Digital economy is key to survive China's slowdown in 2017

China might be the world’s second largest economy but data shows that an economic slowdown is inevitable in 2017, and the business world is advised to fasten its seatbelt for what might be a rollercoaster ride ahead.
 
The economy of China already appeared to be sluggish in 2016 and such trend is expected to continue in 2017. In December 2016, the Chinese Academy of Social Sciences forecast China’s economic growth in 2017 at a slow rate at 6.5 per cent, the slowest pace in over a quarter century, down from 2016’s 6.7 per cent.
 
Economists cited a number of factors contributing to the grim outlook. One of them was the depreciation of Chinese yuan, which recorded its eight-year low in November 2016. Reports of the rapid rise of bank lending, bad debts in the corporate sector and a lacklustre property market threatened the growth of China’s economy.
 
Despite the slowdown, China’s economy is unlikely to be unstable or volatile, as the country is expected to tighten its monetary policy in order to maintain the stability of the economy.
 
Nevertheless, the vast market potential of China will still make the country an attractive place to invest and expand business. It will also play a key role in driving global economic growth, according to the China Business Review.
 
Gordon Orr, a director emeritus of McKinsey and senior external adviser, predicted that private sector corporate investment will grow despite the economic slowdown, and the low real interest rates will boost investment in productivity-enhancing technologies like robots and cloud-based services.
 
A World Economic Forum report noted that down in export will prompt China to take a greater emphasis on domestic consumption and services, and internet-based digital businesses will have the biggest growth potential.
 
The report said that China has more than 670 million internet users, and this figure is growing everyday. These internet users form a strong basis for internet-based businesses. According to Cisco survey on retail innovation in the Internet of Everything era, 89 per cent of the Chinese survey respondents visit privately owned shopping apps like JD.com or Tmall on their smartphones at least once a week, compared to the global 40 per cent.
 
In a report published in January 2017 by Boston Consulting Group, it was estimated that China’s digital economy will be worth US$16 trillion, providing 400 million jobs by 2035. Among those jobs, 100 million of them will be generated by China’s biggest online trader Alibaba, which owns online shopping platforms like Tmall. The report said that 30 million jobs were already created by Alibaba in 2016.
 
In order to capitalise on such a vast potential of China’s digital economy, technology such as cloud computing and artificial intelligence will gradually take over the manpower, according to the report, and as much as 20 per cent of the world’s labour force will become self-employed or work on a freelance basis as long as work can be done via the internet in the next decade. Hence, internet-based businesses that allow flexibility over employment will be the next big trend in China.