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China gears up for more reform to boost innovation, funding

Lan Lan
Updated: Jun 6,2015 10:36 AM     China Daily

China will come out with a five-year plan (2016-20) for the development of its strategic emerging industries and to further boost its innovation efforts, the nation’s top economic planner said on June 5.

The National Development and Reform Commission highlighted a number of priorities for reform, including facilitating an innovative drug approval process, opening low-altitude airspace, opening up of broadband services to private investors and promoting charging facilities for electric vehicles.

At the same time, the government will also encourage strategic emerging enterprises to expand channels for fund raising through initial public offerings, bond issues and crowd funding.

Wang Changlin, head of the research department of industrial economics under the NDRC’s Academy of Macroeconomic Research, told China Daily that related investigations and studies are underway.

This is the last year of the nation’s 12th Five-Year Plan (2011-15) and it is expected that a draft of the 13th Five-Year Plan will be submitted to the National People’s Congress in March.

“Specific five-year plans for industries will be released after the national plan. This is most likely to happen in the second half of next year,” he said.

Promising industries such as health, energy efficiency and environmental protection, high-end equipment, mobile Internet and e-commerce are expected to have a total value of about 50 trillion yuan ($8 trillion) by the end of 2020, said Wang.

According to the NDRC, revenues of the 27 strategic emerging industries totaled 3.96 trillion yuan in the first quarter of 2015, up 11.1 percent from a year earlier.

Eight areas saw robust growth in the first quarter, including new computer products, electronic devices, audio-visual equipment, fiber and cable manufacturing, new style rail transportation equipment manufacturing, photovoltaic and wind equipment, pesticide manufacturing and aerospace equipment manufacturing.

A survey conducted by the NDRC and related agencies showed that entrepreneurs of the strategic emerging industries are optimistic about economic prospects. The entrepreneurs confidence index for the industry is much higher than the national average. It was based on investigations of more than 1,000 companies in the emerging strategic industry, according to an NDRC statement.

However, further reforms are needed to reduce or remove the procedural obstacles. For instance, revenue growth of drug manufacturing and medical equipment and device manufacturing declined by 4.1 percentage points and 3 percentage points, respectively, in the first quarter.

What this means is that reforms in the pharmaceutical and medical services need to be prioritized, the survey said.

Companies in the sector are also facing difficulties in fund raising. Many of them are small and medium-sized asset-light firms and usually it is difficult for them to get loans from banks.

It is also necessary to improve the credit system and promote indirect financing through intellectual property mortgage loans. Also, it is important to further improve the direct financing system and change the low proportion of direct financing, said the NDRC.

Liu Shi’an, vice-president of the Shanghai Stock Exchange, said on May 19 that China is considering launching the Board of Strategic Emerging Industries, which will meet the actual needs of emerging companies and facilitate development of a multi-tiered capital market.

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