Beyond the Great Wall: A Deep Dive into China's Vibrant Industry Segments

Synopsis:
Booming sectors like Technology, Electric Vehicles, Artificial Intelligence, FinTech, Infrastructure, Construction, and Healthcare drive China's rapid economic growth. Giants like Alibaba, Tencent, and BYD lead the way in these industries, positioning China as a global economic powerhouse. Let’s dig deep into some booming sectors of the economy.

Introduction

China, the world's most populous nation and the second-largest economy has seen remarkable economic growth over the last few decades. This rapid transformation can be attributed to the various sectors that constitute its diversified economy. From technology and manufacturing to retail and healthcare, numerous sectors have become engines propelling the nation's growth.

Let’s dig deep into some booming sectors of the economy for 2023 and ahead:

The Technology Sector

China's technology sector has made significant strides in recent years, boasting a vibrant and competitive market. The country is home to several leading tech companies, including giants like Alibaba, Tencent, and Huawei. These firms' global influence extends beyond China's borders, dominating fields such as e-commerce, social media, telecommunications, and Artificial Intelligence.

China’s software sector revenue grew by 15.4% year-on-year to 7.2 trillion-yuan ($1.03 trillion) in 2020, while profit was up 9.9% to 936.2 billion yuan, according to the Ministry of Industry and Information Technology (MIIT) statistics.

Source: Statista

Electric Vehicles

According to the latest research from Counterpoint's China Passenger Electric Vehicle Model Sales Tracker, China’s passenger electric vehicle* (EV) sales grew 29% YoY in Q1 2023. Battery EVs (BEVs) made up nearly 70% of the sales. There was also a remarkable 88% YoY surge in plug-in hybrid EV (PHEV) sales. Recently, PHEVs have become increasingly popular in China. BYD secured its leading position with 79% sales growth.

Most Recent Update: May 2023
Source: Statista Market Insight

Saw its global plug-in EV sales double in April 2023. This company will also have an even greater competitive edge when it opens its planned manufacturing facility in Vietnam.

For the first quarter of 2023, Li delivered 52,584 EVs, up almost 66% YOY. Despite a dip in mid-April, Li stock has also been rising steadily since the start of the year and looks poised to keep trending upward.

It is a Chinese electric vehicle company which has targeted the luxury end of the market. Its flagship product is the ES8 SUV, known for its premium leather interior and luxurious design.

Artificial Intelligence

With growing interest surrounding OpenAI’s ChatGPT, stocks related to artificial intelligence listed in mainland China have soared this year – with one company having tripled in valuation since January.

Alibaba told CNBC it’s working on a rival product similar to ChatGPT, while Baidu announced earlier this week that it will launch “Ernie bot,” its artificial intelligence chatbot.

These Chinese companies could be formidable AI rivals.

Alibaba Group [BABA] is sometimes called the "Amazon of China." There are several similarities between the two companies. Both are e-commerce leaders. Both have central cloud service units.

Baidu [BIDU] is sometimes called "China's Google." It developed a viral search engine. Also, like Google, the company has invested heavily in AI.

Tencent Holdings [TCEHY] ranks as one of the biggest video game companies in the world. Its games include Call of Duty Mobile and Dune Awakening. But Tencent has expanded beyond video games.

FinTech

The People’s Bank of China (PBOC) recently released its Fintech Development Plan for 2022-2025, which seeks to develop China’s fintech sector further and drive the digital transformation of finance in the country over the next four years.

Unlike the Internet finance stage, fintech is broader in scope. In addition to Internet technology, emerging technologies, such as big data, cloud computing, artificial intelligence, and blockchain, are merged into the financial business field to change or create new financial products or services, lower transaction costs, and improve operational efficiency.

By 2025, China wants to achieve leapfrog improvement in the fintech sector. This will enhance the potential of data as a production factor, improve the quality of digital transformation of the finance industry, increase fintech governance, deepen the application of critical technologies, and scale up the development of digital infrastructure.

FinTech Development Plan for 2022-2025

Improving governance of fintech

Fully unleashing the potential of data as a production factor

Building new digital infrastructure

Deeping the application of core technologies

Activating new drivers of digital operation

Strengthening prudential regulation of fintech

Infrastructure

In 2021, investments in fixed assets grew by more than 4.9%, up by 2.9% from the previous year.

China has accelerated infrastructure investment in the first quarter of this year to propel economic growth, launching more than 10,000 projects nationwide.

Analysts estimated that infrastructure investment grew 10% year-on-year in the first three months, driving up the activity of many associated downstream enterprises and broad market demand for basic materials.

Source: National Bereau of Statistics

China's economic landscape continually evolves, and the growth rates in different sectors can vary over time due to domestic and international factors. While China has experienced impressive growth across various sectors, challenges such as environmental concerns, debt levels, and geopolitical tensions may influence the trajectory of its economic development in the future.

Construction

The industry is expected to register an average annual growth of 4.2% between 2022 and 2025, supported by investments in transport, power, manufacturing, health, education, research, and housing projects as part of China’s 14th Five-Year Plan (2021–2025).

Published: October 2021
Source: GlobalData

The Healthcare Sector

China's healthcare sector has also seen impressive growth, driven by an ageing population, a growing middle class, and increased government expenditure on health. The industry is poised for significant expansion, with healthcare reform, digital health initiatives, and increased focus on biotech and pharmaceutical innovation marking key trends. Revenue in the Health Care market is projected to reach US$19.07bn in 2023. With a projected market volume of US$19,070.00m in 2023, most revenue is generated in China.

Source: Statista

In conclusion, China's booming industries are a testament to the nation's remarkable economic growth and transformation over the past few decades. As China embraces the future, adaptability, innovation, and responsible governance will be critical factors in sustaining its position as a global economic leader. By addressing challenges while capitalising on opportunities, China's booming industries can catalyse progress and prosperity on both national and international fronts.

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