China rich list a mirror of changing economic landscape(2)

The data have sent mixed signals. While China's economic restructuring has become an unstoppable trend, with much headway already made as signified by the rise of Internet services gurus, the traditional industries, such as real estate, remain indispensable in shoring up the economy and the country still faces a severe challenge of deleveraging.

In the past decade, China has relentlessly tried to restructure its economy, making it less dependent on export and investment and, instead, be driven more by consumption, high technology and green industries. The traditional thinking that still favors fast economic expansion, however, has complicated that drive, making the process slow.

The success of those Internet giants shows that the economy has finally come to a stage where new industries have begun to play a crucial role in the economy as technological advancements have been properly organized to create new types of economic activities, such as e-commerce, to improve efficiency and add to output.

What is thought-provoking is that the Internet businesses are all privately-owned. Private enterprises are relatively more innovative, flexible and market-oriented compared with the State enterprises. The commercial success of the Internet giants shows the country's strategy to encourage development of the private sector is in the right direction and will help increase the overall vitality of the economy as a whole.

Now the market scale of e-commerce is about 10 trillion yuan, according to various institutional estimates. It accounts for about 18 percent of the nation's GDP. Considering the fast growth of the sector, by 2020, it could surge to more than 30 trillion yuan, according to market research institutions.

If the trend continues, it is predictable that the contribution of traditional industries to the Chinese economy will gradually diminish and that of consumption and services will rise accordingly, ultimately helping to rebalance the structure.

The restructuring road, however, is set to be bumpy.

Take the real estate sector. It has been a pillar of the Chinese economy for a decade. It accounts for a large proportion of the country's fixed-asset investment and helps generate demand for a good number of other industries. If the economy is to be restructured to be more innovative and competitive, however, it must become less dependent on the sector. On the other hand, deleveraging means possible home price corrections, bank loan defaults and collapse of some related sectors, leading to uncontrollable financial risks.

Therefore, policymakers are very cautious in allowing normal market corrections to happen, as is shown by a slew of relaxation policies this year that are aimed to boost sales.

On the Forbes list, although only real estate tycoon Wang Jianlin was among the top 10 richest business people, still more than one fourth of the richest 400 billionaires are from the real estate sector, indicating that it remains a backbone of the economy — at least for now.

So far, it is not clear whether the relaxation policies will bail out the sector. The performance of the real estate sector next year will be crucial not only for the national economy, but the rankings of the top rich list.