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Deloitte Perspective Deloitte Can the Punch Bowl Really Be Taken Away? The Future of Shared Mobility in China Perspective Gradual Reform Across the Value Chain 2018 (Volume VII) 2018 (Volume VII) 2018 (Volume About Deloitte Global Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms. Deloitte provides audit & assurance, consulting, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves nearly 80 percent of the Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries and territories bringing world-class capabilities, insights, and high-quality service to address clients’ most complex business challenges. To learn more about how Deloitte’s approximately 263,900 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter. About Deloitte China The Deloitte brand first came to China in 1917 when a Deloitte office was opened in Shanghai. Now the Deloitte China network of firms, backed by the global Deloitte network, deliver a full range of audit & assurance, consulting, financial advisory, risk advisory and tax services to local, multinational and growth enterprise clients in China. We have considerable experience in China and have been a significant contributor to the development of China's accounting standards, taxation system and local professional accountants. To learn more about how Deloitte makes an impact that matters in the China marketplace, please connect with our Deloitte China social media platforms via www2.deloitte.com/cn/en/social-media. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Supercharging the Smart City Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. Smarter people and better governance © 2018. For information, contact Deloitte China. How citizens' collective intelligence can guide better decision making Should you wish to learn more about the report and relevant information, please log on Deloitte Perspective Official Site Deloitte Perspective 2018 (Volume VII) Supercharging the Smart City Deloitte China Innovation · Impact · Leadership Preface Quality of growth has been the mantra this year, underscoring the profound transformation that is taking place in the Chinese economy in terms of how it should Publisher be managed. At a macro level, a slower growth rate is necessary but not sufficient for Patrick Tsang mitigating financial sector risks. The real question is whether policymakers will be willing to allow some unsound financial institutions and zombie companies to fail Editor in Chief at a time of heightened volatility in global financial markets. At the micro level, a Paul Siu number of areas of growth have emerged in consumption or consumption upgrade as well as healthcare, which could allow policymakers to take tough decisions without Editorial Board Chief Sitao Xu worrying too much about their adverse effects on the labor market. One of China's great advantages is its speed of decision-making and implementation when compared to most Editorial Board other economies. Such speed is particularly important at the moment as China embarks (in alphabet sequence upon a new project: mapping out smart cities where data sharing is used to tackle urban of the surname) diseases such as congestion and pollution. However, smart cities in China cannot be William Chou a simple repeat of the previous growth model of mobilizing resources for producing Kevin Guo homogeneous products. In a way, the problems China is trying to solve in designing Marco Hecker smart cities are a microcosm of a better quality of economic growth and a more inclusive John Hung approach to development. As China celebrates forty years of economic reform in the year Vivian Jiang of dog, we wait to see if the next wave of liberalization will meet, exceed or fall short of Charles Lip people's expectations. Sectors such as pharmaceuticals and energy which encounter stiff Clare Ma Christopher Roberge headwinds,will prove to be the acid test of commitment to reform. In a nutshell, the Lily Sheng collection of articles in this issue is our attempt to address the problems China faces at Yvonne Wu this crucial juncture in its development, and offer some solutions. Tianbing Zhang Please read and enjoy! Editorial Director Lydia Chen Editorial Team (in alphabet sequence of the surname) Roger Chung Jinna Guo Kangqiao Huang Alaric Li Patrick Tsang Paul Siu Iris Li CEO / Deloitte China Deputy CEO / Deloitte China Keyu Liu Jill Qu Claire Rao Zoe Wu Icy Xu Jane Zhang Annie Zhou Graphic Designer Pam Pang Research Support Deloitte Research 63 Gradual Reform Across the Value Chain Despite the importance and necessity of the oil and gas reform it also comes with its own set of struggles, making it the most difficult task for the top authorities. So when China announced its long-awaited oil and gas reform summary in May, it makes sense that the reforms will be Deloitte Perspective gradual and pilot-based, containing a compilation of plans and programs already underway. 2018 (Volume VII) Contents 75 New Governance of the Platform Economy With the rapid development of digital technology, the platform economy has rapidly risen, bringing the tremendous changes in the management of business and governance. This report proposes three major challenges in collaborative governance of the platform economy: protection of rights and interests, reasonable taxation and fair competition. It is suggested that, the primary goal of governance should be to encourage innovation and development, 1 Can the Punch Bowl Really Be Taken Away? and its regulation should be sufficiently inclusive and prudent, while the platform economy Given a high GDP growth target, policymakers might push the panic button and turn on is still at an early stage. the liquidity tap in order to forestall an economic downturn - this would be unfortunate but not inconceivable. 9 Embracing the BRI Ecosystem in 2018 —Navigating pitfalls and seizing opportunities China-proposed Belt and Road Initiative, a large part of the investment landscape across the world for four years, will become increasingly important. This paper summarises Deloitte’s key BRI insights for 2018, and explains how industry players can best position themselves to seize the investment opportunities. 29 A Promising Future Rooted in Innovation 1 35 49 75 95 —Thermo Fisher China's Life Science sector is expected to maintain a strong growth rate during China's 13th Five-Year Plan period. Driving clinical innovation while managing cost is the key challenge 87 Supercharging the Smart City of both policy makers and market players. How to adapt the facts include changing demographic trends, consumption upgrade, overcapacity and the lack of IP protection in —Smarter people and better governance China is a major task that life science companies need to accomplish. Smart city construction is spreading like wildfire in China. However, many developments are fraught with issues such as unclear strategic goals, inadequate technology implementation and poor execution models. City planners should take a step back and re-examine what 35 The Future of Shared Mobility in China makes a smart city work click and what not. The new generation of Chinese smart city Faced with this new wave of urbanization, the Chinese government is more willing to seek development should aid city administrators in creating an urban environment that's smart, a compromise as neither a spending binge on local public transit nor a massive cut on car innovative and sustainable for its citizens: essentially a supercharged smart city. usage proves to be feasible solutions. In the post-private car era, car ownership, shared mobility, and public transport will coexist for a long time. 95 Making Cities Smarter —How citizens' collective intelligence can guide better decision making 49 Convenience Store Turns the Corner As massive, complex organisms, cities somehow manage to deliver services, move products Driven by continued economic growth, rise of major consumer groups, favourable policies, and goods, protect us, educate us, inspire us. But how can they do it smarter? capital investment, the convenience store industry has experienced stable growth. Digital- If you're a smart leader you know you don't know the next [person] that it's going to come centred transformation will pioneer the next stop for this industry and become crucial means from. It can come from the most junior person in the organization. But the more voices you to cope with changes and challenges. Participants from outside are swarming into this can listen to the better chance you are going to have of getting the estimate right or getting industry and may probably become the key force reshaping the convenience store landscape. the new idea that no one else thought of. Can the Punch Bowl Really Be Taken Away? Given a high GDP growth target, policymakers might push the panic button and turn on the liquidity tap in order to forestall an economic downturn - this would be unfortunate but not inconceivable. Can the Punch Bowl Really Be Taken Away? BY / Sitao Xu hile Chinese policymakers concur on the need for deleveraging, what to tackle first remains a much debated issue.