China's Digital Shock Absorber

China’s digital economy is becoming a key shock absorber in the post-property adjustment, supporting investment, jobs, and growth as housing and construction remain under pressure, says the International Institute of Finance in its latest report.

The sector is already macro-sized: core digital industries account for more than 10% of GDP and have added close to 1 percentage point to annual growth in recent years.

Unlike the more software-led U.S. model, China’s digital expansion runs through factories, logistics networks, e-commerce, robotics, and digitally enabled production, reinforcing its industrial and export strength.

Digital Shock Absorber

But the model comes with limits: platform jobs can cushion labor-market weakness without delivering large income gains, while China’s digital expansion remains exposed to advanced chip and equipment chokepoints.

The global spillovers will cut both ways: China will remain a major source of demand for high-end technology inputs even as its growing strength in digital goods, platforms, services, and equipment intensifies competition abroad.

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