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Mandy Zuo

While China continues to produce many young self-made billionaires, showcasing its economic dynamism, observers have urged the creation of a more supportive environment, saying that innovation is still being held back.
About 98 per cent of the super-rich in mainland China, with assets valued at US$1 billion or more, are relatively young first-generation entrepreneurs, reflecting the vitality and wealth-creation power of its economy, Swiss bank UBS said in a recent report.
However, Beijing’s tendency to strengthen state ownership and the lack of a loss-proof mechanism – which would shield innovative risk-takers from severe repercussions for failures – have curbed entrepreneurial vigour, according to some analysts.
“We noticed that self-made billionaires constitute a very high proportion of China’s wealthy individuals, indicating that the Chinese market remains a vibrant and dynamic engine for generating new wealth,” said Marina Lui, the bank’s head of China wealth management, at a news conference in Shanghai on Tuesday.
She said new billionaires in China “tend to be younger – typically in their 40s to 50s, in my observation – compared to those in other regions”.
UBS’ annual billionaire report recorded 470 billionaires in mainland China this year. That was second only to the United States, which had 924, but those in China were generally younger, with smaller families.
Technological innovation was a major factor driving wealth creation, with Wang Chuanfu and Lu Xiangyang, the founders of electric-vehicle maker BYD, among the prime movers, the report said.
Beijing has increasingly emphasised the importance of innovation in recent years as it is regarded as the core driver of new economic growth amid rising international competition on the technology front.
Most of the money goes to state-owned enterprises, but are they capable of innovating?
Wang Jianye, former IMF economist
“Sticking with innovation-driven development” was listed as the second priority among eight major tasks for next year at the annual central economic work conference which concluded last week.
But the innovative ability of private companies, which were the primary engine of entrepreneurship and economic vitality, still faced constraints such as difficulties in accessing financing, said economist Wang Jianye, formerly of the International Monetary Fund.
“Most of the money goes to state-owned enterprises, but are they capable of innovating?” he asked at a conference held at New York University (NYU) Shanghai on December 5.
Smaller private companies and start-ups relied on their own capital or non-bank financing channels as they often lacked the collateral and guarantees that banks required, Wang said.
Another obstacle was a culture that tended to prioritise error avoidance over responsibility and creativity, said Yan Hong, a professor of finance at Shanghai Jiao Tong University, at the NYU Shanghai conference.
He called for the creation of a fault-tolerant system that protected officials, enterprises and researchers from severe repercussions for failed experiments or innovative risks. “If people are afraid of making mistakes, it will be very difficult to innovate or push forward with reforms,” he said.
According to the results of a survey of state-owned investment institutions released last month by LP Institute, a Chinese advisory firm, a mere 41.91 per cent had established fault-tolerance mechanisms, and only 42.86 per cent had set up incentive mechanisms.


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Technological innovation – one of Beijing’s top priorities – is helping to drive wealth creation, report says


Technological innovation – one of Beijing’s top priorities – is helping to drive wealth creation, report says.


China’s growing young billionaire class masks innovation hurdles, analysts say

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Technological innovation – one of Beijing’s top priorities – is helping to drive wealth creation, report says

Technological innovation – one of Beijing’s top priorities – is helping to drive wealth creation, report says