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October 28, 2010

Escape Velocity Infrastructure spending in China and AI is one of three things in IT that China sets out as Strategic

Raghav Bahl is the Rupert Mudoch of India. He owns several TV Stations.
Recently he has written a book 'Super Power?' which compares the two developing country China and India.

Raghav writes in Forbes

China today is investing nearly half its GDP, something that is simply unprecedented. Over 200 years of economic experience tells us that hyper-investment creates a bubble and ends in a dreadful collapse. But China has consistently defied all such prophesies of doom.

The time has come to acknowledge a truth: either conventional economic theory will have to be rewritten, or China will eventually collapse. The two cannot coexist.

I would venture a 50 per cent wager on China actually trumping conventional theory. Why do I say that? Because by investing on a scale hitherto unknown and untested, China may have defined a new "escape velocity" of capital spending. By putting so much capital, not in factories, but in infrastructure, China may have escaped the "gravitational pull of low thresholds."

Big factories create waste, while big infrastructure, especially life-enhancing social assets, empowers people. The sheer scale of your activities could end up swelling the tide in which everybody and everything rises together; a new model of "tidal wave investing" could buoy the whole ocean to a much higher watermark.

China has identified 7 strategic sectors that they want to be major GDP contributors. IT is one of the seven and AI (artificial intelligence is one of three things mentioned as important in the IT goal.





China's most recent five year plan is summarized in a different article.

Some new goals listed in the five-year plan include:

1. Improving the social welfare and livelihood of the people

2. Boosting domestic consumption to accelerate economic restructuring away from its traditional export-oriented focus

3. Narrowing the differences between the western and coastal parts of China.

4. Improving energy efficiency and environmental protection

5. Developing seven strategic key industries, with the aim of increasing their GDP contributions from the 2 per cent of GDP now to 8 per cent by 2015 and 15 per cent by 2020

7 STRATEGIC SECTORS

China is also shifting its focus and resources to seven strategic industries that have been identified to tackle unfavourable demographics, raise productivity, develop home-grown technology and move its industries up the value chain. They are:

1. New energy: Developing clean or alternative energy from nuclear, wind, solar and bio-fuel sources

2. Energy conservation and environmental protection

3. New materials: Rare earth, alloys, membranes, high-end semiconductors

4. Biotechnology: Drug and vaccine development, advanced medical equipment, biomedical research and development

5. New IT generation: Broadband and mobile communication networks, Internet security infrastructure and artificial intelligence

6. High-end equipment manufacturing: Aerospace, telecom and railway equipment and marine equipment

7. New Energy vehicles: Electric cars, plug-in hybrid cars



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