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Haikou Jiangdong New Area
Economy

Spotlight: Chinese, U.S. entrepreneurs bullish about prospects of Chinese market

April 23, 2019


Abstract : China's vigorous economic expansion has strengthened market players' confidence in the country and its growth momentum, financial industry insiders from China and the United States agreed during a local conference on Saturday.

NEW YORK, April 21 (Xinhua) -- China's vigorous economic expansion has strengthened market players' confidence in the country and its growth momentum, financial industry insiders from China and the United States agreed during a local conference on Saturday.

In addition, some of them believed that Chinese companies' proactive efforts in applying frontier technologies, such as blockchain and artificial intelligence (AI), in multiple areas, especially financial services, would boost investor sentiment globally in the evaluation of relevant businesses.

STIMULUS PACKAGE WORKS FOR GROWTH

"I think the Chinese government can reflate the economy. I think it's in the process right now of being reflated," said Christopher Wiegand, CEO and co-founder of Royal Bridge Capital, at the Columbia China Prospects Conference, adding that the country's fiscal stimulus has helped drive growth.

Economically speaking, if a government reflates its country's economy, it increases the amount of money available in order to fuel demand and encourage more economic activities.

Wiegand noted that China could create a reflation that would become "a self-sustaining expansion" if current monetary and liquidity stimulus, such as tax cuts and credit loosening, continues.

China's gross domestic product (GDP) growth notched a rate of 6.4 percent year over year in the first quarter, topping market forecasts and on par with that of the previous quarter, the National Bureau of Statistics (NBS) reported Wednesday.

In targeted moves to energize market entities, China has implemented massive tax and fee cuts for enterprises and individuals of around 194 billion U.S. dollars in 2018.

This year, China will reduce the tax burdens and social insurance contributions of enterprises by approximately 298 billion dollars.

Echoing his viewpoints, Jin Wen, managing director at QMA, Prudential Global Investment Management, said that such significant stimulus package has injected vitality into the Chinese market, which brought tailwinds on the macro front globally.

He also mentioned that the recent progress made by China and the United States in trade, and the U.S. Federal Reserves' dovish stance on interest rate moves would "set up a stage for a pretty good trend in the global equity markets."

As a fund manager, he believed that such macro factors have lifted investors' evaluations of market efficiency in major emerging market economies, especially China, which are "primarily driven by the sentiment on the fundamentals," including market competitiveness, gross domestic product (GDP) growth and inflation expectations.

"On the emerging markets front, we like Brazil and China in terms of their GDP growth, reduced inflation pressure, and valuation of those markets," Jin said. "As an investor, we can use those signals with great confidence ...(to decide) what's sustainable and in accessing returns going forward."

He also noted that China is "an ideal market" for his company to generate more investment opportunities in the future, as "we believe with so much creativity, market capacity and market efficiency, this is basically the ideal market for us to benefit."

Based on her observations, Emma Liao, the co-founder of a company, believed that the growth opportunity in China mainly lies in such industries as manufacturing, advanced technologies, consumer brands and health care, thanks to "a more friendly financial environment with less regulatory pressure."

"Personally, I always believe that China is the biggest market for a lot of people in terms of growth opportunities, and I did pursue that trend and decided to start a tech company in China," said Liao, co-founder of Ultrain Technology, a Hangzhou-based next-generation public-blockchain technology venture.

FRONTIER TECHNOLOGY FOR STARTUPS

More specifically in the high-tech field, Liao said that for startups in China, blockchain, a cutting-edge crypto record-keeping technology, is "a real frontier technology" and "another level of sharing economy," which would allow them to break the bottleneck of limited access to massive data.

That's because such data are highly expensive and have been purchased by industrial heavyweights, such as e-commerce giant Alibaba and Internet magnate Tencent, for AI development.

Blockchain, or briefly a growing list of records, uses a complex and decentralized series of records, one being stamped and linked to the previous record in a series by cryptography.

It has been used for virtual currencies like bitcoin, and is being increasingly used for other types of record-keeping.

"Blockchain is another layer, or another level of sharing economy, which means you don't have to buy a centralized database anymore," Liao said.

"AI is very much depending on who has more data. Small players and startups have very limited access to data, which became a bottleneck for them," she noted.

In this aspect, Cao Huining, finance department chair at Cheung Kong Graduate School of Business, said building a blockchain business model for sharing economy is "a great idea," although it would take a while for companies to understand and apply the technology.

The professor further pointed out that blockchain would be most likely applied in financial services in the future, including digitalized assets, stocks and crypto-currency, for recording the execution, clearing and settlement of transactions in a decentralized database, which features a high level of security.

The technology would narrow the gap between offline and online transactions by ensuring relevant data are accurate and not to be modified or deleted, said Cao.

From an investor's point of view, Jin said that global investors have priced in a potentially high growth in both sales and earnings of Chinese technological companies, as there is a strong demand from market players and other consumers.

This, in turn, would raise investors' evaluation of those Chinese companies, he said.

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