GSMA：5G will become the most mainstream mobile technology in China next year
Recently, GSMA released its annual report “China Mobile Economy Development 2023”, which introduces the latest milestones in the development of China’s mobile industry. According to GSMA estimates, mobile technology and services contributed 5.5% of China’s GDP in 2022, equivalent to $1.1 trillion in economic added value. It is expected that by 2025, China will become the first market with 1 billion 5G connections.
The report China Mobile Economic Development 2023 shows that Chinese Mainland is the world’s largest 5G market, and the number of 5G connections has exceeded 60% of the global total by the end of 2022. In 2022, China built 887000 5G base stations, and by the end of 2022, the number of 5G base stations in China had exceeded 2.3 million.
GSMA predicts that 5G will surpass 4G as the most mainstream mobile technology in China by 2024. The industry organization also pointed out that the mainstream adoption of 4G and 5G in China means that traditional networks (2G and 3G) are currently being gradually phased out. Although most users have migrated to 4G and 5G, traditional networks continue to support various IoT services. However, it is estimated that by 2025, China’s traditional networks may be almost completely shut down.
The report also predicts that by 2028, China’s smartphone data traffic will more than double. GSMA points out that China’s mobile traffic growth is driven by various factors, mainly video live streaming, live streaming e-commerce, and online gaming. 5G is also a major driving factor for the growth of mobile data traffic, as evidenced by the increasing proportion of this technology in the total mobile data traffic.
In terms of the Internet of Things, GSMA predicts that the number of authorized spectrum cellular IoT connections in China will double to 3.6 billion by 2030. By 2030, China’s authorized spectrum cellular IoT connections will account for 67% of the global total.
This report points out that the large-scale construction of 5G networks in the past few years has led to record levels of capital expenditure intensity in China. As operators shift their focus to creating investment returns, overall capital expenditure will begin to decline in the coming years. During the period of 2023-2030, Chinese operators will invest $291 billion in their own networks, most of which will be used for 5G.
The GSMA stated that China’s mobile ecosystem created 6 million job opportunities in 2022. By 2030, the contribution of the mobile industry to the Chinese economy will reach approximately $1.3 trillion, and 5G is expected to bring $290 billion in benefits to the Chinese economy, accounting for over 22% of the total impact of the mobile industry on the economy. Most of the profits will be realized within the next 5 years.
Operators are fully seizing the enterprise level opportunities of 5G: With a large number of consumers starting to use 5G, the focus of Chinese operators is increasingly shifting to 5G enterprise services. Operators also readjust their enterprise strategies accordingly to improve customer service quality, including adjusting their 5G value proposition to edge computing and network slicing with the expansion of 5G SA networking deployment. The GSMA points out that the proportion of revenue other than network connectivity among global operators varies greatly, ranging from 15% to 40% of total revenue. In China, operators have made significant progress in diversifying their revenue. However, due to the large scale of mobile services that dominate the revenue structure, the proportion of revenue other than network connectivity to total revenue still ranks among the lowest globally.
The development momentum of dedicated 5G is strong: the report states that China has been at the forefront of dedicated 5G development worldwide. The GSMA stated that national support and cooperation between mobile operators and local equipment suppliers such as Huawei and ZTE have laid the foundation for the growth of dedicated 5G. To maintain the development momentum, solutions need to lower prices and make installation and operation more convenient and efficient. This has driven the growing demand for pre packaged solutions, which include service management tools and billing systems, edge and cloud integration, as well as mechanisms for handling data authentication and security.
Innovation supports China’s digital goals: The report points out that the digital ecosystem, including startups, will be the vanguard force in achieving China’s digital goals. In 2022, the United States added 182 new unicorn companies, accounting for more than half of the 330 new unicorn companies worldwide, followed closely by China with 74 new unicorn companies. About 70% of the newly added unicorn companies in China come from four fields: clean technology, renewable energy, healthcare, and intelligent logistics. More than 10 semiconductor companies also made it onto the list, while other industries such as automotive transportation, intelligent manufacturing, gaming, and metaverse also had companies on the list.
Financial technology provides opportunities for mobile industry enterprises: The report states that in the past decade, China has been at the forefront of financial technology services, largely due to investments in an increasingly diverse range of products and the growing demand for electronic payment methods. Network connectivity is the main driving factor for fintech services. The increasing attention to peripheral fields such as big data, artificial intelligence, and cloud computing will enable telecommunications operators to obtain greater value through financial technology. Some operators are also playing a more active role in the fintech field through direct investment and partnerships.
China’s shift towards circular economy: GSMA points out that the benefits of circular economy and its necessity for telecommunications equipment will dominate in 2023 and beyond. The transition to sustainable development requires all industries to examine their own resource utilization methods. This is particularly crucial for growing industries such as telecommunications. The Chinese government has recognized the importance of circular economy and incorporated its principles into the 14th Five Year Plan. Chinese terminal and equipment suppliers have joined the transition to a circular economy.
