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UPDATED: September 26, 2011 NO. 39 SEPTEMBER 29, 2011
Prospects in the Spotlight
The quality of China's economic growth is examined at the 2011 Summer Davos

BETTER GROWTH: Business leaders from all over the world participate in a group discussion about China's sustainable future at the Summer Davos in Dalian, northeast China's Liaoning Province (JIANG BING)

New frontiers

As China seeks to embark on a more sustainable path of growth, an array of emerging industries are showing potential to fill the blank left by waning exports.

"The next gold mine of China will be the green economy," said James Cameron, Vice Chairman of Climate Change Capital, a London-based investment management and advisory firm.

"Stimulus for the green economy and growing customer interest have provided Chinese firms with the opportunity to reap profits and expand green technology development," he said.

Success with electric car technology has given China a head start in the global race to a low-carbon economy. The country has also made pushes into wind and hydropower to offer relief from its reliance on coal. Meanwhile, it has stepped up a clampdown on energy-guzzling industries like cement and steel, though the move requires a compromise on economic growth.

Malini Mehra, founder and CEO of the Center for Social Markets, an Indian non-profit organization promoting responsible entrepreneurship and sustainable development, said there are two ways in which the governments can support low-carbon businesses to continue along a "green" path.

"The first is to provide some means of recognizing their good work," she said. "And the second is building a measuring system to verify which company is actually doing well, not just talking about doing well."

Guo Shuqing, Chairman of China Construction Bank, said the service sector, including financial and tourism industries, also has the chance to shine as the country gears up to boost domestic demands.

In 2010, the service sector accounted for 43 percent of the Chinese economy, up from 40.5 percent in 2005. The government has set the goal of raising the share to 47 percent by 2015.

"Commercial banks will also extend credit support to service companies and soothe financing difficulties of the smaller firms," said Guo.

Cordon Orr, Chairman of McKinsey Asia, said modern agriculture will also become a bright spot on China's economic landscape over next few years.

"Agriculture is the foundation of economic take-off and its prosperity holds key to China's sustainable development," he said. "A lot of multinationals have shown interest in the sector, and massive investments are expected to pour into businesses like fertilizer production, seed planting and agricultural product supplies."

Li Daokui said the Chinese economy is able to thrive for another three decades, drawing strength from ongoing urbanization, vibrant consumptions and infrastructure construction including water resource facilities.

"China still lags far behind developed countries in terms of the urbanization rate, which means the country has a great potential to play a swift catch-up," he said.

Reforms underway

As China prioritizes quality growth, the forum's participants believe a necessary step is to deepen domestic reforms and address problems glossed over in past boom times.

Zhang Xiaoqiang, Vice Chairman of the National Development and Reform Commission, said the most urgent task is to overcome system barriers hindering integration between urban and rural areas.

"In addition, policymakers must properly repair the social security network and remove much of the anxiety that makes residents prone to save," he said.

In the latest move, China in July launched a new pension program for unemployed urban residents, widening its pension umbrella to cover all residents. Prior to this, the country had put in place a new rural cooperative medical system benefiting almost all Chinese farmers.

"The country would face growing financial pressures to strengthen its pension mechanism because of an aging society," said Wang Feng, Director of the Brookings-Tsinghua Center for Public Policy.

Zhang Weiying, an economics professor of Peking University, stressed the importance of reforming the education system.

"As many Chinese companies graduate from low-cost manufacturing, they need more innovative talents in technologies and research and development," said Zhang. "That is why we must shift the focus of education from teaching knowledge to fostering creativeness."

"Meanwhile, it is necessary to match education with the needs in the job market, and enhance the students' teamwork and communication skills," he added.

Tian Lipu, Director of the State Intellectual Property Office, said China will also spare no effort to press ahead with its protection of intellectual property rights (IPR), and help enterprises translate innovations into productivity.

"China had a late start on IPR protection, but its progress is remarkable," he said. "For instance, we have established more than 100 IPR protection centers across the country and set up hotlines to receive relevant complaints."

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