Carlos Barria / REUTERS  An Apple logo is seen at an Apple store in Pudong, the financial district of Shanghai, China, February 2012. 

Calichina Dreaming

Apple, the iPhone, and the Future of the Chinese Economy

The iPhone 8, expected to be launched on September 12, is already an online media sensation. And with good reason. The release of each new iPhone is a technological shock that has the capacity to reconfigure a large chunk of the global economy. Other new products offer incremental improvements that over time can have a cumulative effect on economic structure. But a new iPhone isn’t so much a new device as a new ecosystem. Each new iPhone opens up technological niches that are then exploited by thousands of other companies, from giants such as Facebook to small developers of all kinds of gadgets and apps.

Its repeat record of industrial renewal has made Apple the most profitable company in the world. It has also created a new economic system that spans the Pacific region, from California in the east to Sichuan in the west and everywhere in between. This system might be called the i-economy, since it depends so heavily on the iPhone and the technological ecosystem it supports.

The Pacific i-economy is centered on smartphones, but its reach is much broader. It takes in a host of related industries that depend on the smartphone ecosystem for their very survival. The i-economy includes apps, but it also directly sustains Hollywood, popular music, electronic gaming, electronic publishing, Internet search, ride-hailing services, food delivery services, photography, and financial technologies. All of these industries are or are in the process of becoming mobile based.

By its very nature the i-economy is not tied to any particular place, but in reality its industries are clustered around the shores of the Pacific. Of course, the i-economy was conceived and born in California, with Silicon Valley at its heart, and California remains its most important creative (and profit) center. But other nodes are spread around the Pacific basin. Microsoft and Amazon are based in Seattle, while Sony and Nintendo are based in Japan. South Korea’s Samsung and LG are at the same time Apple rivals and suppliers.

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