Despite deep global recession, the Chinese economy has largely marched on unimpeded. Recently, however, China has had to face the reality of a cooling domestic economy, and serious concerns have been raised over the downward trajectory that leaves full-year growth on course for its softest showing since 1999, CNBC notes. But although down from the double-digit growth of the past, still the economy has grown 7.6% year-on-year.
However, the days where the industry alone could drive the Chinese economy forward in leaps and bounds seem to be over. Production costs are already significantly higher than in many other East-Asian countries, meaning that transitioning the economy from an industrial powerhouse into one based on knowledge will prove absolutely vital if growth is not to grind to a near halt in the future.
A key component in this process will be the continuous development of the IT-sector. In this regard, fresh data from iResearch shows that while e-commerce growth appears to have been somewhat affected by a generally slowing economy, growth remains very strong. As can be seen below, the value of the Chinese e-commerce market reached 1.88 trillion Yuan ($295 billion) for the second quarter, up 25% year-on-year and thus around 3.5 times the growth rate of the overall economy.
Leading Chinese search engine, Baidu, furthermore presented an uplifting earnings call for the second quarter, which exceeded analyst expectations and added to the picture of a more than healthy Chinese internet economy. And when looking forward, despite already being the world’s largest internet market in terms of number of users, the online sphere is far from saturated with internet penetration still below 40%. Growth rates will naturally slow down from the almost unreal levels of the past, but for the time being Chinese e-commerce has largely managed to counter the macro headwind. Whether it will remain so will be interesting to follow, but its vast potential cannot be questioned.
Postscript
China’s largest e-commerce company, Alibaba Group, in which Yahoo holds a 41.7% stake, has surpassed Baidu as the second-largest web company by revenue, notes Tech in Asia. Revenues were up 64% year-on-year, highlighting rapidly growing consumer confidence in online shopping.
Immanuel Simonsen
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