China Headlines: "Makers" securing place as China's new economic drivers

New government promises of favorable policies for tech startups will be further encouragement for the whiz kids working in China's "makerspaces", community workshops where techies gather to collaborate and achieve economies of scale.

While Premier Li Keqiang said on Monday that China will issue more pro-maker policies, this is just the latest government move to encourage innovation and restructure the country's plateauing economy.

One group already benefitting are the micro-businesses who won places in Dream Town, a government-backed makerspace launched last month in Hangzhou, a southern Chinese city known as a home of high-tech firms, including the Alibaba Group.

Yu Yang, one of many aspirational and tech-savvy members of China's "post-80s generation", has established a 3D printing company in Dream Town.

Yu hopes his technology will help put paid to the stereotype of cheap Chinese goods. His company filled orders worth more than 200,000 yuan (32,690 U.S. dollars) in March and he plans to expand.

Dream Town is home to over 80 startups who faced fierce competition for residency, with the workspace being rent-free for the first three years and residents getting access to subsidized loans of up to 1 million yuan.

"The air is filled with energy and vitality. We inspire and cooperate with each other, even sharing clients," said Jing Tian, a Dream Town maker who develops healthcare apps.

Alibaba's Dream Town neighbors are not the only young entrepreneurs aiming high. In garages and cafes, countless young Chinese are setting out to become the next Jack Ma, and the government is glad to lend a hand.

Ma himself, Alibaba's founding father and leading light, was once a maker.

"It took Ma more than a decade to be crowned China's richest man," said Lu Feng, an economics professor at Peking University. Lu believes the process from launching a tech business to growing rich can be much shorter with favorable policies in place.

NEW GROWTH ENGINE

Premier Li's promise on Monday came in a letter to students from Tsinghua University, the prestigious science and engineering academy.

He called on young entrepreneurs to be pioneering, to dare to break with routine and to bring economic growth in the process.

The first signs of a big official push behind makers came in the government work report in March. The annual report mentioned makers for the first time and identified mass entrepreneurship and innovation as a new engine for economic growth.

It was obvious then that makers would be big participants in a 40-billion-yuan venture capital fund announced in January to help innovative firms in their early stages, especially in emerging industries.

On Friday, the State Council, China's cabinet, offered tax breaks to innovative startups and secured loans of up to 100,000 yuan for small firms. It promised to use fiscal revenues to help cover the interest.

Analysts have predicted that the government funding will attract private investors to bet on startups, with hundreds of billions of yuan likely to come flooding in.

STARTUPS ON THE RISE

The measures may have already started to take effect. The number of newly registered firms in China in Q1 rose by nearly 40 percent from Q1 of 2014.

Small firms saved 24 billion yuan through tax reductions in the Jan.-March period, with many enjoying a 50-percent cut in income tax, according to new official data.

These trends need to continue if China is to meet its targets. Nearly 80 percent of urban jobs are in small companies. The government has pledged to create more than 10 million urban jobs and ensure that the unemployment rate stays below 4.5 percent in 2015.

Some experts have suggested that the government should go even further in providing incentives for startups. "A three-year tax-free period for small, innovative firms should be considered in due time," said Wang Xiaoguang, a researcher with the Chinese Academy of Governance. Endi