China has transformed into a digital giant

China has firmly established itself as a global leader in consumer-oriented digital technologies. It is the world's largest e-commerce market, accounting for more than 40 percent of global transactions, and ranks among the top three countries for venture capital investment in autonomous vehicles, 3D printing, robotics, drones, and artificial intelligence (AI). One in three of the world's unicorns (startups valued at more than $1 billion) is Chinese, and the country's cloud providers hold the world record for computing efficiency. While China runs a trade deficit in services overall, it has lately been running a trade surplus in digital services of up to $15 billion per year.

Powering China's impressive progress in the digital economy are internet giants such as Alibaba, Baidu and Tencent, which are commercializing their services on a massive scale, and creating new business models. Together, these three companies have 500-900 million active monthly users in their respective sectors. Their rise has been facilitated by light - or, perhaps more accurately, late - regulation. For example, regulators put a cap on the value of online money transfers for a full 11 years after Alipay introduced the service.

Now, these internet companies are using their positions to invest in China's digital ecosystem - and in the emerging cadre of tenacious entrepreneurs that increasingly define it. Alibaba, Baidu and Tencent together fund 30 percent of China's top startups, such as Didi Chuxing ($50 billion), Meituan-Dianping ($30 billion), and JD.com ($56 billion).