China’s Digital Economy Core Exceeds 10.5% of GDP in 2025

China’s core digital economy sector accounted for over 10.5% of the country’s GDP in 2025, according to the National Informatization Development Report (2025) released by the Cyberspace Administration of China (CAC) on July 25. Digital industry revenue reached 39.6 trillion yuan (approximately $5.5 trillion USD), marking an 8.8% year-on-year increase and confirming the successful completion of a major policy target set under the 14th Five-Year Plan.

Context: A Five-Year Transformation

The 14th Five-Year Plan (2021–2025) set an ambitious target for the core digital economy sector to account for 10% of GDP by the end of the planning period. The final figure of 10.5% represents a significant acceleration from 7.8% in 2020, with the absolute scale of the sector growing from approximately 8.1 trillion yuan to over 14.7 trillion yuan — a compound annual growth rate of 12.8%, far outpacing China’s overall GDP growth over the same period.

The core digital economy sector covers industries that provide digital technologies, products, services, infrastructure, and solutions — including telecommunications, software services, electronics manufacturing, internet platforms, and AI-related industries. According to CCTV News, the finalized figures released by the CAC exceeded preliminary estimates issued earlier in the year, reflecting a broader and more comprehensive accounting of digital activities across the economy.

Key Developments Across the Digital Economy

Digital industry profits reached 3.1 trillion yuan in 2025, up 48.4% from 2020 levels, while residential digital consumption hit 25.3 trillion yuan, growing 8.7% year-on-year. These figures underscore the expanding scale and profitability of China’s technology sector.

China’s digital infrastructure also continued its rapid expansion. By the end of 2025, the country had deployed 4.838 million 5G base stations, with two-thirds of prefecture-level cities meeting gigabit city standards. Active IPv6 users reached 869 million, reflecting the country’s ongoing transition to next-generation internet protocols.

Liu Liehong (刘烈宏), Head of the National Data Administration, had previously highlighted the sector’s growing importance at a March 2026 press conference, stating that “the core digital economy sector’s foundational and pillar role in the national economy has become more prominent.” He noted that the sector had risen from 7.8% of GDP in 2020 to exceed 10.5% in 2025, calling it a “milestone” for China’s digital transformation.

Analysis: Structural Shift Underway

The growth of the digital economy reflects China’s deliberate strategy to transition from traditional manufacturing and property-led growth toward technology-driven, innovation-led development — a concept often referred to as “new quality productive forces” (新质生产力). The digital sector’s CAGR of 12.8% significantly outpaced the broader economy, signaling a fundamental structural shift in the composition of China’s GDP.

Beijing serves as a bellwether for this national trend. The capital’s digital economy accounted for 46.4% of its regional GDP in 2025, positioning the city as a “global digital economy benchmark city” and offering a glimpse of the transformation underway at the national level.

The completion and surpassing of the 14th Five-Year Plan target sets the stage for even more ambitious goals under the 15th Five-Year Plan (2026–2030), which is expected to focus on deepening “AI+” applications and creating what the 2026 Government Work Report described as “a new smart economy form.” China’s National Data Administration, established in 2023, has been tasked with coordinating this data-driven economic transformation.

What to Watch For

While the headline figures are undeniably impressive, several questions remain unanswered. It is unclear how China’s 10.5% core digital economy share compares to other major economies such as the United States, the European Union, and Japan, where comparable data may use different definitions and methodologies. Additionally, the breakdown of the 39.6 trillion yuan in digital industry revenue — between hardware manufacturing and software or services — has not been disclosed, nor has the employment impact been quantified.

As China enters the 15th Five-Year Plan period, the focus will likely shift from broad-based digital expansion to deeper integration of AI and smart technologies across industries. With nearly 5 million 5G base stations already deployed and close to 870 million active IPv6 users, the infrastructure backbone is firmly in place. The next phase will test whether China can translate its digital infrastructure advantage into sustained productivity gains and global competitiveness in emerging fields like artificial intelligence, smart manufacturing, and data-driven services.