China was reported to have set up an investment fund to bolster growth in the service trade industry, as it aims to further develop its foreign trade structure.
Reports released on Monday stated that the country has presented a government-led fund worth CN¥30 billion ($4.6 billion), which was jointly launched by the Ministry of Finance, Ministry of Finance, Ministry of Commerce, and China Merchants Capital Investment Co. Ltd.
The money will be used to boost support for China’s service trade businesses, which may include transportation, tourism, telecommunications, construction, advertising, computing, and accounting.
The fund will also be allocated to establish effective cooperation methods and improve the use of resources.
Deficit in sales and delivery of intangible products due to huge domestic demand has become a regular problem for China.
Official government data showed that the country’s services trade deficit for November 2017 was at CN¥120.8 billion ($18.6 billion), nearly 3 percent higher than October’s CN¥117.5 billion ($18.1 billion).
China's Economic Transition Beneficial for its Debt Concerns
Meanwhile, economist Robin Xing believed China’s economic transition from traditional manufacturing will be good for its debt concerns, since it would not have to depend largely on borrowing.
Xing stated that with China trying to step up growth of the new economy, which is less credit intensive, is also helping deleverage efforts in the country.
Sources familiar with the matter said on Thursday that China decided to keep its economic growth forecast at around 6.5 percent for this year, as it favors economic stability.
The country has been tackling debt for several years, but only made very small progress so far as it tries to balance efforts to lessen debt risks while keeping the world’s second-biggest economy steady.
However, recent statements from Beijing suggested China is creating a moderate slowdown and changing growth drivers. President Xi Jinping had said that his country would shift from high-speed to high-quality expansion.
The Ministry of Science and Technology (MOST) revealed last week that China allocated over CN¥13 billion ($2 billion) for research and development programs this year.
The plans consist of 40 special projects and over 600 small ones that will involve four major fields, such as social development, high-tech research, agricultural science and technology, as well as fundamental research.
Researcher Li Hongjun said that budget allocation for the programs shows the country’s emphasis on particular industries.
Moreover, Xing stated that looking back a few years, a debt of CN¥6 ($0.92) makes CN¥1 ($0.15) in gross domestic product (GDP), but now it only needs CN¥3 ($0.46)n debt to do the same.
Contribution from consumption is expected to keep increasing, while China’s debt-to-GDP ratio growth is likely to stabilize in second half of 2019.
Xing also said that services sector is already employing more than 10 million people per year, which is higher than balancing the snowballing 4 million unemployment figure in old economy segments, including machinery and steel.
These businesses have been experiencing layoffs because of an official crackdown on overfilling. Xing added that there will be less risk, slower pace of growth, but higher quality.
The latest market happenings are here at FSMNews. Subscribe now to FSMNews and get the latest on forex, commodities, stocks, technology, economy and a lot more.