More 5G-related spending to sustain growth

China's investment in 5G infrastructure has witnessed an unprecedented growth with bulk of the efforts being trained at creating new infrastructure that will lend "innovative but strong" impetus for local economic growth, experts said.

Two 5G robots are displayed at China Telecom's exhibition area during the Fourth Silk Road International Exposition in Xi'an, capital of Shaanxi province, on May 12. [Photo/For China Daily]

Investment on base stations, networks and other 5G infrastructure will continue to increase and reach 1.1 trillion yuan (US$145 billion) in the next few years, according to the China Academy of Information and Communications Technology.

According to JPMorgan, a global investment bank, continued infrastructure investment will help China's 5G industry to account for about 6% of the nation's GDP by 2030.

Expenditure on 5G-related infrastructure by the country's big three telecom operators – China Mobile, China Telecom, and China Unicom – is expected to reach 34.2 billion yuan in 2019. China Mobile plans to build 30,000 to 50,000 5G base stations this year while China Telecom is looking to have 20,000.

Chinese authorities have singled out 5G, artificial intelligence, industrial internet and the internet of things as investment priorities this year, as the country looks to "construct a new form of infrastructure" and "speed up the commercialization of 5G".

"The country approved a string of new infrastructure projects in 5G, IoT and industrial internet last year and most of them will be commercialized this year," said Lian Ping, a senior economist with the Bank of Communications.

Once the commercialization process is complete, the 5G sector will help realize an economic output of 10.6 trillion yuan from 2020 to 2025, the CAICT pointed out.

Local governments are also expected to play a key role in China's 5G efforts with more than 10 provinces and municipalities including Zhejiang, Jiangsu and Beijing earmarking 5G infrastructure construction as top priority.

Zhejiang province announced recently the establishment of 80,000 5G cells by 2022 to cover major villages, towns and cities. Shanghai has said it will set up 30,000 5G cells by 2021.

"The investment in emerging industries will supplement traditional industries to act as a stabilizer and unlock innovation for economic growth. The infrastructure investment will help fuel demand from the telecommunications, computing and electronics sectors," said Jiang Chao, chief analyst of Haitong Securities.

"Although the effects will not be seen in the short term, it will be key for transformation and upgrade of China's manufacturing industry," he said.