Outlook Update: China to Strengthen $3.8T Digital Economy
OUTLOOK UPDATE – On Wednesday, the state planner of China expressed interest in strengthening the country’s $3.8 trillion digital economies. It said that sectors such as big data and artificial intelligence could generate more jobs.
The economy of China is within a long-term restructuring that has witnessed the decrease of low-end industries, and the emergence of high-value factories that create drones and robotics.
“China will promote the digital transformation of traditional sectors, driving more workers to switch jobs and improve the quality of employment,” said the National Development and Reform Commission.
In the past few months, the government departments and agencies in China including the state planner have expressed their commitment to the long-term development of the country. Beijing focuses to depend less on trade and other external drivers.
The worsening trade war with the United States has covered the medium-term growth outlook of China and inflicts uncertainty for millions of Chinese jobs.
Chinese state media placed accusation against Washington of using trade to hinder the development of China.
According to the state planner, Beijing will advance inroads into areas such as the big data, cloud computing, and Artificial Intelligence, internet of things, and generate more high-end jobs.
Further, Beijing will put active efforts in attracting foreign talent to promote the innovation of its digital economy, the NDRC stated.
As per China Academy of Information and Communications Technology, the digital economy of China increased 18% to 26 trillion yuan ($3.8 trillion) in 2017. It is equivalent to a third of China’s gross domestic product (GDP).
In China, there are hundreds of millions of people who use mobile apps for entertainment, gaming, shopping, and social networking. Moreover, Urban China is largely cashless – most people pay through WeChat, Alibaba, and Alipay.
The NDRC said that it will likewise provide financing support in helping to grow new industries including obtaining funds from capital markets.
The NDRC signed an agreement with China Development Bank (CDB), a major policy lender, to make 100 billion yuan ($14.55 billion) offer in giving financial support for the digital support.
The NDRC added that the digital economy will likely help to boost agriculture – one of China’s ambition in reviving rural areas.
Outlook Update: ADB drops 2018 growth forecast in Vietnam
On Wednesday, the Asian Development Bank (ADB) dropped Vietnam’s economic growth forecast to 6.9% from 7.1% which was forecasted previously. This is due to the escalating trade tensions between the United States and China.
Vietnam is considered as one of the fastest growing economies in Asia. The country has an open economy that is heavily reliant on exports. The United States and China were two of its biggest trade partners.
“These are not good events for Vietnam. As Vietnam is so open … any reduction to global trade is going to affect it. There may be a beneficial impact in the short term, but we have to see how it plays out over the longer term. The long-term risk is a trade contraction in general and high competition from as a result of that Vietnam being squeezed out,” ADB Vietnam’s Country Director Eric Sidgwick said.
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