How COVID-19 and 5Geopolitics Reset China v.s. The U.S.
LightCounting releases its China Update Report: How COVID-19 and 5Geopolitics Reset China vs. the U.S.
China’s rapid recovery from COVID-19 and swift 5G rollout execution is placing its GDP on track to overtake the U.S. as the world’s largest economy by the end of this decade. On the other hand, the U.S. ban on Chinese vendors and a fresh round of restrictions on their chip suppliers are severely affecting China’s 5G 2H20 plan. Since a robust and high performing 5G network is fundamental to sustain long term GDP growth, China cannot afford to abruptly cease its 5G massive deployment.
- 1H20: Our research indicates COVID-19 did not slow China down. An average of 12,500 5G sites were built just in 2Q20, driving half-year capex up 19% YoY. Total telecom services 1H20 revenue hit $101B, up 3.2% YoY helped by strict COVID-19 stay-at-home measures that fueled fixed communications services revenue up 12% YoY but slowed mobile communications revenue 1% down.
- 2H20: The outlook gets cloudier each day. China’s successful execution of its 5G plan is fully tied to Huawei’s and ZTE’s ability to source key components for their base stations (BTS). We found that some specific BTS heavily rely on U.S. made chips, and producing a comparable product overnight seems like an impossible task.
But this is China, after all, and we have seen many surprises before. LightCounting’s China Update Report: How COVID-19 and 5Geopolitics Reset China vs. the U.S. indicates Chinese service providers remain confident that their homegrown vendors will find alternatives that meet their specifications, and many economists have updated their forecasts for China, seeing 5G as a key enabler of China’s digital economy that is rapidly taking off. However, Chinese government economists are worried and are sounding the alarm of deglobalization leading to a fragmentation into 3 blocks: North America, Europe, and China. But Beijing’s confidence in the success of the Chinese government’s new development strategy of focusing more on its domestic market, given the intensifying economic, technological, and geopolitical rivalry with the U.S, remains intact. Nevertheless, so many things can go wrong.
About the report:
- This report focuses on 5G developments in China, including macroeconomics, geopolitics, and technology. The publication date is scheduled a few weeks after the four services providers (e.g., China Broadcasting Network, China Mobile, China Telecom, China Unicom) provide their interim report so that we can gather details about 1H20 and provide a 2H20 outlook and a 5-year forecast. This report also includes RAN vendor market shares and analyses.
More information on the report is available at: