Innovative Tradition

Thomas Dirksen is a German citizen who graduated from the Department of Chinese Language and Literature at Fudan University in Shanghai. Better known for his Chinese name “A Fu” among the locals， he completed a “no-cash day”in Hangzhou， capital of eastern China’s Zhejiang Province， in late August， just a few days before the G20 Summit was held there.

He arrived in Hangzhou on a bullet train from Shanghai， bringing no cash or credit card but only his passport and smartphone with him. “I have been told that people can buy anything without cash in Hangzhou，” he explains. “I doubted this was true， so I decided to try it for real.”

After renting an umbrella with an app， Dirksen soon realized that mobile payments had indeed penetrated every corner of life in Hangzhou. During his day in the city， he continued paying by scanning QR codes with his smartphone， whether taking a bus， eating， buying tickets， consulting doctors in a traditional Chinese medicine clinic， or buying snacks at a roadside food cart.

Stunned by his cashless experience， Dirksen recalled that people in his hometown of Marienheide， about 50 kilometers from Cologne， never dare to go out without cash or credit cards. “We take coins to ride the bus and pay for water， electricity and gas bills by visiting banks or using online services，” Dirksen grins.“But in Hangzhou， my primary concern is my cell phone battery.”

As headquarters of Alibaba， the world’s largest e-commerce company， Hangzhou has become the “capital of mobile payments.”Data released by Ant Financial， an internet financial services provider under Alibaba， showed that thanks to the popularization of thirdparty mobile payment platforms such as Alipay and WeChat payment， 98 percent of taxis in the city， as well as more than 95 percent of local supermarkets and convenience stores， accept Alipay. This mode of payment is also available in more than half of the 40，000 or so local restaurants. All one needs is a smartphone with a payment app. In the Digital Inclusive Financial Index compiled by Peking University in July， Hangzhou topped the 335 surveyed Chinese cities in the overall development of internet finance.

Hangzhou is the torchbearer of the Chinese economy in the“Internet Plus” era. A recent report from the China Internet Network Information Center estimated the number of Chinese online payment users at 455 million by June 2016， up 9.3 percent from the end of 2015. Meanwhile， the number of Chinese mobile payment users rocketed to 424 million， an increase of 18.7 percent in only six months.

New businesses related to the mobile internet and electronic payment， such as social networking platforms， ridesharing apps and online to offline （O2O） services， have ballooned in China， led by unparalleled global giants such as Alibaba， Tencent， and Didi. The “Internet Plus” tide has not only changed lifestyles in China， but also boosted the country’s economic restructuring. Thanks to the incentives offered by the government and tireless work by players from a variety of sectors including agriculture， manufacturing， shopping， travel， catering， and real estate， the “Internet Plus” trend has become an important driver restructuring traditional industries and promoting innovation.

With the arrival of the information technology era， China， once notoriously labeled as lacking innovation， has transformed from a straggler into a leader in technological innovation in recent years. In an article of The New York Times titled “China， not Silicon Valley， Is Cutting Edge in Tech，” Paul Mozer wrote “China’s tech industry—particularly its mobile businesses—has in some ways pulled ahead of the United States. Some Western tech companies， even the behemoths， are turning to Chinese firms for ideas.”

The 2016 Global Innovation Index， jointly published by the World Intellectual Property Organization （WIPO）， Cornell University， and INSEAD， suggests that China has joined the ranks of the world’s 25 most innovative economies. “That of course is right in line with all the developments we have seen in China in recent years， including the current enormous emphasis on innovation as a major component in the transition of the Chinese economy from‘Made in China’ to ‘Created in China，’” remarks WIPO Director General Francis Gurry.

As global recovery continues sluggishly， innovation has taken a more important position as a new engine to drive economic growth. As its economy enters a “new normal” phase， China seeks to transform from an investment-driven economy to an innovationdriven one. In this context， Chinese policymakers have made“mass entrepreneurship and innovation” one of the twin engines to reform economic structure and guarantee growth. In March 2015， Chinese Premier Li Keqiang mentioned the “Internet Plus” Action Plan in his Government Work Report for the first time， which aims to transform traditional industries and promote innovation-driven development via new-generation information technologies such as the “Internet of Things，” cloud computing， and big data.

According to Yang Peifang， former chairman of the China Information Economics Society， the “Internet Plus” could be an industrial revolution with greater penetrability than the previous ones driven by steam engines and electricity， and become the core productive force in the information age. More importantly， it is helping expand the size of the new economy while transforming the traditional economy， making economic stock more incremental.

Thanks to the prevalence of the mobile internet， the tide of“Internet Plus” has not only swept across cities of China， but it is now also extending its reach to some once-isolated rural areas.

Already， an “Internet Plus” village experiment has shown promising signs in Tongguan Village， Liping County in southwestern China’s Guizhou Province， thanks to the joint efforts of the government and some charity organizations. Surrounded by mountains， the village has 460 households， and 93 percent of its people are from the Dong ethnic group. Like many other remote villages inhabited by ethnic minorities， Tongguan used to suffer from inconvenient transportation， and most working age natives migrated to cities to work. The majority of the people who stayed were children and seniors. Most had never used cell phones. The per-capita annual income was only 2，800 yuan.

The situation began to change in 2014， when an aid program named WeVillage was launched there. With the help from volunteers， villagers of Tongguan gained access to smartphones and established an online group on the social networking app WeChat. Through the platform， the village committee now can send messages about new farming and breeding technologies and job opportunities， and locals can advertise their agricultural products. In addition， the village launched the WeChat-based Tongguan Market， through which consumers can buy local products by scanning QR codes， see product photos and find contact information.

Thanks to the spread of “Internet Plus，” the development gap between China’s urban and rural areas caused by an imbalance in information accessibility and resource distribution is expected to shrink and eventually disappear.