great significance to the vigorous development of China’s digital economy, historical evidence indicates that in China, the role of the government is more centred in the middle stage of the development of the digital economy than in the early stage [18]. Firstly, at the beginning of the 21st century, like other developing countries, China did not stand out in terms of internet infrastructure investment and coverage; secondly, the current Chinese giant companies in internet network industry, interpreted as “BAT” (Baidu, Ali, and Tencent) initially invested by foreign capital.
29 At that time, the government focused on supporting state-owned enterprises in ICT sector. Finally, under the government support for the domestic digital enterprises, regulations and measures have effectively assisted Chinese enterprises to promote business in the domestic market, but the real starting point of these approaches’ impact on domestic digital companies such as “BAT” took shape and grew, and began to be significantly enlarged and strengthened is since 2010.
30 From this point of view, the relatively underdeveloped markets and network infrastructure, and insufficient domestic capital investment that rely on access restrictions to maintain the comprehensive conditions of China’s digital economy in the early stages of development are relatively weak. In comparison, the US has created better conditions for the development of digital enterprises by virtue of its long-term institutional and technological environment.
31 Many American digital companies operated relatively mature traditional services in a digital mode at the earliest stage: for example, digital e-commerce has an origin relationship with the long-existing trade catalogs in American market; the “sharing” model in the digital age has directly inherited the complete short-term rental system in American automobile and housing industries; technologies such as mobile finance and cloud services have been developed in American companies before the acceleration of digitalization evolution [19].
32 These key digital industries have risen rapidly with technology empowerment under the effective satisfaction of clear needs in the United States.
33 The combination of China’s governance effectiveness and development of China’s digital economy along the line of thinking that the system is a key explanatory variable, for China and the United States, China’s digital technologies companies can be described as “congenitally deficient”, and it’s difficult to have a market that surpasses the American market as a whole. In terms of comprehensive strength in the development stage, it is even more difficult for Chinese companies to compete with American companies which emphasize economic efficiency and have first-mover advantages under the “big business, small government” model. In the analytical framework in which institutionalism tends to form path dependence, China’s digital economy should be in a state of lagging behind and catching up under the conditions of a relatively disadvantaged institutional environment.
34 Surprisingly, China has not only realized the rapid development of the digital economy, but also is overtaking the United States in e-commerce, electronic service market, financial technology market and other fields. China is the global largest e-commerce market, generating nearly 50% of the global transactions. The COVID-19 pandemic and the national lockdown boosted e-commerce growth in China: China’s online retail transactions reached more than 710 million digital buyers, reaching $2.29 trillion in 2020, and it’s expected to reach $3.56 trillion by 2024.
35 In 2021, China surpassed the United States and became the largest market for e-commerce with revenue of $1.5 trillion [20]. This indicates the different governance effects under the same institutional model. Institutionalism seems to have lost its explanatory power here. Existing case studies believe that the development of the digital economy in China and the United States has different driving forces [21]. The main driving force in China is neither the existing market trend nor powerful digital technology, but the growth of the service sector amidst the ever-growing social needs.
36 In other words, although China’s digital economy faced institutional disadvantages such as underdeveloped enterprises and weakened social services in the early stages, these disadvantages have instead created opportunities for domestic digital companies. In the case of China’s digital economy development, the system is not the only influencing factor, and demand or scale has become an important explanatory variable. For example, in the field of e-commerce, the advantage of scale has become a key driver of the growth.
37 The demand for new technologies from China’s 1.032 billion Internet users has directly impacted on the technology accumulation and first-mover advantage of the United States in this field. In particular, Chinese government plays the leading role not only in developing advanced ICT technologies as 5G and even 6G, but also focusing on their surveillance use to beneficial the majority of Chinese people. By the end of 2022, China has put 2.31 million 5G base stations into operation, and the number of 5G users in the country had reached 561 million, accounting for more than 60% of global total [22].
38 Today, the emerging “Chinese model”, representing the benchmark of the non-Western model, has gained attention both at the academic and practical levels. China’s development model, generally characterized as state-led development model, emphasizing the role of central government in socio-economic development policymaking and focusing on good governance that prioritize development and efficiency, is becoming a reliable development model for countries in the Global South. The Good Governance is increasingly reflected in Whole-of-Government reform practices in response to socio-economic issues, particularly China’s market-oriented reforms and modernization [23].
39 The digital transformation in the economic field has provided new opportunities to the development of Chinese enterprises and the entire national economy, however the role of digital transformation is not limited to this. With the rise of the digital economy, the digital industry has become a new development axis. This trend has been significantly indicated in the post-COVID-19 pandemic recovery: despite the global public health crisis.
40 China’s digital economy is rebounding significantly and becoming the driving force of its economic growth [10]. Chinese government has also been significantly promoted certain fields and industries closely related to the digital industry. Digital transformation has profoundly changed the development path of many social and economic fields, making breakthrough to the original governance model, and creating different state governance effects.
41 In the study of the similarities and differences of the state governance between different countries, institutionalism often regards its historical and cultural heritage, and institutional foundation as key factors for the formation of national strategies and governance methods. For example, new institutionalism defines institutions in a relatively broader way, which includes not only formal rules, procedures, and norms, but also cultural categories [24].
42 Relevant studies believe that the reason countries adopt certain governance mechanisms and means is not because these mechanisms and means are the most efficient, but because they have social legitimacy and fit the cultural environment in which the country lives [25]. However, in the coming digital age, differences in state governance due to culture factors have tended to weaken, which could lead to similar governance methods among different countries.
43 For a long time, China’s state governance has been dominated by the government, the role of enterprises and society has been limited to main areas such as market operation and community building. In the digital age, the importance of corporate entities and their role in China’s state governance have gradually increased, and China’s state governance has begun to resemble the “American model” that emphasizes corporative subjectivity and initiative.
44 Firstly, China has shown a clear and positive reform plan in terms of business environment, and has adopted a series of measures to strengthen the nature of government services, such as reducing the difficulty of entrepreneurship and project approval, simplifying project permits, tax payment and bankruptcy liquidation procedures, and encouraging the establishment of township e-commerce enterprises. These measures will not only reduce the government’s administrative monopoly power, but also save the operating costs of enterprises and activate market factors.
45 Secondly, after years of growth and accumulation of the digital economy, a number of digital corporate giants have emerged. These companies have begun to lead the way and provide funding in encouraging R&D and cultivating talents, and are becoming important participants in the national scientific research plans and major projects. For example, China’s top giant in ICT sector, Huawei, has 3,147 5G standard patent declarations, ranking first in the world [26]. Tencent established the “Science and Technology Excellence Scholarship” to encourage more young talents in R&D, and Baidu led the establishment of the first deep learning national engineering laboratory in cooperation with Tsinghua University, expanding its influence among “digital” talents [27].
46 Thirdly, digital enterprises, especially platform enterprises, have gradually connected into all social life by virtue of their mature operating models, advanced technological means and rich data resources, not only affecting the formulation of rules regulating market and non-market relations between organizations, but also in non-traditional economic fields such as rural poverty alleviation and revitalization, and urban community construction. Thus digital enterprises are also playing an increasingly important role in China’s state governance in this coming digital age.
47 CONCLUSION
48 Digital transformation has brought new changes and partial convergence of state governance methods. The “China model” has begun to emphasize the dominant position of enterprises and move toward pluralistic governance. These new governance methods and trends cannot be fully explained by differences in national and cultural systems. Although the existence of similar governance methods among countries is not a new phenomenon, the particularity of this part of the discussion is that these similarities originate from the common governance issues in the digital transformation, and are displayed in the continuous generation of linkage structures based on digital technologies.
49 Digital transformation has made “demand orientation” and “scale orientation” a new development mechanism for China. The increase number of governance-led digital constructions reflects the wide range of collaboration through both top-down and bottom-up approaches could lead to gradual changes in government organizations, new relations between governments, and the private sectors, thus triggers the transformation of China’s state governance system. However, the rapid development of digital governance also spawned a series of emerging legal issues, which had a huge impact on China’s legal system.

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