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New Engine, New Opportunities

With a fortune of 295 billion yuan ($46.6 billion), Ma Huateng, founder and CEO of internet giant Tencent, is now the wealthiest person in China.

The business leader, also known as Pony Ma, has jumped 23 places to be ranked 15th globally, according to the Hurun Global Rich List 2018 released on Wednesday.

Behind the rise of Ma and his company is China's flourishing digital economy, which has been a story of commercial success.

Tencent and Alibaba are China's top two companies in terms of market value, a stark contrast to just five years ago when no internet companies even made the top 10.

The digital economy is not only reshaping the Chinese economy and changing people's day-to-day life, but also creating enormous business opportunities for foreign companies.

New engine reshaping the economy

A booming digital economy is reshaping China's economic landscape as technology such as big data and AI revives traditional industries and casts new light on high-quality development.

China's digital economy totaled 26 trillion yuan in 2017, accounting for around 32 percent of national GDP, according to the China Academy of Information and Communications Technology. Its 18-percent growth substantially outpaced the overall economy, which grew 6.9 percent in 2017.

The trend is likely to continue in the future and the value of China's digital economy is expected to hit $16 trillion by 2035.

"China is already more digitalized than many observers appreciate and has the potential to set the world's digital frontier in coming decades," the McKinsey Global Institute said in a recent report titled "China's digital economy: A leading global force."

China is the world's largest e-commerce market, accounting for more than 40 percent of the value of worldwide transactions, up from less than one percent a decade ago. In terms of mobile payments, China has a transaction value 11 times that of the United States, according to the report.

"The digital economy is making greater contributions to the national economy and rising as a fresh driver of economic transformation and upgrades," said Lin Nianxiu, deputy head of the National Development and Reform Commission, the country's top economic planner.

Mobile everything

While companies that invest heavily in the digital economy are reaping a fine e-harvest, ordinary people are sharing the bounty.

On platforms offered by the internet giants, you can do almost everything with just a click on your smartphone -- ordering groceries, transferring money, watching movies, booking holidays, and even managing your stock market portfolios.

Every day, life gets easier, faster and, very often, cheaper.

Ms. Sun from Beijing is a busy woman, but house-proud and concerned about stubborn kitchen stains and ice buildup in her freezer. Now she has an app on her phone that brings professional cleaners to her door to solve her problems in no time at all. "It saves me time and energy," she said.

The mobile internet is breeding new professions and new industries with tailored services only a few taps away. The digital lifestyle is the real new normal: mobile payments, mobile entertainment, mobile socializing and even "mobile officing."

About 531 million Chinese people now make online payments of some sort, 12 percent more than the previous year, according to the China Internet Network Information Center (CNNIC).

Over 300 million people are ordering meals online, creating a market of online food ordering worth 204.6 billion yuan in 2017, 23 percent more than 2016, according to the institute of Meituan-Dianping, an online platform for ordering food and booking movies and restaurants in January.

In 2016, over 157 trillion yuan changed hands via mobile payments, almost 50 percent more than in 2015, the People's Bank of China said.

Decoding the sudden rise

China's booming digital economy has been based on the bigger, younger China market, which has enabled rapid commercialization of digital business models on a large scale, said the McKinsey report.

In 2016, China had 731 million internet users, more than the European Union and the United States combined. And nearly one in five internet users in China relies on mobile only, compared with just 5 percent in the United States, according to the report.

The success of the internet giants has also been built on a solid foundation laid by the firms themselves and the government.

Baidu, Alibaba and Tencent, collectively known as BAT, have been spending huge on developing a multifaceted and multi-industry digital ecosystem that touches almost every aspect of consumers' lives.

The functionality offered by their "super apps" has increased about seven times since 2011. Beyond BAT, other digital innovators such as Xiaomi and NetEase and traditional players such as Ping An are building their own ecosystems.

Supportive policies have also played a pivotal role. The digital economy is part of the government's vision of an economy driven by innovation, a plan to make economic growth more sustainable and domestic companies more competitive globally.

The government has rolled out an array of policies such as "Made in China 2025" and "Internet Plus" strategies to spur the integration of Internet technologies and manufacturing, as well as other traditional sectors.

Now it is easier than ever to set up a business, not just in terms of administrative procedures and government approvals, but also through a plethora of novel financing vehicles for start-ups.

Foreign bees seek Chinese honey

As for-hire bikes flood city streets and cashless diners pay for meals by phone, the digital economy just keeps expanding, and more and more foreign firms are jumping in for a slice of the pie.

Apple is desperate for a bigger piece of the mobile payment market dominated by WeChat and Alipay. In July last year, Apple Pay launched its biggest marketing campaign since entering China, offering perks including discounts of up to 50 percent on purchases for a week.

Total online retail sales reached 7.18 trillion yuan in 2017, a third more than a year before and, while Chinese firms Alibaba and dominate, U.S. rival Amazon is making inroads.

In June of 2017, Amazon partnered with Migu, a China Mobile subsidiary with one of the country's largest mobile reading platforms, to create a new Kindle exclusively for Chinese readers.

On Black Friday last year, sales at Amazon China were double the previous year's. The number of cross-border shoppers using the site has risen 22-fold in just two years.

U.S. home-sharing company Airbnb has said it plans to more than triple the size of its China workforce this year and double its investment in the market to better serve Chinese travelers.

China has one of the most active digital-investment and start-up ecosystems in the world, said the McKinsey report.

China is in the top three in the world for venture-capital investment in key types of digital technology, including virtual reality, autonomous vehicles, 3-D printing, robotics, drones and AI, it said.

(Xinhua News Agency March 1, 2018)

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