Chinese policy-makers are discussing the 13th Five-Year Plan at the on-going Fifth Plenary Session. How to further encourage innovation in different sectors is expected to be on the agenda. Innovation brought by the internet-plus-strategy is expected to be one of the next main economic drivers. But how much economic potential does it really have? Laura Luo has the story.
Being an entrepreneur is not longer just a privilege of the elite. It is the answer of the grass-root Chinese to the country’s national strategy of mass innovation and mass entrepreneurship. In other words, anyone can start a business now, and that’s all thanks to the internet.
online wealth management is the best example.
"A fancy university degree doesn’t necessarily make you a good fund manager. There are many capable investors on the Internet who can bring in better returns. If you have a solid investment return history, then let the data speak for itself. Investors will choose you," Renrencaopan CEO Gu Chonglun said.
Small online financial companies such as Renrencaopan have mushroomed in China this year. They are all in it for the lucrative potential of this new sector.
Statistics show China saw over 3 million newly registered businesses in the first three quarters, jumping one fifth from last year. The growth in information and software technologies was especially prominent. Innovation driven entrepreneurship is seen by the government as a new engine for China’s New Normal – which trades speedy development in exchange for better quality of growth.
Grass-root innovation and startups have had an impact on big industry players, forcing them to change faster.
"ICBC has 200 million internet banking users, and we hope to be a driving force in the era of internet plus," Jiang Jianqing, chairman of Industrial & Commercial Bank of China, said.
Another hot area that’s about to be revolutionized by the internet is education. Innovation in university teaching will certainly release even larger potential for China's creative minds.
"Encourage students to take MOOC courses like Coursera, and top unis in China. Experience more about how top professors teach. In addition, we also put tech at the frontier of our programs. Tencent elite class, Tencent execs come co-design programs…" July Lam, chancellor of Wuhan College, said.
With the help of internet, China has seen the 4th tidewave of entrepreneurial enthusiasm. Innovation is happening in every field, creating huge economic value.
But how much exactly does innovation contribute to the Chinese economy? A study by consulting firm McKinney shows that the contribution of innovation to economic growth has declined, to 30 percent of GDP growth over the past five years, from 48 percent in the previous decade (1990 to 2010). The report suggests that in order to maintain GDP growth of 5.5 to 6.5 percent per year through 2025, China will need to generate 35 to 50 percent of GDP growth.
Innovation is becoming increasingly essential to drive the country’s GDP growth. And the next five years is crucial for the country to realise its potential and emerge as a global leader in innovation. And only by doing so, can the country fulfil the fast expanding demand of its enormous consumer market.
