Shanghai Daily Business
Updated: 33 sec ago
ARTIFICIAL intelligence technologies have been used in dealing with non-performing assets (NPAs), which may be a market worth 10 trillion yuan (US$1.5 trillion) within the next five years, a Shanghai-based technology provider said yesterday.
Toproperty, which serves finance firms such as banks and peer-to-peer platforms, offers management systems and data analysis tools to help clients recover accounts.
In 2016, the value of NPAs suffered by banks was 4.06 trillion yuan and it is expected to touch 10 trillion yuan annually within five years, said Shang Jieli, founder and CEO of Toproperty.
With new AI-featured products, Toproperty helps clients better manage the process to recover accounts and loans based on data analysis and other AI technologies.
Toproperty has about 180 enterprise clients.
PROFITS at China’s major industrial companies rose in November at the slowest pace in seven months on cooler prices, the National Bureau of Statistics announced yesterday.
Industrial companies’ profits totaled 785.82 billion yuan (US$119.86 billion) last month, up 14.9 percent year on year but that was a drop from 25.1 percent in October.
For the first 11 months combined, industrial profits rose 21.9 percent year on year to 6.88 trillion yuan.
Of the 41 industries surveyed, 39 posted year-on-year profit growth from January to November. The statistics bureau tracks companies with annual revenue of more than 20 million yuan.
Bureau statistician He Ping attributed the slower profit growth to cooler inflation at the factory gate.
The Producer Price Index, tracking product prices of industrial companies, rose 5.8 percent year on year in November, the lowest in four months.
He said the price factor dragged the industrial profit growth by 13.8 percentage points. The slower price increase also hurt companies’ cost as some materials were purchased by them at higher prices previously, He added.
For each 100 yuan of revenue, companies had to spend 85.52 yuan, up 0.29 yuan from the same month of last year, according to the latest bureau figures.
By the end of November, the debt-asset ratio of the industrial companies dipped 0.5 percentage points from a year ago to 55.8 percent.
Profits at coal, steel, chemicals, and petroleum sectors contributed to over half of the total profit at industrial companies.
Profit growth at advanced manufacturing and strategic new industries outpaced the average, bureau data showed.
Profits at state-owned enterprises jumped 46.2 percent to 1.58 trillion yuan in January to November, compared with a 48.7 percent surge in the first 10 months.
Private companies reported profits growing 12.7 percent to 2.19 trillion yuan in the first 11 months, down from 14.2 percent in the first 10 months.
November’s manufacturing Purchasing Managers Index stood at 51.8, above the boom-bust mark for the 16th month in a row.
FROM tequila to avocados, the state of Jalisco in west central Mexico is seeing its exports to China increase, thanks to the expanding Chinese middle class.
Still, the export of avocado to China is currently somewhere between the thoughts of some Jalisco local officials and a development blueprint.
On November 11 Singles Day, consumers purchased nearly a million avocados via online sales site Tmall, part of e-commerce giant Alibaba.
Such a scenario has led some local officials to believe that the avocado, the bright-green protein-rich fruit the Chinese consumers have proven fond of, will be another local export with notable potential for growth.
Ignacio Gomez, a spokesman for Jalisco’s Association of Export Avocado Producers, said he’s confident that his state’s produce will be available to Chinese consumers soon.
Right now in Mexico, only Jalisco’s neighboring state of Michoacan ships avocados to China.
“It is a market that is responding very well, and the trend indicates that in a few years China will be a very, very important market for Mexican avocados,” said Gomez.
Jalisco currently exports 80,000 tons of avocados to countries in Europe, Central and South America, and the Middle East, as well as Canada and Japan.
One of Mexico’s breadbasket states, Jalisco first launched tequila exports to China five years ago. In June of this year, the state made its first shipment of cranberries to China, sending 420 cases.
“We have to continue to strengthen the relationship with China, which is exceptional,” said Hector Padilla, Jalisco’s secretary of rural development.
“It is a market that is moving forward, that is growing, that is diversifying, and that we are cultivating so that volumes keep increasing,” said Padilla.
Padilla noted that producers of Jalisco’s other well-known fruits such as berries, mangoes and limes, also see China’s market as a great booster of business.
“The space (for growth) in China is huge. They have enormous purchasing power that is growing year by year. It’s just a question of time” before the state exports to China take off, said Padilla.
“We are barely in the initial stage of penetrating the Chinese market,” the state official added.
Mexico benefited from China’s growing consumer demand in 2017, with its exports to the Asian giant increasing 28 percent, the highest rate among its trading partners, and far higher than the 9 percent growth in trade it saw with its neighbor to the north, the United States, the Inter-American Development Bank (IDB) said.
Government statistics show trade exchanges between Mexico and China grew a whopping 185 percent from US$26 billion in 2006 to US$74 billion in 2016.
Over recent years, Mexico has also received more than US$74 million in foreign direct investment from China.
Mexico’s productive sector is looking to diversify its exports markets given the climate of uncertainty affecting the two-decade North American Free Trade Agreement between Canada, the United States and Mexico, since US President Donald Trump took office.
China’s Latin American purchases were the most dynamic in 2017, and centered on basic products that are seeing higher prices compared to previous years, according to economist Paolo Giordano, an IDB expert in trade and integration.
Following four years of negative growth, Latin America saw a 13 percent increase in exports in 2017, driven in large part by increased demand from Chinese consumers, according to IDB.
The region’s small and medium-sized businesses are also looking to break into Asian markets, especially China, said Alejandro Salcedo, head of the Mexican chapter of the Latin American Association of Micro, Small and Medium-Sized Businesses (ALAMPYME).
“There are basic products that they need in order to produce and we want to see whether it is viable to supply these types of products to establish a marketing scheme,” said Salcedo.
ALAMPYME, which gathers 300,000 small and medium businesses from 13 Latin American countries, believes China could serve as a gateway to Asia.
THE year 2017 has seen the overland Silk Road Economic Belt and the 21st Century Maritime Silk Road reach more peoples and more lands.
The year may mark a milestone in materializing the Belt and Road initiative. Both a vision and a solution from Chinese wisdom valuing peace and harmony, the initiative seeks common prosperity and safeguards globalization amid uncertainties and challenges such as a surge in protectionism, nationalism and isolationism in Western countries.
“China is an inspiring example for many countries,” said Andrei Vinogradov, a political expert with the Russian Academy of Sciences. “Its success and historical experience make it possible to provide the world with a solution based on win-win cooperation.”
Four years after it was put forward by Chinese President Xi Jinping, the initiative has blended well with the respective development strategies of participating countries.
For example, in mid-March, the United Nations resolution on Afghanistan highlighted the Chinese plan as key to rebuilding the war-ravaged country and boosting regional integration.
The initiative aims to expand infrastructure, trade and investment networks to connect Asia, Europe and Africa along and beyond ancient Silk Road routes.
Furthermore, the Belt and Road is set to lead the world toward “a common community of a shared future for humankind,” another vision devised by China out of its responsibility to respond to changes in the global landscape, and inscribed in multiple UN resolutions.
The initiative well serves the UN 2030 Agenda for Sustainable Development, according to UN Secretary-General Antonio Guterres. In a message to a November forum in New Zealand, Guterres noted “clear synergies” between them.
Both strive to “stitch countries together in networks of trade and mutual gain,” and aim to “deepen global connectivity,” he said.
The initiative has in the past year responded to more calls for openness, inclusiveness, innovative growth, and freer and fairer trade at multilateral forums such as the World Economic Forum, G20 summit and BRICS summit. It has pushed for more partnerships and is lauded as a welcomed public good.
Its prospect charmed over 1,500 representatives from over 130 countries and 70 international organizations and effected the signing of close to 70 agreements at the Belt and Road Forum for International Cooperation held in Beijing in May, a milestone marking a new implementation phase for the initiative.
With policy support from the Chinese leadership on top of confidence built on China’s steady growth, the initiative has this year convinced more onlookers and skeptics than ever before.
Notably, in November over 250 Japanese business leaders showed interest in playing a role in the initiative’s grand narrative.
The infrastructure plan received a vote of confidence in December when the Asian Infrastructure Investment Bank, a major source of funding for the initiative, expanded in less than two years to a broader geographical area represented by 84 member countries and regions, up from its founding 57.
“The Belt and Road offers new opportunities for development and the billions of people in areas it touches,” said deputy speaker of the Czech parliament Vojtech Filip during a December visit to Beijing.
An increasing number of economic corridors, railways, highways, ports and power plants, among others, are being mapped out on paper while substantiated on the ground along the Belt and Road.
The collaboration is based on extensive consultation with participating countries, who see the project as a means to boost economic growth.
Under the initiative, Chinese enterprises have invested roughly US$50 billion and helped build 75 economic and trade cooperation zones in 24 countries, generating more than 209,000 jobs, according to official data.
It plays a significant role in Australia in the development of its north, former Australian trade minister Andrew Robb said.
It helps lay “one of the key cornerstones to Kenya’s journey of transformation into an industrial, prosperous and middle-income country,” said Kenyan President Uhuru Kenyatta during the launch of the passenger train service of the 472-kilometer Mombasa-Nairobi Standard Gauge Railway in May. The railway is the African country’s single largest infrastructure project since its independence in 1963.
In land-locked Laos, a railway under construction will make it land-linked.
Railways built with Chinese expertise elsewhere will connect cities in and out of Thailand, Serbia, Hungary and other countries, while putting local development on a faster track, or simply bringing faster and easier travels to everyday life, not to mention jobs with better pay.
In parallel with the progress on land, most recently in December the operation of the port of Jambantota in Sri Lanka was launched enabling it to join other hubs along the Belt and Road, including Piraeus in Greece and Gwadar in Pakistan.
Not even the Arctic is left out. Russia and China in July agreed to find a shortcut between the Pacific and the Atlantic through the frigid north. Annual global freight costs could be cut by US$50 billion to US$120 billion.
The Silk Road on Ice via the Arctic is widely seen as the third arch of the Belt and Road, adding another sea route to ones starting from the South China Sea, to the Indian Ocean, Africa and the Mediterranean, and to the South Pacific and Oceania.
A man rides an escalator at a commercial building in Tokyo. Japan’s unemployment rate in November dipped to its lowest level since November 1993, official data showed yesterday, offering another sign that the world’s third-largest economy is on track to recovery even if the pace is slow. Unemployment stood at 2.7 percent last month while the jobs-to-applicants ratio improved 0.01 percent from the previous month to 1.56 in November, the highest in almost 44 years. — Reuters
Health care, technology and Japanese small-cap stocks look poised to outperform the broader market in the year ahead, according to some of the best performing US-based stock fund managers of 2017.Small-cap stocks should be among the largest winners of the newly signed Republican-led tax law, which slashed corporate taxes at home and made it cheaper for companies to bring back their profits from overseas. Yet small-cap fund managers from Loomis Sayles, Federated Investors and Wasatch Advisors whose funds are up 30 percent or more for the year say that a bigger factor in the year ahead will be continued global growth.“The tax bill is going to make some balance sheets look better on the margin, but we think the larger factor is that the recovery is still going on internationally,” said Kenneth Korngiebel, a co-portfolio manager of the US$335 million Wasatch Micro Cap fund, which is up 36.1 percent year-to-date. That performance makes it the 13th-best small-cap fund of the year, according to Lipper data, which tracks about 1,800 small-cap funds.As a result, Korngiebel is shifting more of his portfolio into international stocks, which often trade at lower valuations than their US counterparts and have better growth characteristics, he said.Korngiebel is adding to stocks like Japanese outsourcing company UT Group Co, whose shares are up 243 percent for the year to date, and which he expects to grow its revenue by more than 30 percent in the year ahead. He is also adding to his position in US-based Tabula Rasa Healthcare Inc, which helps doctors screen for potential drug interactions. Shares of the company are up 97 percent in 2017.“The percentage of the population who take five or more medication is going up and adverse drug events are expensive and can lead to loss of life. What we see here is opportunity to take advantage of an under-covered company that is unique and meets a large need,” he said.Overall, companies in the small-cap benchmark Russell 2000 index pay a median effective tax rate of 31.9 percent, while the larger, multinational companies in the S&P 500 pay a median effective tax rate of 28 percent, according to Thomson Reuters data. The median for the 30 mega-cap stocks in the Dow Jones Industrial Average is 23.8 percent.Some of the benefits of the tax cut are already reflected in stock prices. The iShares Russell 2000 ETF, which tracks the benchmark Russell 2000 index of small-cap shares, is up 14 percent for the year to date, with about half of that gain coming over the last three months as Republicans rolled out their tax plan.John Slavik, a co-portfolio manager of the US$18 million Loomis Sayles Small/Mid Cap Growth fund, the 16th-best performing small-cap fund this year, said that industrial machinery companies such as Gardner Denver Holdings Inc should benefit if corporations reinvest part of their tax windfalls into improving their factories.The fund’s largest position is in supply chain company XPO Logistics Inc, which Slavik expects to gain from both corporate capital reinvestment and global economic growth. Shares of the company are up 78 percent for the year, and now trade at a trailing price to earnings ratio of 65.9, but Slavik said that he expects its revenues and cash flow to accelerate as the global manufacturing sector continues to expand.“The valuation of the stock has been more challenging but we still thinks it works into the future,” he said.He has also been selling his position in clear-braces maker Align Technology Inc, whose shares are up 135 percent this year and now trade at a market value of more than US$18 billion, making it too large for his fund.“This is a company that has done very well for us but we are looking to start to redeploy that cash elsewhere,” he said.Stephen DeNichilo, a portfolio manager of the US$872 million Federated Kaufmann Small Cap fund, the ninth-best small-cap fund this year, said that fund holdings such as plastics molding manufacturer Milacron Holdings Corp will benefit from a pickup in capital spending because its products help improve a factory’s efficiency. “This kind of investment pays for itself very quickly,” he said.Yet he has a larger position overall in biotech companies, which have greater growth potential, he said.
CHINA will enhance key manufacturing technologies in nine areas as the government aims to drive the country to be a top manufacturer in the world by accelerating technology upgrading.
The National Development and Reform Commission, the country’s top economic planner, has made three-year (2018-20) targets for railway transport, advanced shipping and maritime engineering, intelligent robots, smart cars, modern agricultural machines, advanced medical devices and medicines, new materials, smart manufacturing and key equipment. The targets are aimed at catapulting China into the top league of manufacturing.
China expects to succeed in producing maglev trains that can run at 600 kilometers per hour and automating the operations of railways in the next three years. It also expects to “realize significant achievements in producing large cruise ships” and building a vessel capable of carrying 22,000 TEUs (twenty-foot equivalent units), which will be the world’s largest container ship.
China is expected to expand its global market share in advanced agricultural machines.
The NDRC aims to cut domestic medical expenses by introducing at least 10 new medicines to the domestic market and has plans to sell them abroad.
The targets also include intensifying the development of key components for smart manufacturing, such as programmable logic controllers and robots. Development of artificial intelligence and augmented reality will also be vital under the plan.
New materials such as graphene, specialty steel, advanced organic and composite materials are identified to help the development of advanced machines, save energy and cut carbon emissions.
China needs to deepen efforts on technology upgrading to enhance its manufacturing capability, the NDRC said, adding that the country hopes to rapidly integrate Big Data and AI with manufacturing.
CHINA’S securities regulator has ordered the founder of indebted tech conglomerate LeEco to return to China and sort out a mounting debt pile linked to his firms, ramping up pressure on the head of the embattled entertainment-to-auto group.
The heavy debt of LeEco, which is still controlled by Jia Yueting, has “seriously infringed investor rights.” Jia must return to China before Sunday, said the Beijing branch of the China Securities Regulatory Commission.
It did not specify where Jia was, although he has business interests in the United States.
A spokeswoman for LeEco’s main listed unit Leshi said Jia’s personal behavior would not have a major impact on the listed company’s overall operations and his ties with the firm were no longer that close. Jia stepped down as CEO of Leshi in May, but remains the head of parent LeEco.
The companies faced heavy debts and cash problems after LeEco’s aggressive expansion into the new-energy car market, which sucked up the capital of Leshi and forced it to halt trading for over seven months.
SHANGHAI stocks rebounded yesterday after investors were buoyed in the wake of the approval for the city’s master plan to become an “excellent global city” and also China’s plans to enhance the country’s manufacturing capacity.
The Shanghai Composite Index gained 0.78 percent to 3,306.12 points.
Shanghai Shine-Link International Logistics Co, a logistics company based in the Shanghai free trade zone, jumped by the daily limit of 10 percent on investor hopes that Shanghai’s plan for 2035, approved by the State Council on Monday, would benefit FTZ shares.
First Tractor Co also surged 10 percent as the National Development and Reform Commission forecast most of China’s advanced agricultural machines would be made domestically by 2020 and not imported.
A woman looks at an LG Electronics’ TV, which is made with LG Display flat screen, at its store in Seoul. South Korea’s trade ministry said yesterday that a committee had approved LG Display’s plan to build a new organic light-emitting diode panel production facility in China. The approval comes five months after LG Display said it would invest in large-size OLED production in Guangzhou to respond to fast growing demand in overseas markets.
CHINA’S non-fossil fuel production has gained steam amid a government campaign for more clean energy use to curb pollution, official data showed yesterday.
China’s energy production is set to reach 3.6 billion tons of standard coal equivalent in 2017, among which non-fossil fuel output accounts for 17.6 percent, up 6.4 percentage points from the percentage in 2012, according to information from a national work conference on energy.
By the end of 2017, China’s installed power generation capacity is slated at 1.77 billion kilowatts, and non-fossil fuel generation capacity accounts for 38.1 percent of the total.
China’s newly added renewable energy installed capacity accounts for 40 percent of the global growth, according to Nur Bekri, head of the National Energy Administration.
“China is actively adapting to the green trend in the energy supply,” he said, adding the country has become a global leader in the development of non-fossil fuel.
China has been promoting green resources such as wind and solar in recent years to cope with pollution and boost the quality of its growth.
China’s non-fossil fuel will account for half of its total power generation by 2030.
China will become the world’s second-biggest importer of liquefied natural gas this year as it overtakes South Korea, shipping data showed.This is a huge boost to Asia’s emerging spot market as Chinese buyers rely much more on short-term purchases to meet their needs than their counterparts in Japan and South Korea.Shipping data in Thomson Reuters Eikon showed that China’s imports of LNG will have risen by more than 50 percent in 2017 from the previous year to around 38 million tons.Comparatively, import-dependent Japan and South Korea will have taken around 83.5 million tons and just over 37 million tons by the end of the year, respectively.Analysts, though, say China’s LNG imports will rise further.“We are expecting to see even higher surges in winter demand over the next three to four years as the Chinese government pushes more broadly its gas-for-coal drive,” said Wang Wen, Beijing-based gas analyst with consultancy Wood Mackenzie.China’s soaring LNG import demand is a result of a huge government gasification program that saw millions of households switch from using coal for household heating this year to natural gas.Beyond virtually doubling Asian spot LNG prices since June to US$11.20 per million British thermal units — their highest since November 2014 — China’s rapid growth in purchases also changed the structure of the market.Despite efforts to change the market, LNG trading has remained dominated by long-term contracts under which fixed monthly volumes are supplied at prices linked to the oil market, although within certain price ranges.Such deals have been preferred by Japan and South Korea, which meet all their gas demand through LNG imports, as it gives them security of supply and prevents price volatility.China is different. The country has significant domestic natural gas reserves and also brings in supplies via pipeline from Central Asia.This means its utilities may order LNG cargoes only when they require gas at short notice — for instance during the current winter cold snap and supply crunch — possibly bringing a sudden spurt of purchases to a spot LNG market that in the past has seen limited activity.“China will surely become a key driver for Asian spot LNG prices,” Wang said.Japan, China and South Korea together make up 60 percent of global LNG demand.The world’s biggest LNG producers are Qatar, Australia and Malaysia, which together meet around 60 percent of global demand.
Shanghai taxi operator Qiangsheng plans to drive into the online ride-hailing business around the Spring Festival, the company said yesterday.Qiangsheng is cooperating with State Grid Corp, Geely Group and Tokyo MK — a Japanese taxi firm — to put 1,600 new-energy cars in the market.Geely has offered Qiangsheng 600 new-energy cars as the carmaker aims at “integrating with the Qiangsheng platform,” said Dong Kainan, manager of Youxing Technology, which owns Geely’s online car-hailing app Caocao Zhuanche.Passengers can book the cars through Caocao Zhuanche or Qiangsheng’s hotline service and app. However, no price has been set yet for hailing cars online.Qiangsheng is now recruiting drivers for its online hailing service.“All drivers must meet standards of online ride-hailing,” said Zhang Liang, an official of Qiangsheng. “They will also undergo an elementary English course to cater to the needs of foreign passengers.”Zhang said drivers will also receive service training from Tokyo MK to enhance their service awareness and quality.Qiangsheng owns 12,000 taxis, taking up 25 percent of Shanghai’s total.
CUSTOMERS of Shanghai Pudong Development Bank will be able to use their voice to check the balance in their accounts and buy wealth-management products as the lender launched the industry’s first voice-based interaction app yesterday, the latest effort by a Chinese bank to embrace an artificial intelligence era.
“Your voice is your passport to our banking services,” said Chen Zhuo, product manager of the lender’s electronic banking department.
The Pudong Bank has built an open alliance for smart financial innovation with Baidu, iFLYTEK Co and Shanghai Clearing House.
“As the artificial intelligence era has come, the combination of the technology and finance will revolutionize the financial industry in terms of the way of doing business, the internal momentum as well as the service efficiency,” said Pan Weidong, executive vice president of the Shanghai-based bank.
IFLYTEK, a software firm, provides the smart interaction technology for this app.
China’s top economic planner has punished four heating companies for violating pricing rules as it urged local governments to protect public rights amid rising demand in winter.The National Development and Reform Commission found the heating companies in Heilongjiang, Zhejiang, Sichuan and Shandong provinces breached pricing rules in an investigation which started on December 19, the NDRC said yesterday.The Heilongjiang company had imposed additional charges of 361,200 yuan (US$55,205) on users when they joined the heating network, while the firms in the other three provinces had arbitrarily demanded higher heating prices and made a profit of over 718,100 yuan.All the firms have been asked to pay back the illegal income to the users or to hand in it to the local governments. The Heilongjiang firm was also fined 541,900 yuan.China aims to ensure public rights by monitoring heating prices and supplies, and ordering local governments to beef up investigation into pricing violations.China’s heating demand has been surging during winter, “especially raising the natural gas prices” after the government asked users to switch from coal to gas, the commission said.The NDRC has also started an antitrust investigation on December 20 in 17 natural gas heating companies.
ANOTHER 126,000 households in Beijing can use clean heating instead of coal stoves this year, city authorities said yesterday.
At a cost of 7.4 billion yuan (US$1.1 billion), the city completed 296 projects to switch coal-fired heating to clean energy in rural areas this year, reducing the city’s annual coal use by 2.1 million tons.
As part of a campaign launched in 2013, Beijing phased out coal-fired heating facilities in 185,000 households across 415 villages, reducing the city’s coal use by 18 million tons over five years.
Beijing will phase out coal-fired heating facilities in 217,000 households between 2016 and 2020. By shifting to clean fuel, such as electricity and gas, the city can cut emission of carbon dioxide by nearly 600,000 tons, particulate matter by 3,700 tons and sulfur dioxide by nearly 1,500 tons.
Small stoves in Beijing’s suburban and rural areas, not covered by the central heating system, have been blamed for worsening the capital city’s smog during the winter.
A booming digital economy is reshaping China's economic landscape as the spread of technology such as big data and AIrevives traditional industries and casts new light on high-quality development.
The country's digital economy amounted to 22.58 trillion yuan (US$3.43 trillion) last year, ranking second globally and accounting for around 30 percent of national GDP. Its near-20-percent growth substantially outpaced the overall economy, which grew 6.7 percent in 2016.
The trend is likely to continue in the future and is expected to hit US$16 trillion by 2035.
"The digital economy has become a core engine powering China's economic growth," said Pony Ma, founder of Internet giant Tencent.
Tencent has plowed big money into forging competitiveness in fintech and big data, and recorded strong growth in games, digital content, online advertising and payments in the third quarter.
"China is already more digitized than many observers appreciate and has the potential to set the world's digital frontier in coming decades," the McKinsey Global Institute (MGI) said in a report.
As of June, there were 3.89 billion Internet users around the world, of which 751 million were in China. The enormous number of web users has created room for risk takers in e-commerce, mobile payments and other emerging areas to stretch their wings.
With leading online retailers Alibaba and JD.com, China is the world's largest e-commerce market, accounting for more than 40 percent of the value of worldwide transactions, up from less than 1 percent a decade ago. In terms of mobile payments, China has a transaction value 11 times that of the United States.
"The digital economy is making greater contribution to the national economy and rising as a fresh driver of economic transformation and upgrades," said Lin Xiunian, deputy head of the National Development and Reform Commission, the country's top economic planner.
As China's policy-makers pledged to steer the economy onto a new path featuring high-quality rather than high-speed growth, at the recent three-day Central Economic Work Conference, digital technology will give a push to the shift, revitalizing sluggish sectors and creating new growth points.
"China will briskly foster new growth drivers, improve technological innovation, push for upgrades of traditional sectors, and foster innovative, leading businesses," according to a statement of the key meeting.
The government has rolled out an array of policies such as "Made in China 2025" and "Internet Plus" strategies to spur the integration of Internet technologies and manufacturing, as well as other traditional sectors.
"After the process of digitization, businesses will see a 30-percent increase in production efficiency on average and a 20-percent drop in operation costs," the Ministry of Industry and Information Technology (MIIT) said.
Wu Hequan, an academician with the Chinese Academy of Engineering, said big data technology would redefine a series of sectors including finance, medical care, manufacturing, logistics and transportation, and prompt automobile, education and tourism to form new business models.
The food delivery unit of Meituan Dianping, China's largest group deals site, hires around 500,000 couriers, 31 percent of which come from declining traditional industries and 10 percent from poor areas.
"Our services create employment and value, and represent the future of the economy," said Wang Xing, chief executive of Meituan Dianping.
Innovators on the rise
The digital economy is backed by numerous homegrown Chinese tech firms developing from followers to leaders in the international tech community.
"China's three Internet giants are building a rich digital ecosystem that is now spreading beyond them. Baidu, Alibaba, Tencent and others are driving technical performance such as computing efficiency to set new world-class standards," the MGIsaid.
Investment has also poured in. The MGIsaid China was in the top three in the world for venture-capital investment in key types of digital technology, including autonomous vehicles, 3D printing, robotics, drones and AI.
One in three of the world's 262 unicorns, startups valued at more than US$1 billion, is Chinese, commanding 43 percent of the global value of these companies.
The government has promised tax breaks, financing support and other favorable policies to help innovative firms sprout and grow, and expects to see more domestic players able to take on international rivals.
"China is already a global digital economy, and it is going to have a greater impact on the global digital world," said Jonathan Woetzel, senior partner at Mckinsey.
SHARING economy is booming in China, but can it last? The answer is yes, according to economists, and growth will be fast, but not without challenges.
The market value of sharing economy will reach 4.5 trillion yuan (US$687 billion) in 2017, compared with 3.45 trillion last year, according to the State Information Center.
The sharing economy is expected to maintain annual growth of about 40 percent over the next few years, the SIC forecast.
The business model was originated from and flourished in the consumption sector, with companies such as Mobike and ofo in bike sharing and Airbnb in home sharing.
It is now also accepted by manufacturing and artificial intelligence enterprises.
By establishing a sharing platform that connects global innovation with China-made products, IngDan has now brought together more than 16,000 programs of intelligent hardware, 14,000 suppliers, and 16 million hardware buyers.
“The sharing economy is providing new growth in the manufacturing industry, while sharing of production materials will become more important,” said Ding Minglei, analyst with the Chinese Academy of Science and Technology for Development.
Shenyang Machine Tool (Group) developed an “i5” smart operating system which serves as a sharing platform for raw materials.
“The i5 is actually five ‘i,’ standing for five English words, industry, information, Internet, intelligent and integrate,” said Guan Xiyou, chairman of the group.
Thanks to the core technology with multiple patents, i5 smart machine tools have received more than 20,000 orders. Over 50 agreements have been signed to build smart factories nationwide.
Knowledge sharing is also on the up.
“Paying for superior online knowledge and content has become popular, replacing the previous mode of providing knowledge online for free,” said Zhou Yuan, founder and CEO of Zhihu, an online community sharing knowledge.
A series of credit services, including deposit exemption service, fueled the sharing economy, with users of sharing products increased by 12.7 percent month on month from January 2016 to April 2017, SIC data showed.
Despite the good news, the sharing economy faces blind expansion, with regulators struggling to forestall risks and clear the market.
Large and medium-sized cities, including Beijing and Shanghai, have made regulations since August, stopping bike-sharing companies from adding new bikes.
“The industry has seen excessive production and delivery of bikes, causing road safety problems,” said Tang Yunyi, a researcher with Shanghai Academy of Social Sciences.
Tempered by competition and regulation, a couple of bike-sharing companies have closed with nearly 1 billion yuan of deposit missing.
A research report by the Tencent Research Institute showed that 15 companies providing transportation services, such as on-demand taxi service, have closed in 2016 and 2017.
To promote the sharing economy, China issued guidelines in July. The government will encourage innovation in sharing while regulating the sector in a tolerant and prudent manner, according to the National Development and Reform Commission and other seven government departments.
The country will open more government and public data to the market to improve efficiency.
Specific employment and taxation policies would be adopted to assure the sharing economy’s growth.
CHINA will invest steadily in transport development in 2018, flat with this year, Minister of Transport Li Xiaopeng said yesterday.
In 2017, fixed-asset investment in railways and highways was targeted to reach 800 billion yuan (US$122 billion) and 1.65 trillion yuan respectively.
Citing the main transport target for next year, Li said around 5,000 kilometers of highways would be built and put into use.
The country will also renovate about 200,000km of roads in rural areas and increase over 600km of inland waterways.
China will continue to support the construction of roads in poor regions, so as to ensure these areas are connected by highways by 2020.
Over the past five years, China has made remarkable progress in transport development with total length of roads increasing by 534,000km and railways in operation by 27,000km.
In particular, over 7 billion trips have been made through high-speed railways in the 2012-2017 period.
In the following three years, transport will play a bigger role in eradicating poverty and achieving greener, safer development, according to Li.
He also said China will continue to push supply-side structural reform in the transport industry and further lower logistics costs in 2018.
China reduced logistics costs by more than 88 billion yuan in 2017, according to the ministry.
The cuts were made through measures such as the removal of some road tolls in provincial regions and streamlined traffic services, according to the ministry.
The country will expand pilot programs in highway toll collection and streamline some charges in ports, Li said.
Statistics from the National Development and Reform Commission showed the cost of logistics in China took up about 14.9 percent of GDP in 2016, down by 1.1 percentage points from the previous year.
Although the ratio had dropped for four years in a row by 2016, it is still higher than some developing economies.
Authorities have stepped up reform in the transport sector this year to reduce the logistics burden of companies. Rail freight charges were canceled or lowered, while more means of financing were made available to companies in the logistics sector.
THE Ministry of Commerce yesterday determined to turn China into a “strong economic and trading nation in all respects” by 2050.
In the past five years, China’s domestic consumption, foreign trade and investment all surpassed most other economies, laying a solid foundation for strengthening the economy and trade, Minister of Commerce Zhong Shan said at a meeting.
Before 2020, China should consolidate its position as a large economy and trader. The goal of becoming a strong trading nation should “be basically realized” by 2035 and be accomplished in all respects by 2050, according to Zhong.
He said efforts should be made to complete the goal in advance, without giving specifics about the meaning of “a strong economic and trading nation.”
China has remained the world’s largest goods exporter and second-largest importer for eight straight years. The market share of China’s exports in the world rose from 10.4 percent in 2011 to 13.2 percent in 2016.
China’s trade growth has contributed to the global economic and trade recovery, as Chinese products benefit people around the world, while imports help the development of trade partners, according to a statement from the ministry.
However, Chinese products rely mainly on quantity and price advantages in international competition, while lacking core competitiveness and added value.
China aims to basically realize socialist modernization by 2035 and develop into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful by 2050, according to a report delivered to the 19th National Congress of the Communist Party of China.