Economy defies doomsayers

China’s economic growth looks set to accelerate this year, the first time in seven years, after it registered a 6.8 percent year-on-year GDP growth in the third quarter. Given that growth trend has been achieved against the backdrop of both domestic structural reforms and the still fragile global economic recovery, it showcases the exceptional resilience of the world’s second-largest economy. [Special coverage]

China’s GDP growth in the first three quarters has been in stark contrast to the scenario depicted by many doomsayers late last year. Even more reassuring, while a variety of economic indicators are showing signs of steady growth, the country has also made much headway in carrying out the tough task of economic restructuring.

Industrial output growth, for example, increased to 6.7 percent in the first three quarters from 6 percent a year ago, with high-tech manufacturing and equipment-making industries, which are the backbone of a country’s industrial development, showing brisk performance. The growth in their output was 13.4 percent and 11.6 percent, respectively, 6.7 percentage points and 4.9 percentage points higher than that of overall industrial output.

Another case in point is retail sales growth, which remained strong at 10.4 percent in the January-September period. Although that was unchanged compared with a year ago, online sales increased by 34.2 percent, 8.1 percentage points higher than a year ago, indicating the bigger role played by this new driving force for consumption.

In terms of the supply-side structural reform, China has continued to reduce its leverage levels and the country’s investment in environmental protection, public facility management and agriculture all registered much higher growth than overall investment expansion.

Such encouraging fundamentals have been achieved thanks to the government striving for innovative, coordinated, green, open and shared development.

As Xi Jinping, general secretary of the CPC Central Committee, said on Wednesday, while expansion of economic scale remains important, top priority must be given to the quality of growth.

It is a focus that will ensure sustainable long-term growth.

Mid-size firms bullish over next 3 years

Medium-sized companies on the Chinese mainland are confident of the business growth over the next three years and are focusing on expanding in the domestic market, according to a HSBC report.

Generally, medium-sized companies surveyed saw both their revenue and profit margin to grow steadily in the next three years, the report said.

“As an important part of the national economy, mid-market companies have their own features in business development and market strategies.” said Fang Xiao, vice president and director of commercial finance of HSBC China.

“Different from mega-sized companies which are actively expanding in global markets, we found that many mid-sized companies focus more on seizing the opportunities arising from China’s economic upgrading and transformation and digging deep to tap the potential of local markets.”

One-third of the mid-sized companies on the mainland highlighted tapping market potential as the main channel to increase revenue. This option topped expanding the domestic market which came in second at 24 percent while improving operational efficiency ranked third at 19 percent, according to the report.

Meanwhile, 61 percent of medium-sized enterprises on the mainland believe that investing in technology can bring new business opportunities and 54 percent see green development as the way to survive.

More firms set to beef up travel budgets

Along with rising business confidence, as many as 31 percent of Chinese companies expect to increase their travel budgets over the next 12 months, surging from the 17 percent of respondents that predicted budget increases last year, a survey showed.

The 2017 China Business Travel Survey was published by the CITS (China International Travel Service) American Express Global Business Travel on Tuesday. It revealed that 40 percent of the polled organizations planned to expand their budgets to tap into the opportunities presented by the Belt and Road Initiative.

China became the country with the largest business travel expenditure of $317 billion in the world after overtaking the United States in 2016.

The survey indicated that 75 percent of China’s business travel spending was made domestically, but Tan Haoling, vice-president of CITS American Express Global Business Travel, said they have also noticed the trend that many Chinese companies are looking outward for opportunities in global commerce.

“China’s Belt and Road Initiative could benefit Chinese organizations with an international travel program (43 percent of companies), as well as those with a regional program (21 percent of companies),” said Tan.

The survey also highlighted the importance of business travel as a key driver of revenue for many Chinese organizations, with 90 percent reporting that increased client-facing travel would likely increase revenue, and 53 percent of the respondents believed an increase in client-related travel would improve overall revenue by between 10 percent and 20 percent.

“The research tells us Chinese companies believe there are savings to be identified within their current travel budgets, and that many intend to put measures in place to realize some of these savings next year,” said Tan, who added inflexible travel policies (30 percent) and complex reimbursement processes (23 percent) are the top two complaints for business travelers.

The barometer is an annual report detailing the status of, as well as forecasts for, China business travel. This year’s report surveyed executives from 150 companies in China, in a variety of enterprises in major Chinese cities.

CITS American Express Business Travel is a joint venture between American Express and CITS.

A white paper on China’s business travel by Ctrip, China’s largest online travel platform, published earlier this year, projected China’s market will continue to see double-digit growth this year.

Shanghai to help foreign-invested R&D centers

Shanghai will offer financial incentives and greater access to government-led projects for foreign-invested research and development centers as it bids to turn itself into technology and innovation center.

Foreign investors are encouraged to set up R&D centers and incorporate existing ones into their global R&D center as the government will offer a one-off 5 million yuan ($759,000) for foreign-invested R&D centers employing more than 100 employees, according to new rules released yesterday.

The R&D centers will also receive subsidies to cover as much as 30 percent of the rent for three years. Rent subsidies will also be granted for R&D centers if they share their resources with small businesses and entrepreneurs.

The government has also vowed to lift the proportion of foreign-invested R&D centers within state and city-level technical centers, and offer as much as 3 million yuan per project for city-level technical centers engaged in lifting basic innovative capability, breakthrough of core technology, and smart manufacturing.

“Promoting the role of foreign investment to build up Shanghai’s technology and innovation center is a new path of innovation-driven development,” said Shang Yuying, director of the Shanghai Commission of Commerce.

The incentives include funding for R&D projects in emerging industries, equal policy support between domestic and foreign investment on transfer of technology, faster import procedures for R&D materials, and financial awards for new patents.

Various government bodies will also enhance protection of intellectual property rights, simplify visa and work permit procedures, and offer more public services for foreign investment R&D centers.

There were 416 foreign-invested R&D centers in Shanghai by the end of August, accounting for a quarter of the total on China’s mainland, according to official data.

Shanghai now a sellers’ market for job hunters

Increasing demand for workers amid a shrinking labor pool is driving salary offers higher than job seekers’ expectations.

“Offered salaries have been lower than job seekers’ expectations for a very long time,” said Wang Jiawen, a career information analyst at the city’s employment promotion center, which released a study on the jobs market yesterday.

“But we noticed they began to exceed expectations in the fourth quarter last year and the trend has become increasingly very obvious in the past 10 months.”

Average offers were 4,630 yuan ($700) a month in August, against average expectations of 4,474 yuan, the report said.

The average offers cover from entry-level to more experienced positions.

The shift reflects significant changes in the labor market.

“The recruitment needs have been high, but the working-age population is declining,” Wang said.

Shanghai is expanding and upgrading its industrial infrastructure, fuelling strong growth in demand for skilled workers — and making it harder for employers to find people with the right skills and qualifications.

“Previously, people had to lower their expectations to get a job as soon as possible,” Wang said.

“But now, employers have had to increase their offers to hire the right talent as soon as possible.

“The job market is no longer a buyers’ market. It is a sellers’ market.”

He forecast that trend to continue over the long term, with salary offers continuing to rise.

The report also found the general average pay offered by employers across the total job market was 8.8 percent higher in August than the lame period last year.

But that is still below the average of 9.6 percent growth in recent years.

The finance industry has the best offers -— 5,436 yuan a month in August, up 5 percent from a year earlier.

Next best were hydraulic engineering, environment and public facility management averaging about 5,252 yuan a month and information, computer services and software, offering about 5,144 yuan a month — which showed the highest growth over last year at 15.6 percent.

Private companies offered the highest wages — 4,733 yuan a month.

Money offered by foreign ventures saw the highest growth, with a 9.2 percent increase to 4,484 yuan.

Men are still offered more than women — 4,825 yuan a month, compared with 4,609.

Qihoo 360 sets up subsidiary in Xiongan New Area

Qihoo 360 Technology Co Ltd has completed its registration in China’s Xiongan New Area to set up a subsidiary, becoming the first cybersecurity company to set its footprint in this new economic area, according to a report by Shanghai Securities News on Friday.

The subsidiary was established on Oct 12, 2017, with registered capital of 10 million yuan ($1.52 million), the report said, adding that Qihoo 360 has pledged its safety network will cover social and economic aspects in Xiongan and will help train more cybersecurity talents in the area as well.

Meanwhile, the People’s Insurance Company (Group) of China, China’s major insurer, announced On Oct 11 that its proposed subsidiary PICC Pension Company Limited (PICC Pension) has been granted approval to commence operation from the China Insurance Regulatory Commission.

The registered capital of PICC Pension will be 4 billion yuan, with its place of registration in Xiongan New Area and its place of operation in Beijing city, an announcement on PICC’s website said.

And information on the National Enterprise Credit Information Publicity System showed that a unit of China’s real estate giant Vanke Co Ltd was registered on Oct 10, with 2 billion yuan registered capital and Hebei’s Xiongxian, part of Xiongan New Area, as its registration place.

These are among 48 companies in the first batch to have been given green light to set up units in the economic zone, including Alibaba Group Holding Ltd, Tencent Holdings Ltd, Baidu Inc, Jingdong Finance, Shenzhen Kuang-Chi, China Telecom, according to the administrative committee of Xiongan.

Fourteen companies are leading Chinese information technology firms, 15 are in finance, seven are research institutes, and five are focused on green technology.

Nineteen of them are centrally-administered State-owned enterprises and 21 are private companies.

The committee’s official WeChat account said on Sept 28 that high-end and high-tech companies will be the mainstream of industry in the area.

While Chinese e-commerce giant Alibaba announced on Sept 29 that it will set up three subsidiaries in Xiongan with a total registered capital of 160 million yuan, tech giant Tencent also set up a subsidiary on Sept 26 in the new area with a registered capital of 20 million yuan, according to Tianyancha, an enterprise data query system.

The Xiongan New Area, a new economic zone about 100 kilometers southwest of Beijing, was announced in April. It covers Hebei’s Xiongxian, Rongcheng and Anxin counties.

The project aims to relieve the pressure of population on Beijing and build another economic powerhouse along the lines of those built near Shenzhen and Shanghai.

China to invest big in ‘Made in China 2025’ strategy

China will step up financial support for major projects of its “Made in China 2025” strategy, a blueprint for upgrading the country’s manufacturing sector.[Special Coverage]

Sectors that boost manufacturing innovation, including the Internet of Things, smart appliances and high-end consumer electronics, are the major priority for funding, according to the Ministry of Industry and Information Technology (MIIT).

The total funding is likely to exceed 10 billion yuan (1.5 billion U.S. dollars), Xinhua-run Economic Information Daily reported.

Aside from central-level funding, local authorities will also increase financial support for “Made in China 2025” projects with over 10 billion yuan expected to be invested by local governments nationwide from 2016 to 2020.

The MIIT will also cooperate with China Development Bank to provide financial services including loans, bonds, leasing to support major projects, with an estimated 300 billion yuan of financing in place in the 2016-2020 period.

“The financial support gives a clear direction for future development in China’s manufacturing innovation and boosts social confidence in economic restructuring and upgrades,” said Wu Hequan, academician of Chinese Academy of Engineering.

The “Made in China 2025” strategy, a roadmap released by the State Council in 2015 to guide the country’s advanced industrial manufacturing, has seen steady progress in industrial capability, smart manufacturing, innovation, as well as product quality and branding.

Average productivity was up by 38 percent for China’s first 109 pilot projects in smart manufacturing, while operating costs dropped by 21 percent, according to the MIIT.

Insurance industry faces profound changes

China’s insurance industry is facing profound changes in terms of policy, environment and technology, said Huang Hong, deputy president of China Insurance Regulatory Commission, on Tuesday.

He made this comment at the China Life Insurance October Qianhai Summit 2017 in Shenzhen, Guangdong province.

He stressed that the key of the country’s financial policy now is to serve the entity economy, control financial risks, and deepen reform.

“Serving the entity economy should be reflected through the entire asset management process in a broad range, including stabling people’s lives, promoting consumption, and supporting the building of major projects,” he said.

In addition he believes new technology, such as mobile internet, big data, AI and genetic tests, are changing consumer behaviors, service methods and sales channels in China.

Huang also argued the industry should continue to open up, stably relax the threshold for foreign insurance companies to enter the domestic market and encourage foreign capital to take part in health care and retirement insurance.

Ng Keng Hooi, chief executive and president of AIA Group Ltd, noted at the summit the life insurance market in Asia remains the strongest in the world and is at an inflection point for continued high growth.

Companies should seize Belt and Road opportunities: Cushman and Wakefield

Both Chinese and international companies should seize the opportunities offered by the Belt and Road Initiative, according to a report issued by global real estate services firm Cushman and Wakefield.

Since the initiative was proposed by China in 2013, governmental organs and companies from around the world have expressed their strong will to take part in it, the report said.

Some Chinese companies have increased their international competitiveness through self development and business management, while others sought global partnerships or foreign acquisitions to fill existing gaps between them and their global counterparts.

The number of overseas mergers and acquisitions executed by Chinese firms in 2016 increased by 21 percent from the previous year to reach 438, and the amount of actual investment involved grew to 215.8 billion U.S. dollars, up 148 percent than 2015, the report stated, quoting figures jointly issued this June by Shanghai-based advisory firm DealGlobe and Hurun, known for publishing an annual rich list. These deals were mainly made in the manufacturing, financial services and health sectors.

Business opportunities will arise for overseas companies, including outbound capital projects and infrastructure, especially in partnership with Chinese companies, and involvement in supplying equipment, technology and intellectual property, it also said, citing a report issued by PricewaterhouseCoopers earlier this year.

The Belt and Road Initiative, also knows as the Silk Road Economic Belt and the 21st Century Maritime Silk Road, aims to build a trade and infrastructure network connecting Asia with Europe and Africa along ancient trade routes.

Over 100 countries, regions and international organizations have expressed support for or participated in the initiative.