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China aims to boost real economy

Xinhua | Updated: 2017-01-21 10:29

BEIJING - Once a successful real estate developer, Li Fangping has shifted to high-end manufacturing by setting up a medical device company.

"I saw signs of a possible bubble in the property market and made up my mind to enter the more down-to-earth manufacturing sector," he said.

Li's company, Nurotron Biotechnology, is the only one in China capable of independently developing cochlear implant systems. To date, some 6,000 people have been implanted with Li's products.

Behind the company's good performance is Li's devotion to scientific innovation. The company has employed top talent from abroad and invested some 25 million yuan ($3.6 million) in technological research and development every year.

From real estate to the real economy, Li has followed the country's strategy to boost the real economy, which has been plagued by rising labor costs and low investment returns compared to the financial and property sectors.

The country has adopted a set of measures, such as reducing overcapacity, streamlining administrative approvals and boosting innovation to stimulate the real economy.

Reviving the real economy was also stressed during the annual Central Economic Work Conference in December 2016.

The real economy has also been a key word in the ongoing local two sessions -- the annual meetings of provincial lawmakers and political advisors.

A Shanghai government work report published during the city's two sessions vowed to revive the real economy and promote an economy that features new technology, new industry, and new formats and patterns.

During the two sessions of the eastern province of Zhejiang, vice provincial governor Feng Fei said the real economy is facing an imbalance of profit and resource allocation as real estate and finance, which are much more profitable, have been attracting far more resources than the real economy.

The province will help lower the costs of the real economy this year so that more resources will be distributed to the sector, he said.

Government efforts and determination have boosted the morale of businesses.

On Jan 18, China's CSG Smart Science and Technology Company began construction on a robotics industrial base in Shanghai.

The base, which is expected to be completed in two years and covers over 200,000 square meters, will serve as an innovation and industry incubation center focused on both industrial and service robots.

Yao Yao, vice president of the company, said, "The city's determination to develop the real economy and local governments' efforts in streamlining administrative approvals have made us hopeful for our future development."

Companies in the virtual economy are also shifting their attention offline. China's e-commerce giant Alibaba is offering to buy Intime Retail, a department store chain, for $2.55 billion.

Alibaba Investment, a wholly owned subsidiary of Alibaba Group, announced earlier this month that it has asked Intime's board to propose a privatization plan to shareholders.

Alibaba is already Intime's biggest shareholder, holding a 28-percent stake that will be raised to 74 percent after the deal.

"Alibaba's purchase of Intime reflected the integration of Internet companies with the real economy," venture capital analyst Zhang Zheyu said. "After years of rapid expansion, the e-commerce sector needs to join hands with traditional retailing to innovate the consumer experience."

China's producer price index (PPI), which measures costs for goods at the factory gate, rose 5.5 percent year-on-year in December 2016, the highest in more than five years.

Yang Liuyong, professor of economics at Zhejiang University, said a rebound in PPI could boost corporate profits, benefiting the manufacturing industry.

Zhang Lianqi, a national political advisor, said the key to enhancing the competitiveness of the real economy lies in quality improvement, brand building and innovation.

Hopefully the country will come up with more concrete supporting policies and supervising measures in quality inspection, setting standards, brand building, and improving the business environment, he said.

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