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China’s Strategic 5G Pricing Stimulates Economic Expansion

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China's rapid deployment and adoption of 5G technology have positioned it as a global leader in the telecommunications sector. Central to this success is the country's strategic approach to 5G pricing, which has facilitated widespread consumer uptake and stimulated economic growth.

In 2019, China's major telecommunications operators—China Mobile, China Telecom, and China Unicom—officially launched 5G services to the public. These operators introduced competitively priced data packages to encourage early adoption.

Initiation of 5G Services

At launch, China Mobile had already attracted 3.8 million 5G users, accounting for 69% of China’s 5G market. The company set an ambitious target of reaching 100 million 5G users by the end of 2020, a bold move considering that it had only recorded 21.5 million net additions in the first 11 months of 2019 and 37.9 million for the whole of 2018.

To achieve this goal, China Mobile introduced a nationwide strategy focused on affordability, rapid network expansion, and device availability. It also planned to transition to 5G Standalone (5G SA) by the fourth quarter of 2020, ensuring a fully optimized and independent 5G network.

China Mobile’s initial 5G plans ranged from RMB 128 (USD 18) to RMB 598 (USD 86) per month, offering a tiered structure based on data and voice usage. These prices were designed to make 5G accessible to both casual and heavy users. By maintaining relatively low entry-level pricing compared to Western markets, China Mobile accelerated 5G adoption among consumers.

The Ministry of Industry and Information Technology’s (MIIT) research arm, the China Academy of Information and Communications Technology (CAICT), reported that 13.77 million 5G phones were sold in the last two months of 2019, with 35 different models available. While the majority of China’s mobile shipments in 2019 were 4G devices (389 million units), the rapid price decline and increased availability of 5G phones helped accelerate consumer adoption.

To support its aggressive 5G rollout, China Mobile invested RMB 24 billion (USD 3.5 billion) in 5G networks in 2019.

At the end of the year, the company had deployed 50,000 base stations across 50 cities, laying the foundation for nationwide 5G coverage.

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Pricing Structure and Competitive Strategy

While China Mobile pursued aggressive pricing to attract mass adoption, China Telecom strategically positioned itself with a pricing model that balanced affordability with premium offerings tailored to high-speed connectivity applications, such as its groundbreaking 5G-powered Shanghai Maglev train network.

China Telecom introduced its 5G plans with a tiered pricing strategy, ensuring a variety of options for consumers. The operator's base plan started at an affordable rate, making it accessible to a wide range of users, while premium packages offered higher data limits and additional features. This approach was designed to cater to both budget-conscious customers and high-data users who required uninterrupted connectivity, such as business professionals and gamers.

In comparison to China Mobile, which offered 5G plans starting at RMB 128 (USD 18) for 30 GB, China Telecom’s pricing focused on flexible packages and bundled services. While China Mobile aimed to rapidly increase its subscriber base through low-cost plans, China Telecom leveraged its 5G infrastructure investments, such as its high-speed rail network coverage, to justify competitive yet value-driven pricing.

One of China Telecom’s key differentiators was its focus on specialized applications for 5G, particularly in high-speed transportation.

In partnership with ZTE, China Telecom successfully deployed the world's first commercial 5G maglev train network in Shanghai, enabling seamless connectivity at speeds of up to 500 km/h. This innovation highlighted the carrier’s ability to offer premium 5G services beyond conventional mobile plans, targeting industries and high-end users willing to pay for cutting-edge connectivity solutions; thus, contributing to China’s broader gross domestic product (GDP).

Premium Pricing for Early Adoption

China Unicom officially introduced its 5G services in 2019, setting a minimum price of RMB 190 (USD 26) per month for its 5G data packages. As one of China’s three major telecom operators, China Unicom came up with a strategic pricing model that balanced affordability with profitability, ensuring a smooth transition from 4G to 5G.

Unlike China Mobile, which was expected to introduce lower-cost 5G plans, China Unicom initially set higher price points for its 5G services. This pricing strategy aimed to offset the high costs of early 5G infrastructure deployment, encourage gradual adoption rather than overwhelming the network with an immediate surge of users, and maintain quality service for early adopters by preventing excessive congestion.

The company justified its pricing by highlighting that its 5G plans were still the cheapest in the world. Compared to South Korea’s minimum 5G package of RMB 325 (USD 44) per month and AT&T’s USD 70 per month for 15 GB of data in the US, China Unicom’s offering was over 40% cheaper than South Korea’s and 60% lower than the US’s lowest 5G plan.

Despite China Unicom’s competitive global pricing, the RMB 190 (USD 26) starting price sparked controversy online, as many consumers found the cost too high. However, telecom industry analysts pointed out that premium pricing during the early phase of 5G adoption was a standard strategy. To address affordability concerns, China Unicom announced plans to introduce lower-cost 5G packages over time, adjusting its pricing based on user demand and network expansion. The company emphasized its long-term goal of making 5G accessible to a wider audience while maintaining service quality.

China Unicom’s approach to pricing its 5G services reflected a calculated balance between early profitability and long-term market expansion.

While its initial pricing catered to high-end users and businesses, the company made it clear that more flexible and affordable packages would be introduced as 5G adoption increased.

This strategy allowed China Unicom to remain financially sustainable while gradually transitioning users from 4G to 5G, ensuring a stable and high-quality network experience for China’s first wave of 5G subscribers, while simultaneously supporting the enterprises contributing to China’s GDP.

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Bolstering the GDP

By the end of November 2024, China’s 5G mobile phone subscriptions surpassed 1 billion, marking a significant milestone in the country’s rapid adoption of next-generation connectivity, according to data released by the Ministry of Industry and Information Technology (MIIT). This figure represents 56% of all mobile lines in China, reflecting a 9.4 percentage point (PP) increase compared to the previous year.

According to the GSMA’s Mobile Economy China 2024 report, China is expected to reach a 5G adoption rate of 90% by 2030, positioning it as a global leader in mobile connectivity. The report projects that 5G connections will rise to 1.6 billion by 2030, contributing USD 260 billion to the country’s GDP.

Within three years of 5G development, the average monthly data usage per mobile user in China nearly doubled from 7.8 GB to 14.9 GB. This surge has supported applications such as remote work, online education, digital life, scientific research, and epidemic prevention and control, highlighting 5G's role in enhancing digital services.

Beyond this, the widespread adoption of 5G has revolutionized consumer services, particularly in e-commerce and mobile internet usage. With over 1.1 billion internet users as of 2024, accounting for approximately 78.6% of the population, China leads the global e-commerce market. The rapid growth of 5G networks has further accelerated online retail and digital services, contributing to economic growth.

Since the issuance of 5G commercial licenses, China's 5G commercialization has directly generated approximately CNY 5.6 trillion (around USD 787.53 billion) in economic output over the past five years. Additionally, it has indirectly contributed to CNY 14 trillion in economic output, underscoring 5G's substantial role in the country's development.

According to Zhang Yunming, Vice-Minister of Industry and Information Technology, China has entered a crucial period of 5G commercialization, with wireless technology being applied to 40 of the 97 major economic categories. He emphasized that large-scale applications have already expanded into mines and ports.

A Framework for the Future

China’s progress in 5G deployment has been supported by an extensive infrastructure network. As of November 2024, the country had installed approximately 4.2 million 5G base stations, which account for over 60% of the global total, according to industry estimates. Yunming highlighted that China has already met the 14^th Five-Year Plan (2021-2025) target for 5G deployment ahead of schedule, with 29 5G base stations per 10,000 residents. These networks provide extensive coverage across government service hubs, cultural landmarks, tourist destinations, and key transportation corridors.

The Chinese government is continuing its push for broader 5G accessibility, particularly in rural and remote regions, as part of a national strategy to bridge the digital divide. In collaboration with 11 other government bodies, the MIIT recently launched an updated plan known as the second “Set Sail” action plan, which aims to further enhance 5G applications by 2027. The initiative sets ambitious goals, including increasing 5G base stations to 38 per 10,000 people, achieving a personal 5G user penetration rate exceeding 85%, and ensuring that over 75% of network traffic runs on 5G networks.

Shanghai, one of China’s key economic centers, has also taken an aggressive stance in advancing 5G. The city unveiled a three-year strategy to expand 5G applications by 2026, focusing on developing 5G-Advanced technology and integrating it with artificial intelligence. The plan aims to achieve a 5G personal user penetration rate of over 90% while ensuring continuous 5G and 5G-A coverage for low-altitude aviation routes. Additionally, Shanghai is fostering the development of high-standard, 5G-enabled manufacturing facilities and exploring applications in humanoid robotics and innovative energy systems.

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