The headlines about China’s slowing economy might sound extremely persuasive but do not let the so-called trade war fool you. The country is still breaking records with its prosperity and even a 1% drop cannot slow it down. The recent news promise some significant changes:
The money will, of course, be supplied to the big government corporations and projects. Although it might seem like the banking system is at risk China is the global leader in POS as well as the cutting edge data transferring technologies.The reserve ratio of Chinese banks has been cut by 0.5 % The government has poured $126 billion into the national banking system.
Local Payment Systems
China has now become extremely close to turning into a cashless society. All due to AliPay and WeChat. A westerner might find it hard to understand how these integrated systems work. Think of a social network, online store and a payment system all merged together into one. Another thing that is revolutionary is that banks do not get the cut in all the online transactions.
The western economies are used to multiple transfer and payment processing companies. But here all this becomes redundant in a unique mold of instant chatting, shopping and sending money with the help of banking companies like UnionPay. The China-based company became gigantic and ever-present not only in China, where according to the insight of reviewers from almost every Chinese household have at least one UnionPay card and making every-day shopping and transfers with it.
The Chinese remittances market is worth $41.51 trillion dollars and only two major companies get around 93% of the cut. WeChat and AliPay have made it much easier to use their payment systems rather than using credit cards. These two companies have already left the rest of the world behind. By 2021 about 80% of Chinese will be paying cashless at the point of sale comparing to only 23% for the USA or 15% for Germany.
Of course, using traditional banks has its own benefits. Clients prefer to be able to visit their local branch plus the bonuses and reward points on the credit cards are pretty nice. The reason for AliPay and WeChat success is that it was an uneven playing field. Both services were first introduced to Chinese citizens with no credit cards. In case these two giants proceed expanding abroad they will have to face some serious competition.
5G Introduction Strategy
The country has the urge to be a global technology leader. Right now China is implementing 5G rushing to be the first country to make it available for the majority of its citizens. The reputation of the country and its economic appeal is at stake. Consider the fact that it was late with the 3G and then with the 4G losing the race twice. The government definitely doesn’t wish to lose the 5G leadership this time. The present-day market demands for augmented and virtual reality, 4K video streaming, smart city, and industrial internet. All that requires 5G for a proper bandwidth speed.
In 2018 China has reached a staggering 92% mobile broadband coverage on its mainland territory. The state regulating bodies have achieved a significant drop in mobile internet prices allowing more citizens to get access to it. The voice over long term evolution or VoLTE technology that allows for a 4G voice transmission has given mobile operators a chance to get rid of the 2G. Thus free significant spectrum sources.
Tiananmen Square in Beijing was the first to receive a 5G network at the beginning of 2019. The Quianhai-Shekou free trade zone in Shenzhen has been the second to receive 5G in April of 2019. The next sites to receive the network are Chengdu, Fuzhou, Zhengzhou, Shenyang, Tianjin, Qingdao, Wuhan, Guiyang, Nanjing, and Hangzhou.
Qualcomm has already introduced a brand new processor Snapdragon 855 able to harbor the new wireless technology. The first company to launch a 5G compatible smartphone was Huawei with its Mate X and 1 Gbps download speed. The company has even developed a processor of its own for the domestic Huawei phones.
However, with over 1 billion mobile phone users introducing an ultra-fast wireless connection with increased power savings and reduced latency is quite a challenge. Major local providers like China Mobile, Unicom or China Telecom have announced commercial 5G plans to be released by August of 2019. The launch has been pushed back towards the October of 2019 so we all have to just wait and see.