China's 5G construction efforts will not be reduced in 2021 and is expected to usher in a "mobile phone replacement wave"

While the pandemic delayed global 5G construction in 2020, China's 5G construction remained strong. In 2021, China's 5G construction will continue to play a positive role in stabilizing investment and promoting consumption.

The 2020 Communications Industry Statistical Bulletin released by the Ministry of Industry and Information Technology of China on the 22nd showed that 5G network construction advanced steadily in 2020. According to the principle of moderate advancement, more than 600,000 new 5G base stations were built, and more than 718,000 5G base stations have been put into operation. The 5G network has covered all cities at the prefecture level and above and key counties and cities across the country.

China has taken the lead in 5G construction. According to statistics from the Global System for Mobile Communications Association, the scale of China's 5G infrastructure is the largest in the world so far, and the number of 5G connections in China accounts for more than 75% of the world's total.

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Recently, China's Ministry of Industry and Information Technology made it clear that in 2021, it will orderly promote the construction and application of 5G networks, accelerate 5G coverage in major cities, promote joint construction and sharing, and build more than 600,000 new 5G base stations.

Compared with 2020, is this goal faster or slower? At the beginning of 2020, the Ministry of Industry and Information Technology proposed to build and open 600,000 5G base stations by the end of the year. Excluding the 130,000 5G base stations built by the end of 2019, the annual target was to add about 470,000 base stations, and the actual completion was 580,000 base stations. Compared with 2020, the construction efforts in 2021 remained stable with a slight increase.

With the goal of 600,000 base stations, 5G investment has made steady progress. According to data from the State-owned Assets Supervision and Administration Commission of the State Council, in 2020, communication companies accelerated the co-construction and sharing of 5G networks and the transformation of commercial applications, completing fixed asset investment of 373.07 billion yuan (RMB, the same below) throughout the year, a year-on-year increase of 9.9%.

China's 5G investment is likely to grow in 2021. The "5G Development 2021 Outlook White Paper" released by CCID Think Tank predicts that the four major telecom operators will continue to increase their investment in 5G networks in 2021, which is expected to be 1.5 to 2 times that of 2020.

Telecom operators will continue to expand 5G coverage in 2021. China Mobile will basically achieve good 5G coverage in all cities, counties and some key towns across the country in 2021. Wang Xiaochu, chairman of China Unicom, said that it will take about three years to complete the large-scale deployment of 5G networks and basically achieve regional 5G network coverage in major urban areas, highways, railways, key county towns and large towns.

The national and local governments also support the construction of 5G infrastructure, and some provinces have issued 5G construction plans for 2020-2022. CCID think tank predicts that 5G base station construction will reach a climax in 2022 and maintain a steady progress in 2021.

At the current construction speed, China's 5G mobile phone market is expected to usher in a blowout in 2021. In 2020, the shipment of 5G mobile phones in the Chinese market reached 163 million units. Many institutions predict that the global shipment of 5G mobile phones in 2020 will be around 200 million units. This also means that China is currently the world's largest 5G mobile phone market.

Qualcomm believes that the large-scale entry of 5G mobile phones in the Chinese market into the mid-to-low price range of 1,000 to 3,000 yuan will promote the further expansion of the 5G mobile phone market.

Chinese consumers are also one of the most willing consumer groups in the world to upgrade to 5G. A 2020 survey on digital consumer trends by the Global System for Mobile Communications Association think tank found that 62% of Chinese consumers said they planned to upgrade to 5G packages in 2020, an increase of 12% from 2019.

China Mobile predicts that by the end of 2021, the number of 5G package users on the network will exceed 150 million, and the number of 5G mobile phone users will exceed 100 million. The target number of users in the replacement cycle on the network is nearly 300 million, and the goal for 2021 is to achieve 200 million new 5G mobile phones on the network.

Zhao Yu, a telecom industry observer, believes that at the current construction speed, the pace of 5G replacement will not slow down in 2021, and will accelerate in the second quarter. It is conservatively estimated that by the end of 2021, the number of 5G connections, including mobile phones, will reach 450 million.