They call them “New Growth” or “Next Generation” industries which have taken over from the industrial sector and is what now what helps fuel China’s economy.
A new documentary by NHK (Japan Broadcasting Corporation) China: The Great Dragon, takes a magnified look at China’s rising “new industries”. It highlights president Xi Jinping’s push for homegrown innovation, and his wish for a “self-innovating economy”, while hoping to shed China of it’s reputation as the “world’s factory”.
As China’s growth transitions from heavy to soft industries, banks have more difficulty in lending more money. So, as a way of getting around this (and to keep next generation industries rising) the government has allowed more private sector investment. Before now investment into China came largely from state-owned and foreign investment. But as China is no longer the world’s factory, investing in manufacturing no longer cuts the mustard, so where do investors now put their money? Private investment groups.
So, as the story goes, the government relaxed the laws in order to “encourage the establishment of investment firms” and give more freedom by utilising a “preferential tax policy” among other incentives. As a result, a monumental amount of private investment companies popped up all over the country, but with that came uncontrolled investment; it is now estimated that 1 in 3 of these companies have caused trouble, according to the documentary. Fraud cases including Nanjing’s recent high-profile Qianbao investment case have rippled through the country, causing a concern for new investors.
From a recent government meeting, Beijing’s “Made in China 2025” wish list of innovation:
- New Advanced Information Technology
- High-end NC Machine Tools and Robotics
- Aerospace Equipment and High-tech ships
- Modern Railway Equipment
- Energy Saving and New Energy Vehicles
- Power Equipment
- Agricultural Machinery
- New Materials
- Biopharmaceutical and High-Performance Medical Devices
“We’ll generate passion for mass entrepreneurship and technical innovation. They will be the great drivers for growth” (Premier Li Keqing)
NHK goes on to highlight the importance of startups and how they are proving to not only be one of the safest ways to invest but they are also the strongest player in the new industry group, and overseas returning Chinese are said to be the most sought after. And with groups such as The China Youth Returnee Association (CYRA 中国青年海归协会), which is possibly one of the most influential and well-connected groups of China’s elite, with over 700,000 members, it targets young people who have studied abroad, Chinese startups are given the green light.
The Yangtse Evening Post recently ran an article claiming there are over 30,000 returnee ventures in Nanjing. In November of 2017 at the Nanjing Economic and Technological Development Zone; Students Pioneering Park, an awarding ceremony was held for students studying innovation and entrepreneurship. The annual “overseas talent entrepreneurship competition” is this year in its sixth session. Successfully attracting 1,531 overseas experts and students to compete; 100 people won the prize with 72 selected as “key talent programs” in Nanjing and 81 technological companies established.
According to the Nanjing Social Council Foreign Experts Bureau, the old capital is “increasing its intensity of support for returnee entrepreneurship and innovative ideas”. In line with support for the 2011 state policy regarding self-innovation, at a municipal level, Nanjing’s plan to attract 37,000 talents (domestic and abroad), has almost been achieved. Offering further incentives to attractive “top talent” to Nanjing, the Bureau has conjured up the idea of a “New Nanjing” which is comprised of but not only consisting of: talent apartments, public rental housing, housing subsidies, total property rights, a Nanjing residence permit, immigration convenience and license renewal.
Ideas of innovative roots in Nanjing can be traced as far back as 1994 with the establishment of the “Jinling Overseas Students Pioneer Park”, which has over time, formed a pattern for the Development Zone. These areas of “high-quality services for overseas students to innovate” became official in 2015. Nationwide three provinces have been granted such provincial-level innovation parks.
And so we sit back and watch while contemplating to which degree China will be able to gain traction as a self-innovating economy. If judging a country by its historical patterns is a good way to predict outcomes, than we can rest assured China’s millennial’s shall not falter when tasked with the great responsibility of ushering this country into its next era of sustainable economic growth.