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Fortune Global Forum explores China's new future

By Yuan Fang (

14:31, June 07, 2013

Fortune Global Forum participants attended a welcome reception in Chengdu Thursday evening, where they heard a keynote address from Chinese Vice Premier Zhang Gaoli. Themed "China's New Future" and scheduled for June 6-8, the Chengdu forum convenes over 600 heavyweights from the political, business and academic world. Participants hope to develop long-term success strategies for Chinese and global companies alike as they explore sustainable development, innovation and technology, global finance and economic recovery and the "China century."

China's transformation of its economic growth pattern, the urbanization drive and the West China Development campaign are considered big business opportunities by savvy multinational executives around the world. In this light, Fortune magazine decided to take its global forum back to China this year.

The 2013 Fortune Global Forum -- a gathering of top corporate CEOs, government officials and academics -- kicked off on Thursday afternoon in Chengdu, a flourishing city in Southwest China's Sichuan Province, themed "China's New Future." More than 600 participants, the largest attendance in the forum's 12-year history, aim to gain some insight into the trends and forces that are redefining economic growth in China, the world's second largest economy, and in the whole world in general.

In his remarks at the forum's opening plenary session, Andy Serwer, managing editor of Fortune, said the forum will thoroughly examine the impact of events such as China's 12th Five-Year Plan, urbanization and China's "west-bound" move.

To illustrate the economic power of China's 1.3 billion consumers, Serwer cited the online sales figures on China's Singles' Day, which is considered the alternative to the U.S. Valentines' Day and falls on November 11 every year.

"In 2010, online sales on Singles Day added up to US$300 million(in China), but two years later -- in 2012 -- people went online and spent US$4 billion on that [very same] day," he said.

Serwer estimated the population of China's middle class, generated by the country's vibrant economic growth and major spending force, will reach 1 billion by 2030.

When identifying some of the challenges facing China's economy, Serwer said that the years from 2008 to 2011 were characterized by an imbalance between export and personal consumption, stressing that the balance of the economy based on the consumer side of the equation is crucial.

Expounding on the forum's theme of "China's New Future," Serwer thinks it is a future defined by a pro-consumption growth founded on three building blocks: The transition from a manufacturing and export model to a service economy, the urbanization and the development of a social security network.

"The service economy of course creates jobs, producing 30 percent more jobs per U.S. dollar in GDP than manufacturing. Yet China's service industry only contributes 43 percent to the GDP, compared to 80 percent in the U.S," Serwer pointed out, adding that a service economy is also resource-light and more sustainable.

In regards to urbanization, Serwer cited the Mckinsey estimates by saying that the percentage of urban population in China will rise from its current 52.6 percent to 70 percent by 2020. He believes that the urbanization drive will have a profound impact on China's economy and the Chinese standard of living as it will lead to a higher consumption level and more jobs -- a proved formula for lifting the nation's per capita income.

Concerning the necessity of the development of a social safety net, Serwer holds that this will help unleash Chinese people's spending power when they still have high savings in the banks as the country still needs to provide better security in the fields of retirement, healthcare and so on.

Serwer believes this transition to a consumption-drive model anchored by the above-mentioned three building blocks will generate large numbers of new business opportunities for both multinational companies as well as Chinese innovators.

Against this backdrop, the forum, Serwer said, will help participants identify new trends and contextualize the complexities and uncertainties that rise from the ongoing changes in China through focusing on four content pillars: The China Century, sustainable development, innovation and technology and global finance and economic recovery.

In a congratulatory message to the forum, Chinese President Xi Jinping underlined China's two major development goals: To double the 2010 GDP and per capita income by 2020; and to turn China into a prosperous, democratic, culturally advanced and harmonious modern socialist country by mid-century. Xi invited companies from across the world to participate in China's modernization process.

"A China full of vitality and keeping growing and making progress will bring more opportunities and benefits to the people of other countries," Xi said in the message as he pledged to protect the lawful rights and interests of investors, strengthen the protection of intellectual property rights and provide quality service to foreign businesses.

When making his speech at the forum's opening night, Chinese Vice Premier Zhang Gaoli said that China's import volume is expected to hit US$10 trillion in the following five years, with outbound investment expected to reach US$500 billion.

According to Zhang, 740,000 foreign-invested companies have thus far been established in China by the end of 2012, with the total FDI number exceeding US$1.2 trillion.

This year's forum marks the fourth edition of the event to be held in a Chinese city after the Shanghai (1999), Hong Kong (2001) and Beijing sessions (2005). Over the course of the three-day event, several discussions and speeches will center on four major tasks under the theme of "China's New Future:" The China Century, sustainable development, innovation and technology and global finance and economic recovery.

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