China’s 2017 CPPCC & NPC Delivers Positive Message for ICT Market Development
In the year of 2016, China’s ICT market (IT and telecommunication service) accounted for a ratio of 3.85% in total GDP. Development of the ICT market is always positively correlated with economic growth. The government’s development target for 2017 lays a sound foundation for the ICT market to grow steadily.
The government’s nine priority tasks deliver positive signals for the ICT market development
Pushing ahead with the five priority tasks through reform. Cutting overcapacity, cutting excess inventory, deleveraging, reducing cost and improving weak areas is the key for reform in the supply side. In terms of reducing cost, the government work report clearly mentioned “More small businesses with low profits will enjoy halved corporate income tax with the upper limit of annual taxable income raised to RMB 500,000 from RMB 300,000. For the small and medium high-tech enterprises, R& D expenses that are tax deductible are to be raised from the original 50% to 75%. We will do all we can to see the intensity and impact of structural tax cuts deliver further results. We will continue to lower as appropriate the share paid by enterprises for contributions to social security. Government-imposed transaction costs will be reduced for businesses with less energy and logistics costs”. The IDC predicts that all these cost cutting measures will be in the favor of the development of ICT manufacturers, which is especially good news for the innovative and start-up businesses.
Deepening reform in the major sectors and key links. Regarding this task, the government work report explicitly stated that “We will continue to transform government functions and will accelerate efforts to make the information system of the State Council departments and those of the local governments better connected, forming a nationally unified government service platform”. The IDC holds that this safeguards the future development of a government cloud. “We will speed up the reform of SOES and state capital by developing a corporate governance structure represented by a legal person that is under effective check and establishing a flexible & efficient market-based operating system, with a view to increasing core competitiveness and making resource allocation more effective”. Reform keeps deepening and the ICT domain will follow the pace, which drives ICT system upgrading for the SOES.
More efforts are to be made to unleash the potential of domestic demand. The government work report mentioned “We need to speed up the development of service consumption and support the non-government sectors in providing education, elderly care, healthcare and other services. We will encourage development of new service models and cross-sectoral integration, combined medical and elderly care services, cultural and creative services and other emerging forms of consumption. We will improve tourist facilities and make a big push to develop rural tourism, recreational tourism and all-for- one tourism. We will increase information consumption including digital homes and online learning. We will see that communities and rural areas have better access to e-commerce and express delivery services and encourage the integrated development of physical store sales and online shopping.” IDC holds that such sectors as big health, culture & innovation, tourism, digital home, education and e-commerce will embrace more IT opportunities. “We will work proactively to expand effective investment and guide more investment into fields that will help to strengthen weak areas, drive structural adjustment, encourage innovation and improve people’s lives. This year, we will invest RMB 800 billion in railway construction and RMB 1.8 trillion in highway and waterway projects. Construction on another 15 major water conservancy projects will begin, and work on major rail transport, civil aviation and telecommunications infrastructure projects will be sped up.” This provides tremendous opportunities for the ICT market of the infrastructure construction sector.
Transforming and upgrading the real economy through innovation. The government work report mentioned “We will strengthen our capacity for making technological innovations and establish platforms for sharing R& D resources. We will accelerate the development of emerging industries and fully implement the plan for developing strategic emerging industries. We will accelerate R& D on and commercialization of new materials, artificial intelligence, integrated circuits, bio-pharmacy, 5G mobile communications and other technologies and develop industrial clusters in these fields. This year, we will do more to increase broadband speed and lower rates for Internet services. Mobile rates for domestic roaming and long-distance call will be canceled; rates for broadband services for small and medium enterprises will be slashed; and rates for international calls will be lowered. We will push forward with the Internet Plus action plan and speed up the development of digital economy, all of which will benefit both the businesses and the people. With the development of smart manufacturing as the focus, we will press ahead with building national smart manufacturing demonstration zones and manufacturing innovation centers. We will work hard on the implementation of projects to build a robust foundation for industrial development and projects to develop and make major equipment and we will make a big push to develop advanced manufacturing, thus moving toward mid- and high-end manufacturing. We will establish more entrepreneurship and innovation demonstration centers; we will encourage large enterprises, research institutes and universities to establish specialized spaces for crowd innovation; we will strengthen support for innovative medium, small and micro businesses; and we will develop a full range of service that are accessible to the general public for the entire business start-up and innovation process.” The IDC regards
The IDC predicts that all these cost cutting measures will be in the favor of the development of ICT manufacturers.
that the core of strategic emerging industries, intelligent manufacturing, Internet Plus action plan as well as business start-up & innovation lies in the digitization transformation of industries, which possesses abundant business opportunities in future.
Promoting steady development of agriculture and continued increases in rural incomes. The government work report mentioned “30,000 administrative villages will be linked up to fiber-optical networks.” The IDC holds that this lays a sound foundation for the new informatization in rural areas and this will also considerably promote development of agriculture e- commerce. Besides, such smart devices as smartphones, tablet computers and PC will have a bigger popularity in the rural areas.
Actively expanding China’s opening up to the world. The government work report mentioned “We will make solid efforts to pursue the “Belt and Road” initiative. Guided by the principle of achieving shared growth through consultation and collaboration, we will accelerate the building of overland economic corridors and maritime cooperation hubs and establish cooperative mechanisms for achieving compatibility in customs clearance procedures along the routes. We will make big moves to improve the environment for foreign investors and will revise the catalog of industries open to foreign investment and make service industries, manufacturing and mining more open to foreign investment. We will encourage foreign-invested firms to be listed and issue bonds in China and allow them to take part in national science and technology projects. Foreign firms will be treated the same as domestic firms when it comes to license application, standard setting and government procurement, and will enjoy the same preferential policies under the ‘Made in China 2025’ initiative. Local governments can, within the scope of the powers granted them by law, adopt preferential policies to attract foreign investment. We will build 11 high-standard pilot free trade zones and widely spread practices developed in these zones that are proven to work”. The IDC regards that the regions and countries along the “Belt and Road” initiative, the 11 pilot free trade zones, service sector and intelligent manufacturing will deepen opening up to the outside world, which will also become an important domain for future ICT business opportunities.
Effectively strengthening environmental protection. The government work report mentioned “Faster progress is supposed to achieve in improving the environment, particularly the air quality and we will endeavor to make our skies blue again. We will act quickly to improve our mechanisms and technologies, enabling us to prioritize the integration of renewable energy sources into the electric grid and effectively address wasted hydro-, windand solar-power generation capacities. All the key sources of industrial pollution will be placed under round-the-clock online monitoring. We will strengthen energy conservation and environmental protection industries to ensure both environmental improvement and economic growth.” The IDC predicts that during the 13th FiveYear Plan, the total investments to the energy conservation and environmental protection sector will exceed RMB 10 trillion, up over 100% compared to that of the 12th Five-year Plan. Great business opportunities lie in environmental protection platforms as well as environmental protection detection and management systems.
Promoting social development to ensure and improve the well-being of our people. The government work report mentioned “We will make continued progress in building a healthy China by accelerating the building of a nationwide information network for basic health insurance so that healthcare costs can be settled directly where incurred. We will extend trials to use a tiered diagnosis and treatment model and a contracted family doctor service system to cover over 85% of the prefectural-level cities in China. The IDC holds that big health and safety China construction is a significant initiative to ensure and improve the well-being of our people and ICT will play a powerful role in the implementation of the initiative.
Strengthening the all- around improvement of government. The government work report mentioned “We will make government operations more transparent. We will ensure that policies are made in a sound and democratic way on the basis of law and we will widely solicit input and criticism from all interested parties in policy making.” The IDC holds that making government operations more transparent needs support by government opening data, which is also in line with the State’s big data development strategy. Data opening is normal and it is exceptions for keeping data secret. In future, big data platforms of governments at all levels will bring great business opportunities.
“Each year, the NPC and CPPCC organized by the Chinese government serves as the guideline for the macro economic development of that year, and it is also a direction for that year’s important ICT business opportunities. As the Chinese government’s policy is exerting increasingly powerful impact, China’s Internet application and penetration keeps deepening and users’ demands become more individual, the Chinese companies need to keep going global. With great potential in the domestic market, China will see deepening opening up to the outside world. Digitization transformation led by the latest ICT technologies will turn into a dominant trend among all the sectors and ICT manufacturers are supposed to seek business opportunities in the digitization transformation course by carefully evaluating the policy and economic environment, making full use of the latest ICT technologies and bringing their own advantages into full play,” concluded Wu Lianfeng, vice president and chief analyst of the IDC China.
As the Chinese government’s policy is exerting increasingly powerful impact, China’s Internet application and penetration keeps deepening and users’ demands become more individual.