Opening the panel, Bin Shi reflected on 2018 as both a challenging year for China equity investors but also a year in which a series of underlying changes emerged as drivers of the Chinese economy.
Increasingly, these drivers have taken the lead as new forces for growth in China at a time when the influence of some of the traditional drivers, like fixed asset investment and exports, may have peaked.
Bin explained that technology is at the heart of this transition and the growth of technology during the past ten years has been very significant.
Bin highlighted three reasons for this development.
R&D and innovation are spurring growth
Chinese companies have significantly increased their spending on research and development during the past ten years from an estimated USD 49bn in 2007 to USD 265bn in 2017 (1).
As a result, Chinese companies have become much more innovative, producing more patents as a share of GDP than Japan, and delivering a paradigm shift in the quality of their products and services.
Bin pointed out that one example of this shift is in the smartphone industry, where Chinese companies have delivered highly innovative products that have helped them compete more fiercely with international competitors.
China is ramping up automation
Demographic changes in China mean labor shortages and wage increases, so Chinese companies are responding by automating their manufacturing operations.
Bin pointed out that 'in just five to six years, many companies in China have significantly increased the usage of robots in their workflow.' China now leads the world in robot installations, and has become one of the world's largest markets for robotics systems.
Mobile internet is rapidly changing consumer behavior
Continuing the innovation theme, Bin showed that improving smartphones, growing user bases, and the widening range of online products and services are driving a rapid change in consumer behavior and increasing the share of total retail sales that are made online.