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The View | What explains China’s ascent in fintech and electric vehicles?
- While institutional factors, such as a nurturing ecosystem and government support, play a role in fostering innovative sectors, these businesses are risky by nature
- China’s growth in these areas might be influenced by a cultural comfort with uncertainty
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Rapid change in innovative parts of several important traditional sectors is generating intense interest globally. For example, the financial services sector – especially its fintech component – and electric vehicles have captured the attention not only of business practitioners but also policymakers as they look at the high-quality jobs, exports and revenues to be gained.
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First, take the growth of fintech. The fixation on fintech is especially apparent in two of the traditional leading financial centres, New York and London. This is partly because they are set in wider economies where more than 70 per cent of gross domestic product comes from services.
Yet, the sector is also important for other economies which are less service-dominated. One example is China, where around half of GDP comes from services.
China performs well in financial service centre lists, with Hong Kong, Shanghai and Beijing in the top 10 of the Global Financial Centres Index. However, Chinese centres feature more frequently and more strongly in the index’s fintech rankings with Hong Kong, Shanghai, Shenzhen and Beijing in the top 10, reflecting a focus on technology development.
Second, consider the global electric vehicle boom. China provides an interesting example as domestically made small electric cars have taken off and could be poised to swamp other international markets, with versions of the Hongguang Mini EV, for example.
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