Creative and high-tech firms in China are emerging as major forces to off-set the lingering slowdown in the wider economy, a Chinese economist said. Zhang Yongwei, vice-director-general of the Enterprise Research Institute under the Development Research Center of the State Council, said growth in the tech sector would offset falling traditional industries like steel-smelting in an article published on the Economic Daily.
"High-tech development zones and innovation parks are rising to become significant drivers of regional development," Zhang said, citing communication, medicine, new energy vehicles and smart equipment startups. The high-tech sector accounts for over 40 percent of industrial output in some developed provinces, which shows economic structural improvement, according to Zhang.
The central government is hoping high-tech and high value-added industries will replace traditional manufacturing as the country's economic engines. The high-tech sector grew 10.4 percent year on year in the first nine months, outpacing China's general industrial output by 4.2 percentage points. Enterprises invested 4.23 trillion yuan (nearly 670 billion U.S. dollars) on technological upgrade in the first seven months of the year, up 12.9 percent year on year and accounting for over a third of total industrial investment, data showed. "Investment in technology is investment in the future," Zhang said, "More and more companies have realized that innovation is the only way they will get rid of their inventories and be competitive." Zhang said creative high-tech firms are also more adaptive to economic restructuring and, as such, more upbeat about the economic outlook.
The MNI China Business Sentiment, an advanced indicator compiled by capital market news website Market News International (MNI), jumped 8.4 percent month on month in October to 55.6, recovering from a sharp decline in September. The indicator is based on monthly polls of around 200 large companies listed on the Shanghai and Shenzhen stock exchanges.
The growing optimism has also been fueled by government policies to improve the overall business environment. China has been cutting funding costs, rolling out tax breaks and widening market access to encourage individuals to set up companies. Thanks to easier market access, around 20.81 million market entities were registered between March 2014 and August 2015, up 16 percent from the previous period.
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