How Technology Saved Chinas Economy – The New York Times

The available studies rely on data at least two years old and probably understate how rapidly China is leapfrogging into the developed world as a tech power. It has more than tripled research and development over the past decade to $440 billion a year, more than in all of Europe. Today nine of the 20 largest internet companies in the world are Chinese (alongside 10 from the United States and one from Canada).

Explosive growth in online banking is helping to fuel 20 percent annual growth in consumer lending and an overdue shift from export manufacturing to domestic consumption as the main driver of economic growth. Set up in 2015, Alibabas MYbank has extended loans to 16 million customers, including 3-1-0 microloans that require three minutes to apply, one second to approve and zero humans involved.

Automation is killing off jobs. At Hema grocery stores, owned by Alibaba, little white robots work the lunch counter in place of waiters. Gym patrons follow the steps on a giant video screen embedded in the floor, no trainer required. Shenzhen residents say criminals have been driven off the streets by the surveillance cameras.

Yet on balance, tech is probably creating more professions than it destroys. A recent International Monetary Fund paper estimates that after subtracting the jobs it eliminates, digitalization accounts for up to half of all job growth. Alibaba platforms alone host millions of small companies, which over the past decade have added 30 million jobs more than China has lost in heavy industry.

Chinas tech revolution was made possible by two of the forces that were expected to slow the economy. The population may be aging, but it still provides a vast market in which tech start-ups can blossom. And though growth normally slows when countries attain a middle-class income, in China the new middle class provides the main customers for new mobile internet services.

No other country has this combination. India has the population, not the income. Brazil has the income, not the population. And these democratic societies are also far more suspicious of government surveillance than China is. Witness the widespread controversy over the rollout of biometric IDs in India.

In China, at least outside Xinjiang, the relatively mild concern about personal data has helped fuel the boom in digital payments and e-commerce. China is the worlds largest e-commerce market by far, and fleets of motorbikes painted in the colors of online delivery companies park five to six rows deep outside malls and office towers.

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How Technology Saved Chinas Economy - The New York Times