Stock market reveals new engine for Chinese economy

As the Chinese economy slows, a stock price boom of recently listed new enterprises has stoked hopes of new growth vigor through innovation, an area the government had previously identified as having potential.

The ChiNext Index, China's Nasdaq-style board of growth enterprises, closed at a historical high of 2,009.83 points Wednesday, up 2.45 percent. Strong performance this week has fed confidence that innovative companies will emerge as a new economic engine.

Chen Bin, founder of YunDing Internet Technology Co., which produces wireless sensors, said he was encouraged by the new high.

"This suggests investors and the capital market are optimistic about startup companies."

The sensors created by Chen's company update users in realtime about door and window activity. As an entrepreneur, the 32-year-old said he was aware of the potential for his company to further expand into the home technology sector.

"The government is encouraging new businesses and innovation, this has created a suitable climate for entrepreneurs," Chen said. "Such an atmosphere will inspire the nation's pioneering spirit, and is conducive to further development."

Chen is not alone. More than 3.65 million new enterprises were registered last year, an increase of almost 46 percent year on year amid government reforms to cut red tape and simplify approval procedures.

In his address to the World Economic Forum's annual meeting, held in Davos in January, Premier Li Keqiang said China needed to encourage entrepreneurship and innovative practice to mobilize the wisdom and power of the people.

With a workforce of 900 million people and a population of 1.3 billion, analysts say, should all elements of the Chinese society be mobilized it would have a positive impact on growth momentum.x Wang Xiaochu, former vice minister of human resources and social security, said amid the "new normal" of the economy, startups and innovation are important to countering the slowdown.

"This process will also help expedite restructuring and industrial upgrading efforts," said Wang, who is also a deputy to the National People's Congress, which is slated to convene its annual session Thursday.

Chi Fulin, director of the China (Hainan) Institute for Reform and Development and also a member of China's top political advisory body, agreed that innovation would drive structural measures.

"Information technology is already playing an important role," he said.

On Monday, the China Securities Regulatory Commission gave the green light to 24 companies wanting to file for initial public offerings.

Among them, eight companies will make their debut on the ChiNext board.