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China Daily (Canada) - - DEPTH -

a big strate­gic step for­ward.”

China’s econ­omy is go­ing through fun­da­men­tal changes with the “new nor­mal” of slower but sus­tain­able growth re­plac­ing the old model. High-tech in­dus­tries, do­mes­tic con­sump­tion and the ser­vice sec­tor will have cru­cial roles to play.

Af­ter decades of dou­ble-digit ex­pan­sion, China’s econ­omy in the sec­ond quar­ter of this year grew at 7 per­cent. That was the slow­est pace in nearly a quar­ter of a cen­tury as weak over­seas de­mand, ris­ing la­bor costs and a stronger cur­rency hit the coun­try’s ex­ports.

Low-end man­u­fac­tur­ing has also faced in­creased com­pe­ti­tion from cheaper ri­vals in Viet­nam, Cam­bo­dia and other parts of South­east Asia.

To drive China’s econ­omy for­ward, the em­pha­sis will be switched to high-tech man­u­fac­tur­ing as well as online ser­vices, such as e-com­merce. Al­ready spend­ing on IT ser­vices is up 165 per­cent dur­ing the past eight years.

This is in line with the State Coun­cil’s “In­ter­net Plus” pol­icy that was un­veiled ear­lier this year. The plan will fo­cus on in­creas­ing in­te­gra­tion of the In­ter­net, cloud com­put­ing and big data into tra­di­tional man­u­fac­tur­ing. Big data is vi­tal to the pol­icy, and is a broad term for pro­cess­ing vast amounts of com­plex sta­tis­tics, which can then be boiled down into mar­ket and con­sumer trends.

“The pol­icy is tes­ta­ment to the gov­ern­ment’s de­ter­mi­na­tion to grow China’s do­mes­tic tech­nol­ogy in­dus­try,” Jiang, the deputy re­searcher, said. “Also, high-tech is a key sec­tor in the US and that will at­tract Chi­nese in­vest­ment.”

That, of course, has al­ready started. Haier Group, a multi­na­tional con­sumer elec­tron­ics com­pany, has a well es­tab­lished pres­ence in the world’s largest econ­omy, while Len­ovo, the PC and smart­phone man­u­fac­turer, is no stranger to the US.

In fact, nearly all the 15 com­pa­nies that were part of China’s busi­ness del­e­ga­tion ei­ther have oper­a­tions in the US or plan to ex­pand there.

“All these firms have some sort of re­la­tion­ship with their US coun­ter­parts,” Jiang said. “Len­ovo, for ex­am­ple, ac­quir-ed IBM Corp’s PC oper­a­tions, while Haier has been in the coun­try for a while.”

Shan­dong Yuhuang Chem­i­cal Co Ltd is another Chi­nese com­pany mak­ing in­roads. The pri­vately owned firm was in­cluded in the busi­ness del­e­ga­tion for the first time.

But that was hardly sur­pris­ing as it re­cently rolled out a $1.5 bil­lion methanol plant in Louisiana, with an an­nual pro­duc­tion ca­pac­ity of 1.8 mil­lion met­ric tons.

“There is huge de­mand in China for methanol, and the gap be­tween sup­ply and de­mand will ex­pand to 20 mil­lion tons ev­ery year af­ter 2018,” Wang Jin­shu, chair­man of Yuhuang, said. “It is likely that we will im­port all the prod­uct to China. This will help im­prove the trade bal­ance and re­duce trade fric­tion be­tween China and the US.”

In Au­gust, the US di­vi­sion of Chi­nese auto-parts maker Wanx­i­ang Group Corp teamed up with bil­lion­aire John Pritzker’s pri­vate in­vest­ment firm to in­vest $1 bil­lion into the coun­try’s ho­tel sec­tor.

The plan is to ac­quire high­end prop­er­ties in places such as Cal­i­for­nia. Since 2010, Wanx­i­ang has in­vested in about 80 real es­tate projects in the US.

The group, which also owns Fisker Automotive, is an ex­pe­ri­enced in­vestor in in­dus­tries such as automotive, real es­tate and energy sec­tors. It has over 40 pro­duc­tion plants and 13,500 em­ploy­ees in the US.

“We ex­pect to see more co­op­er­a­tion be­tween the world’s two largest economies in the years ahead es­pe­cially in high­tech in­dus­tries,” Jiang said.

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REUTERS / TED S. WAR­REN / POOL

A group of CEOs and other ex­ec­u­tives ap­plaud as Chi­nese Pres­i­dent Xi Jin­ping (not pic­tured) ar­rives for a photo call at Mi­crosoft’s main cam­pus in Red­mond, Washington, on Sept 23. In­cluded in the group are (front row, L-R) Face­book CEO Mark Zucker­berg, JD.com CEO Richard Liu Qiang­dong, Cisco Sys­tems Inc CEO John Cham­bers, Alibaba Ex­ec­u­tive Chair­man Jack Ma and IBM CEO Ginni Rometty.

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