Is China’s mobile internet the most lucrative sector in the country?
According to Fosun International, the country's largest private investment firm, this is indeed the case. Fosun, the Chinese investment company, already has a cooperation agreement in place with Chinese internet giant Alibaba. Liang Xinjun, vice chair and CEO at Fosun said the conglomerate would be happy to strengthen its relationship further.
According to Liang, "The business of mobile internet… will have explosive growth and can probably exceed the U.S. by three or four times. In the future it will be much bigger than the scale of the PC internet."
Xinjun is optimistic about other areas of development and believes that China's tourism sector is set for explosive growth the scale of which has already overtaken that of pharmaceuticals and is growing at a rate of 18 percent per year.
The CEO is also positive on China’s healthcare sector and says that “Healthcare…..in the next eight to 10 years …should become China's biggest industry."
Real Estate Slump
However, other economic analysts are not so positive. Their main concern about China’s economy in the second half of 2014 is a slump in the real estate sector. Fading construction threatens to hit demand for everything from steel to furniture. The official figures paint a depressing picture, with sales falling in July and work on new projects following them down. Alternative indicators from private real estate agencies point in the same direction. Statistics from China Real Estate Information Corp. show that sales in China’s top 30 cities in July were down 45 percent year on year.
The effects of the slowdown in real estate have had a ripple effect across the industrial sector. The official data indicate that increases in factory output are slowing. Electricity production, which even Premier Li Keqiang checks as a measure of economic activity, suggests that factory output could be flattening as electricity output decelerated to a 3.3 percent annual growth rate in July, the slowest in more than a year.
There are also signs that high-end consumption is down. Hong Kong jewelry sales and revenue at Macao’s casinos—both widely used to track the spending of China’s rich—are both falling.
Car Sales Up
On the other hand, middle-class consumption remains intact with retail sales registering a solid 12.2 percent year-on-year growth in July, according to official figures. Alternative indicators paint a similar picture. Sales of passenger cars are in high gear. Yum! Brands (YUM)—owner of KFC—reports that Chinese consumers continue to find its chicken wings worth paying good yuan for.
Exports are another strong point. Overseas sales have been expanding at the fastest rate, say official data, since April 2013. Alternative indicators point in the same direction. The movement of containers at Shanghai’s port—a highly visible marker of trade volume—is accelerating. As the U.S. economy picks up, demand for “made in China” is rebounding with it. The fall in the yuan in the first half of the year—taking a few cents off the U.S. price of Chinese goods—hasn’t hurt exports either.