High-tech consumption seen to catch up as growth driver
Print Edition
EYE-CATCHING quarterly gains by Apple and Alibaba in China have provided fresh proof that growing online and high-tech consumption may be coming to the rescue of the country’s economy.
Both e-commerce giant Alibaba and the iconic Apple have reported better-than-expected quarterly earnings on strong performances in the Chinese market.
“There is no lack of demand in China so long as companies provide products that are the apple of Chinese consumers’ eyes,” wrote economics pundit Yu Fenghui when commenting on Apple’s performance on his blog.
Apple’s sales nearly doubled in China despite concerns of an economic slowdown. The company reported US$12.5 billion in revenue from China, almost a quarter of its total.
Alibaba on Tuesday announced faster revenue growth of 32 percent in the third quarter of the year. The revenue of US$3.49 billion beat expectations as its growth slowed to 28 percent in the second quarter from 45 percent in the first.
New York-listed Alibaba has been under tremendous pressure this year amid worries that a slowing economy might drag down consumer spending in the world’s second-largest economy.
But Alibaba defied the doubters through expansion. “We are winning in mobile and remain focused on our top priorities, including internationalization, expanding our ecosystem from cities to villages, and building a world-class cloud computing business,” said CEO Daniel Zhang.
Consumption rises
China is shifting its economic drivers. Compared with investment and exports, consumption has been a less conspicuous source of growth for the country in recent decades, but it is catching up fast.
In the first nine months, retail sales of consumer goods in China jumped 10.5 percent. Meanwhile, the high-tech sector increased 10.4 percent year on year, outpacing value-added industrial output by 4.2 percentage points.
“Some must win, some must lose. This time, the iron and ore sector became a loser, as the government plans to put more emphasis on the green economy, improve the industrial structure and support low-carbon energy consumption,” said Zhang Shuyu, a researcher with the University of International Business and Economics.
“Providing upgraded products and services can be a way out for the losers.”
Although China is experiencing growing pains in shifting from old drivers of growth to new ones, new industrialization, IT application and entrepreneurship have generated strong domestic demand and great potential for future growth, according to the researcher.
“I know some people are worried about the economy, but we’ll continue to invest,” said Apple Chief Executive Tim Cook. “If you look at the long term, it’s clear that China is a great place to be.”
Apple will open its 25th Apple Store in China this weekend.
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