China Roundup: China GDP Growth Target Downscaled
This week, Premier Li Keqiang lowered the China GDP growth target to 7% from 7.5% last year; US President Barack Obama voiced concerns over China’s proposed anti-terrorism law because of its likely impact on US technology companies; and Xiaomi entered GoPro territory.
7% and Other Economic Targets
In face of the slowest growth in two decades, China finally lowered its GDP expansion target in 2015 to 7% from last year’s 7.5%. Chinese Premier Li Keqiang made the announcement during a speech on Thursday delivered at the annual meeting of National People’s Congress (NPC), China’s top legislature.
Li also unveiled other economic goals at the meeting, China’s most watched political event of the year. The consumer price inflation target has been set at around 3%, lower than the 3.5% of 2014. Some economists are worried that China is facing more deflationary pressure as the consumer price index (CPI) only increased by 0.8% in January; domestic institutions also estimated that February’s CPI, despite the lunar new year shopping frenzy, is still below 1%.
Due to the ongoing property sector retreat, the Chinese government, which relied heavily on land auctions as a channel for revenue, is also facing an uphill battle fiscally. Beijing’s deficit-to-GDP ratio was budgeted at 2.1% in 2014, and the number has been raised to 2.3% this year.
Li believes that if everything remains on track, China will continue to provide its citizens with enough jobs in 2015. The target limit of unemployment in urban areas is set at 4.5% with a goal to create 10 million new jobs this year.
China ‘Assures’ Obama
Two days after US President Barack Obama expressed his concerns over a piece of legislation that would affect American technology firms’ interest in China, the National People’s Congress responded, “Don’t worry.”
When asked about the matter at a press conference on Wednesday, NPC spokesperson Fu Ying said that China’s new anti-terrorism law proposal, which would require all tech firms to hand over authorities encryption keys and provide them with system “backdoors”, is only meant to fight terrorism and its usage would be subject to strict approval procedures. “It will not affect the interest of network operators,” she said.
However, international tech firms may find the terms hard to accept, as complying with them would expose the private data of their Chinese users directly to Beijing. Firms that fail to follow orders would be forced to stop operating within the Chinese borders, the law proposal says.
Obama said that the US had raised the issue with Chinese President Xi Jinping and changes must be made to the law if China “expects to do business with the United States”.
Alibaba’s Movie Dream Continues
E-commerce giant Alibaba has many “side businesses”, some of which don’t seem to fit in, but you can be sure that it’s dead serious about entertainment.
On Wednesday, Enlight Media, a domestically listed TV show and film maker, announced that it had sold shares worth $382 million (RMB 2.4 billion) to Alibaba through a private offering. The transaction made Alibaba the second biggest shareholder of the company, according to data compiled by Sina Finance; though the stake is only minor compared to the majority shareholder called Shanghai Enlight Investment Holdings Co.
Alibaba has previously invested in a controlling stake of ChinaVision Media Group and changed the firm’s name to Alibaba Pictures. It then hired a senior film chief to lead the firm, whose board members include celebrities like Zhao Wei and Jet Li. Influential director Wong Kar-wai is currently leading the firm’s first movie project, which will then be marketed across Alibaba’s platforms with the help of big data technologies, the firm said. Alibaba also bought an 8% stake in Huayi Brothers, a prolific moviemaker managing dozens of celebrity actors and actresses.
Enlight Media also produces plenty films, notable among them the comedy Lost in Thailand, thus far the highest-grossing Chinese film in history; romance film So Young, also in the top 10 list. Enlight’s share prices have jumped almost 21% in the following two days (China has a 10% daily cap for rising stocks).
GoPro or Go Ant?
Smartphone maker Xiaomi is entering yet another product category: cameras. On Tuesday the company released Yi (Ant) Action Camera, a compact photo and video camera that resembles industry leader GoPro’s products.
The camera features a 16-megapixel Exmor R BSI CMOS image censor from Sony; it records full high definition videos at 60 frames per second, which on paper is better than GoPro’s Hero, which can only records as fast in a lower resolution. The price tag is just sweet: RMB 399, or $64. The camera hasn’t hit the market yet, and when it does, it’ll be limited to Chinese consumers for the time being.
However more pixels do not equal better image quality; and it’s unclear whether Yi Action Camera’s image stabilization function, which is crucial in sports videography and photography, can match that of the GoPro’s. Durability is also a key for this type of cameras—the ease with which it breaks determines if you’re going to ski with it or put it on your cat.