Information consumption to fuel China's economic growth

A new state guideline to support the consumption of information products and services will stimulate the sector and help fuel economic growth, the China Securities Journal reported Thursday.

By the end of 2015, the consumption of information products and services is expected to grow at an annual pace of at least 20 percent to reach 3.2 trillion yuan (518 billion U.S. dollars), according to a guideline released by the State Council, China's cabinet, on Wednesday.

The guideline says boosting information consumption can invigorate domestic demand and act as a new growth point for the economy, as well as upgrade the service industry, promote economic restructuring and improve people's lives.

It highlights innovation and the power of market forces as ways to promote rapid and healthy information consumption.

The value of industries that are supported by information consumption is expected to increase by 1.2 trillion yuan by the end of 2015, and Internet-based consumption should grow by at least 30 percent annually to 2.4 trillion yuan, according to the guideline.

China's e-commerce sector raked in 4.98 trillion yuan in revenue in the first half of 2013, up 45.3 percent year on year, based on Ministry of Industry and Information Technology data.

Consumption of information products and services jumped 20.7 percent year on year to 2.07 trillion yuan, while the output of smartphones surged 120 percent to 214 million units.

Pingan Securities said in China Securities Journal that investment and consumption in the information industry will likely become a new breakthrough for further economic expansion in the country.

The company believed that sufficient opportunities will be created for investment as the guideline outlines the major tasks for promoting information consumption.

To upgrade telecommunications infrastructure, the government will release 4G mobile communications licenses later this year. By the end of 2013, the government will also push the integration of telecommunications, Internet and broadcasting networks into one complete system covering the entire nation.

Xiong Wei, chief research officer of an investment consulting company in Beijing, regarded information consumption as a new direction of China's economic transformation and update, calling for new technologies and services in the sector, the journal said.

The booming information industry in China benefited many sectors like online games, e-commerce, communication, broadband, fiber optic equipment, logistics network, movie and TV media in the first half of 2013.

Data from Hexin Flush Information Network, a popular Chinese financial service group, showed that total net margin of 65 information service and equipment companies that have released semi-annual reports stood at 5.95 billion yuan, up 22.78 percent year on year, of which 43 realized growth in business performance.

Moreover, the industry forecasted a favorable performance from January to September.

A unicircuit manufacturing company Tongfang Guoxin Electronics expected profit to range between 160 million yuan and 190 million yuan in the first three quarters, up 47 percent to 75 percent from a year earlier, since it believed the unicircuit industry has opportunities considering ongoing policy support.

The stocks market also proved the positive situation that the sectors of information service, electronics and information equipment led the increases in 2013, while the online game and Internet shares surged 129.61 percent and 125.26 percent respectively.

Despite the growth, institutional hurdles are blocking the industry's sustainable expansion. The guideline encourages private capital to invest in the telecommunication industry.

Meanwhile, small information business-based companies are entitled to enjoy preferential financial support. The government will continue to simplify the administrative approval procedures and cut taxes for those businesses.