On a recent eye-opening trip to China, I visited some new and established technology and internet companies operating in the energy and health sectors. My aim was to understand how China’s twelfth Five-Year Plan will affect these sectors. I discovered innovative, persistent businesses working hard to hit ambitious targets.
The latest Five-Year Plan
China’s Parliament - the National People’s Congress - adopted the country’s latest Five-Year Plan in March this year. It marks a significant turning point, as the focus has shifted away from pure GDP growth towards social services, wellbeing and happiness. The Plan is built around four pillars:
- Slower. China wants a slower rate of progress, looking to place extra value on quality and efficiency instead of out-and-out speed.
- Faster. China wants to distribute wealth more quickly, by creating 45 million new urban jobs in the next five years.
- Lower. The plan calls for lower pollution levels (by 16%), lower energy consumption (by 17%) and fewer pollutants.
- Higher. A higher rate of scientific innovation is key to the Plan’s success. It requires the creation of intellectual property via research and development.
This Five-Year Economic Plan sets a course for the world’s second biggest economy, so its implications could reverberate around the globe.
Healthcare complications
Central to China’s ambitions is an increase in the urban population, which is expected to grow from 45% to 55%. As a result, the unhealthy gap between rich and poor should narrow, helping to distribute the wealth between the eastern seaboard and rural areas and creating the largest consumer market in the world.
But there are many challenges. In 30 years China’s elderly will represent 30% of its population and there has been an ‘explosion of obesity’. Just a generation ago, hardly anyone was overweight.
Those two factors alone mean the country is bound to need outside assistance to deliver the world’s most radical health reforms. Its 65,000 hospitals are likely to require new ICT systems and assisted living technology to care effectively for a rapidly-ageing population with changing healthcare requirements.
Energy and technology
It’s also hard to see how China can achieve its ambitious energy targets without external help. The country is heavily-dependent on coal for its energy, yet achieving targets described in the Plan calls for more renewable energy sources, upgraded distribution grids, better energy efficiency measures in people’s homes and smart metering.
In short, there are simply too few notable Chinese start-ups in the energy or health sectors at present. That’s surprising, when you consider the number of well-known internet companies like Baidu (search), Tencent QQ (messaging), Alibaba (ecommerce) and Rekoo (gaming).
That, of course, may change as China continues to extend its value chain. Intellectual property, research and development and the company’s burgeoning consumer market clearly mean there is much more to the country’s economy than ‘made in China’, and new businesses will emerge to exploit these opportunities.
Rising to the challenge
Delivering exportable business models and products in energy and health will be central to achieving the ambitious targets laid out in the Plan. However, Chinese companies have enjoyed mixed fortunes on the global stage, and recent Chinese IPOs have fared poorly in the US.
That does cast some doubt on how feasible this global giant’s latest ambitions really are. But then perhaps you wouldn’t bet against a country like China pulling it off. After all, any country which has seen sustained double-digit GDP growth clearly has significant resources and knowledge to call upon.
