A New Angle on China’s Tech Ambitions

The changing of the seasons usually means one thing: Sickness.

I’m not really one to pay attention. But I can usually always tell when we change over from autumn to winter.

We’ll either be a couple of people short around the office. Or I’ll hear sneezes and coughs on the other side of the building.

Hospitals in China don’t need a calendar either. They know exactly when the colder months are here. All they have to do is look at the number of beds occupied.

When winter rolls around, many Chinese hospitals reach 100% occupancy. Some even take in more patients than they have beds.

And still hundreds more are waiting for a bed.

An appointment in China has become such a hot ticket, scalpers are cleaning up. The going rate, according to the Beijing Review, is about $688.

South China Morning Post (SCMP) writes:

The occupancy rate on all medical wards in 16 public hospitals has consistently been around 110 per cent, with some as high as 130, meaning temporary beds have even filled up all spaces in corridors.

Some patients complained of waiting for days in observation units before they could be moved into a room.

And if things don’t get better soon it could lead to far more deaths than you think.

 

 

China’s after more than just growth

Asian stocks continue their fall. Even China’s currency has joined in on the woe.

Reported by The Age:

The selling has been swift, with June proving to have been a tough month, reflecting US President Donald Trump’s frustration with the trade deficit the US has with China and what he sees as China’s unwillingness to materially address it.

‘…The angst caused by the trade rhetoric also has hit China’s currency, prompting the People’s Bank of China to cut late last month the amount of cash domestic banks need to hold in reserves with the risk now of a fourth such cut in the months ahead.

The move is intended to bolster liquidity, making it easier for companies to borrow cash. The yuan depreciated 3.5 per cent over the final two weeks of June alone and is now more than 6 per cent lower from its April high.

 

 

We all know what this is about.

Trump doesn’t really care about the trade deficit. He simply wants America to be number one. And to do that, he’s got to limit China’s technology ambitions as much as possible.

You’ll remember in Friday’s Money Morning I said economic growth was the product of hours worked and productivity.

Technology greatly improves the latter.

It’s how a business produces more with less. It’s also how countries move up the manufacturing value chain.

It might sound like hype, but technology and process improvements really are the future. Without them we can kiss economic growth goodbye.

And that’s not the only reason China wants to beef up their tech industry. Growth is nice, sure. But what about prosperity and living standards?

Being the world’s economic super means nothing if your people are dying in waiting rooms. And that’s exactly what’s happening all over China.

 

Removing regulation is opening up investments

China’s population isn’t just massive. It’s aging.

By 2025 China will be considered an aged society, The Diplomat wrote:

In 1987, the early days of China’s economic miracle, 63.8 percent of the population were of working age, and 4.2 percent were aged above 65. That meant a surplus of workers to feed China’s low-cost manufacturing boom, which drove the average 10 percent GDP growth seen between 1987 and 2007.

But increased life expectancy and lower fertility means that by 2025, when the share of the 65-and-over population exceeds 14 percent China will officially become an “aged” society. But unlike France, which took 115 years for its share to rise from 7 percent to 14 percent, China will have taken 23 years, and much less than in the United States (60 years), United Kingdom (45 years), and Germany (40 years), according to research by the World Bank and Standard Chartered.

To ensure China is taking care of their own, the Middle Kingdom has officially encouraged research on medical imaging equipment, diagnostic devices, and technology platforms.

The R&D push is part of an ambitious goal to improve average life expectancy from 76.3 years in 2015 to 79-year-old by 2030, and reduce mortality rates among young patients with chronic diseases by a third, from 19.1 per cent,’ SCMP wrote.

China is also planning to remove regulation on internet health care services. Doing so will encourage remote hospital consultations, leading to more online prescriptions for chronic diseases.

It also gives companies like Tencent Holdings Ltd [HKG:0700], Alibaba Group Holdings Ltd [NYSE:BABA] and Baidu, Inc. [NASDAQ:BIDU] a chance to pump millions in investments into the industry.

With any hope, at least the scalpers will be gone.

 

Your friend,

Harje Ronngard,
Editor, Money Morning


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.


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