China’s 2017 CPPCC & NPC De­liv­ers Pos­i­tive Message for ICT Mar­ket De­vel­op­ment

China's Foreign Trade (English) - - Industrial Watch - By Jenny Hu

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.

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