China Controls 42 Percent of Global E-commerce Transactions

The value of retail e-commerce transactions in China has increased dramatically over the past decade. According to McKinsey data, the value of e-commerce transactions in China in 2005 was less than 1 percent, while the United States accounted for 35 percent of the total global e-commerce value of US$495 billion at that time. However, by 2016, the value of e-commerce transactions in China had increased to 42.4 percent, while US e-commerce had fallen to only 24.1 percent.

The value of mobile payments in China in 2016 reached US$790 billion, 11 times greater than the US, which was only US$74 billion. China accounts for 34 percent of the 262 unicorns worldwide, with a valuation of 43 percent of the total US$883 billion.

According to McKinsey Global Institute Senior Fellow Jeongmin Soeng, three factors have driven the rapid growth of the digital economy in China. First, the rapid commercialization of a large young market. Second, the presence of large capitalized digital giants capable of building digital ecosystems, such as Alibaba, Baidu, and Tencent. Third, a government that allows digital economy players to experiment before formal regulations are implemented. However, Jeongmin cautions that rapid digitalization of the economy can lead to disruption.