Hangzhou: Building the first city of digital economy

Hangzhou is renowned for its digital economy. With its visual intelligence, integrated circuit, intelligent computing and network communications industries all having a solid foundation, Hangzhou is creating a signature ICT industry chain.

Hangzhou City, abbreviated to “Hang”, was called Lin’an and Qiantang in ancient times. Located in the northwest of Zhejiang Province, Hangzhou is the province’s capital and the central city in the south wing of the Yangtze River Delta. Apart from being a famous historical and cultural city, Hangzhou is also a city of innovation and vitality and a capital of ecological civilisation. The city played host to the 2016 G20 Summit and the 19th Asian Games. It has won the title of “China’s Happiest City” for 15 consecutive years and is the only “Benchmark City for Demonstrating Happiness” in the country.

A city of innovation and vitality

Hangzhou has a well-developed private economy. For 19 consecutive years, Hangzhou has had the highest number of top 500 private enterprises among all Chinese cities. Its advantageous industries maintain a strong forward momentum in development. In 2021, the added value of Hangzhou’s core digital industries grew 11.5 per cent to RMB490.5bn, accounting for about 27.1 per cent of the city’s GDP. Hangzhou has accelerated the construction of R&D facilities. Currently, there are one national laboratory, two national large-scale scientific installations, 15 national key laboratories and seven provincial laboratories. Hangzhou has been given approval to establish major scientific research carriers, including a national demonstration zone for original innovations and a pilot zone for the innovations and developments of new-generation artificial intelligence. It has rolled out the Chengxi Sci-tech Innovation Corridor. It is home to a number of first-class universities and research institutes, including Zhejiang University, Westlake University and the BGI Life Science Research Institute, as well as 10,222 national hi-tech enterprises. Hangzhou ranks 21st in the global innovation index.

Hangzhou is deepening its digital transformation. It is building a “mobile city”, setting up the Hangzhou Internet Court, iteratively upgrading the “City Brain”, advancing the construction of a pilot city for business environment innovation, and building itself into the first city of digital economy and digital governance in the country. In 2021, there were 483,000 new university students and the net inflow rates of talents, returnee talents and Internet talents all ranked first in the country. It has been voted by foreign talents as one of the most attractive Chinese cities for 11 consecutive years.

Digital economy

In 2021, Hangzhou implemented the “No. 1 Project” of digital economy development. The added value of the city’s core digital industries increased 11.5 per cent to RMB490.5bn, accounting for 58.8 per cent of the province’s total. The added value of core digital industries accounted for 27.1 per cent of the city’s GDP, an increase of 0.5 per cent compared to 2020. Among the industries, the added value of the artificial intelligence industry, robotics industry and integrated circuit industry increased 26.9 per cent, 24.8 per cent and 21.9 per cent, respectively. Fifteen provincial-level industrial Internet platforms were newly established and 100 per cent of industrial enterprises above the designated size were digitally transformed.

Digital transformation

In 2021, Hangzhou continued the construction of “Smart Hangzhou” and rolled out 15 major city-level cross-industry, cross-sector and cross-department scenarios. “People Call, We Act” and “Smart Asian Games” were listed among the major applications of digital transformation in Zhejiang Province. For two consecutive years, Hangzhou was second among key Chinese cities in the evaluation of the capabilities of online government services. By iteratively upgrading the “City Brain”, Hangzhou created the first health code and “Qingqing Online” in the country. The city is building the sophisticated intelligent control command system of “City Brain + Operate and Command + N”, in a bid to be smarter and more intelligent.

Visual intelligence industry — Hangzhou’s visual intelligence industry is leading in the country. In 2021, its main business income was RMB272.08bn. The industry is complete with upstream (algorithms, design and R&D of key control integrated circuits, sensor modules), midstream (front-end cameras, back-end storage and recording equipment, centralised controls and display equipment) and downstream sectors (system integration, cloud platforms and related businesses). With top three national security companies (Hikvision, Dahua Technology and Uniview Technologies) and other advantageous enterprises (including Dali Technology, Zhongwei Electronics and Boya Hongtu) in the city, Hangzhou strives to become “China’s Visual Intelligence Valley”.

Integrated circuit industry — Hangzhou is a national base for integrated circuit design and industrialisation, and a national “Xinhuo” platform for innovation and entrepreneurship. In 2021, the annual sales of Hangzhou’s integrated circuit design industry were RMB36.69bn, the second-highest in the Yangtze River Delta region and fourth-highest in the country. Key enterprises in the city include Silan Microelectronics, Silergy Technology, T-Head Semiconductor, CCMC Semiconductor Wafer and Dahe Thermo-Magnetics, covering all segments – from integrated circuit design, manufacturing, packaging and testing to materials and equipment – of the industry.

Intelligent computing industry — The competitiveness of Hangzhou’s intelligent computing industry is at the forefront in the country. It is home to companies engaging in cloud computing, artificial intelligence and hardware manufacturing, including Alibaba Cloud, the Huawei Hangzhou Research Institute, NetEase and New H3C Technologies. The computing power of artificial intelligence ranks first in the country, while the number of patents is second-highest.

Network communications industry — Hangzhou’s network communications industry chain has formed a development pattern, which integrates communications devices, complete systems and industry applications. A batch of backbone enterprises is based in Hangzhou, including New H3C Technologies, Futong Group, Eastern Communications and Sunwave Communications. Both the construction scale and coverage of Hangzhou’s 5G network rank at the front of all major cities in the country. The advantages of 5G+ industry–Internet integrated applications are apparent, which have already realised a number of innovations in areas including smart manufacturing, digital security, smart healthcare, smart Asian Games, ultra-high-definition videos and future communities. In addition, Hangzhou is vigorously developing the satellite Internet industry based around the national strategic plan, and attracting major projects to take place in the city, such as the China Academy of Space Technology Hangzhou Institute.

Biopharmaceutical industry — Hangzhou’s biopharmaceutical industry has strong momentum in development. The output value of biopharmaceuticals has grown at an average annual rate of around 15 per cent for five consecutive years. More than half of the world’s top 10 pharmaceutical companies have operations in Hangzhou, including Johnson & Johnson, Pfizer, Merck and Sanofi. The city is sixth-highest in the country both in terms of the number of top 100 pharmaceutical companies and the number of listed pharmaceutical companies. More than 40 public service platforms and more than 40 clinical trial institutions and hospitals are involved in all aspects of the industry, providing good basic protection against research and development, registration and approval, and marketing of drugs.