China Market Watch: China GDP Growth, Drug Pricing Reform and E-Commerce Zones
China’s GDP Growth during the First Three Quarters of 2015
Although China’s gross domestic product (GDP) of last year has yet to be released, the country’s actual 2015 GDP growth is set to come in at about 6.9 percent – slightly below the target for about 7 percent. According to the National Bureau of Statistics, the country’s GDP rose 6.9 percent during the first three quarters this year compared to the previous year, beating economists’ estimates for 6.8 percent. It is estimated that the tourism sector contributed over 10 percent to the national GDP growth with a total revenue of RMB 4 trillion.
While the local economy in some of the first-tier cities of China have hit a plateau, China’s Go West and Go Inland campaign have led to increased economic activity in its inland and Western regions. Some of China’s inland regions saw local GDP growth of over 10 percent, such as Chongqing (11%) and Guizhou (10.8%) in the first three quarters of 2015. Meanwhile, the establishment of the three new free trade zones in Tianjin, Fujian and Guangdong has greatly contributed to the GDP growth of the three cities. During the first three quarters of this year, Tianjin’s GDP growth hit 9.4 percent; Guangdong’s provincial GDP increased 7.9 percent. Earlier today, the Fujian government stated that its 2015 provincial GDP growth rate reached 9 percent.
A Brief Introduction of China’s Healthcare and Pharmaceutical Industry Reform
In April 2015, the State Council revised the “Administrative Measures on Medicine,” which simplified the procedures for the application, modification, and cancellation of the Drug Manufacturing License and Drug Distribution License. Later in May, the Chinese government removed the price control on most pharmaceuticals (excluding narcotic drugs and psychotropic substances), a big step towards the marketization of drug prices.
In November last year, the China Food and Drug Administration (“CFDA”) launched a pilot scheme which allowed qualified drug R&D institutions, research personnel and drug manufacturers to apply for drug market authorization and bring their newly developed medicinal product to the market. Such individuals or institutions own the property right and the right of manufacturing, discharging, and sale of the product with market authorization. Further, the CFDA modified the definition of “new drug,” clarifying that “drugs that have not been sold within China or abroad” shall be defined as new drugs. The pilot program was put into effect on December 1, 2015 and will last for three years. Currently, the plan has been implemented in 10 provinces and cities including Beijing, Tianjin, Shanghai and Hebei.
Updates on China’s Cross-border E-Commerce Zones
On January 6, Chinese Premier Li Keqiang announced his plan to set up a batch of cross-border e-commerce experimental zones in Central, Eastern and Western China. The new zones will be closely mirroring the structural and legislative policies of the Hangzhou cross-border e-commerce zone. According to the plan, the government will provide subsidies and bonuses to motivate the transformation of traditional foreign trade entities into cross-border e-commerce businesses. For the next five years, the e-commerce zones will seek to make logistics and e-commerce technology more comprehensive and integrated by establishing a one-stop service platform that provides services like customs clearance, foreign trade, and cross-border smart logistics, and cross-border e-commerce startup incubation.
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