China 360: New decade, new drivers, new disruptions - tech convergence

We believe 5G, AI and Internet of Things (IoT ) – and the merging of the three – are set to be the major tech drivers of new business models and applications this decade. Merging 5G with IoT could support industrial IoT, smart cities and connected cars. Combining AI and IoT could deliver value across a range of themes, from smart homes to smart factories, while 5G and AI could enhance each other’s functionalities.

With the largest amount of AI data globally, about 7bn IoT connections and the potential to be among the first countries to complete 5G deployment, China appears to be well-positioned for this convergence, in our view. We believe China also has several key advantages that could speed up the development and application of key technologies: strong policy support, advanced tech infrastructure, consumer readiness to embrace new technologies and investors’ enthusiasm for China's innovation potential.

We also expect the ripple effect of Beijing's New Infrastructure initiative to create opportunities upstream and downstream. While most of these projects have been widely discussed before, we believe bringing them under the New Infrastructure initiative is set to accelerate their construction. Moreover, by our estimates, some 40-50% of related investments are for 5G, AI and IoT-related projects.