Pointing the Way Forward
China's top leadership convenes to map out economic and reform plans for 2015
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Cover Stories Series 2014> Reform Initiatives Underway for 2015> Retrospect> Opinion
UPDATED: November 7, 2014 NO. 46 NOVEMBER 13, 2014
A Positive Change

The 2014 Forbes China Rich List was recently unveiled by the magazine's Chinese website, with Internet tycoons dominating top spots on the list.

Jack Ma, founder and Executive Chairman of e-commerce giant Alibaba, topped Forbes' China Rich List for the first time. Ma's net worth soared to $19.5 billion in 2014, up from $7.1 billion last year, when he was ranked eighth, after his company raised almost $22 billion in the largest U.S. initial public offering in history in September.

Closely following Ma was Robin Li, founder of China's largest Internet search engine Baidu, and Ma Huateng, founder and CEO of Chinese Internet giant Tencent.

Five of the top 10 richest Chinese are from the Internet industry. Except for the above-mentioned three, the other two are Lei Jun, CEO of electronics firm Xiaomi, China's most popular smartphone maker, and Liu Qiangdong, CEO of JD.com, China's second largest e-commerce firm.

In sharp contrast, billionaires in the real estate sector had a more challenging year amid a prolonged property slowdown. Last year's richest tycoon, Wang Jianlin, Chairman of Dalian Wanda Group, fell three places to the fourth position. Chen Ou, CEO of Jumei International Holding, one of China's most popular cosmetics shopping websites, replaced Yang Huiyan, the majority shareholder of a leading property developer in China, to become the youngest billionaire on the list.

The fortunes of Chinese web entrepreneurs are starting to surpass U.S tech icons like Paul Allen, Eric Schmidt, Jerry Yang and Sheryl Sandberg. This is telling us that China will compete with, if not surpass, the United States for the lion's share of new wealth to be made in an era when e-commerce and mobile services will become a lot more pervasive.

As long as the Chinese Government is sufficiently tolerant, China's e-commerce and mobile Internet can surpass that of the United States and become an engine for the country's technological innovation. As China reshapes its economy to become less driven by exports and investments and more driven by domestic consumption, the boom of Internet companies will play an increasing role in unleashing domestic demand amid a worrying economic slowdown.

The most urgent task is making the economy more driven by technology innovation and domestic consumption. In years past, the Chinese economy has been over-reliant on exports and energy resources, sometimes even at the expense of the environment. Rampant property development has led to speculative activities in the sector. A growth pattern largely driven by government spending and loose monetary policies cannot be sustained. The good news is that the huge success of Alibaba, Baidu and Tencent, China's three leading Internet companies, has offered the country a chance to transform its economy to be as much driven by technological innovation as it is in the United States.

Internet finance in China, which has its roots in the larger Internet economy, has surpassed that in the United States, which has the world's most advanced financial sector. It has become a major force in lowering financing costs for small and micro businesses and pushing forward reforms on China's rigid financial system and traditional financial institutions.

Chinese economy is on the right track to becoming more driven by technological innovations, as evidenced by a falling in rankings of real estate tycoons on the list. This has sent a positive signal to society at large that the Chinese economy has become increasingly reliant on technological progress and that social wealth is flowing toward technology- and innovation-oriented businesses and individuals. This will encourage more talented people to flock to innovation-driven businesses and industries instead of speculating in the property sector.

Meanwhile, China's Internet companies are all private businesses, indicating the vitality of potential of the private sector. The Chinese Government is absolutely correct in is dedication to unleashing the intrinsic growth momentum of private capital by substantially lowering the threshold for start-up businesses, simplifying administrative procedures and delegating power to lower government levels. In the future, reforms should be pushed forward by large strides with the further regulation of governmental functions. The government should refrain from too much intervention in the market.

This is an edited excerpt from an article by Yu Fenghui, a financial commentator, published in The Beijing News

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