“I have been visiting scholars and engineers in universities, Google, Microsoft and high-flying start-ups like iRobot, trying to bring AI and big data experts back to Nanjing,” Du said. 

Du, 38, was working for Nanjing’s city government as a recruiter for more than six years, helping to set up labs and companies in the city. 

Now, he has struck out on his own, using the network he established to help Chinese technology companies like Baidu and Alibaba Group Holding – as well as local governments from Nanjing to Guangzhou – find talent and technology to bring back to China.

He is not alone. Wu Weiyue, 27, with an MBA from Oxford University, is one of hundreds of Chinese students heading home right after graduating abroad, in their belief that China’s economic growth pace and market size are better able to put technology to commercial use.

Wu joined PerceptIn in July, a two-year-old start-up specialising in visual intelligence, an important technology used in autonomous driving. The company has since grown its team to nearly 30 in Shenzhen and Santa Clara, and has located a strategic round of funding at a valuation of US$50 million. 

“The timing is ripe,” said Wu, who feels if she had waited for, say another five years, she would have missed out on a huge opportunity. “It won’t be surprised at all if China leads the world in autonomous driving technology.” 

The paths chosen by Wu and Du reflect the changing face of China’s economy. Top leaders are keen to find a new engine that powers economic growth when traditional industries are struggling with overcapacity and piling debt. 

That switch was highlighted by President Xi Jinping in his opening speech at the 19th party congress last month.  

“China has transformed to high-quality growth, from high-speed growth … we need to speed up building China into a strong country with advanced manufacturing, pushing for deep integration between the real economy and advanced technologies including internet, big data and AI,” Xi said. 

Wang Tao, an economist with UBS, said that Xi’s speech without specifying a gross domestic product (GDP) target perhaps signalled a subtle shift in the party’s primary development objective. 

Wang said that China would take the opportunity to cut overcapacity and leverage, while transforming the economy “by moving up the global value chain and develop new growth drivers in mid- to high-end consumption and innovation”. 

Analysts with Goldman Sachs were of a similar view. They noted that a twin-measure framework had been set by Xi that stresses cutting overcapacity and deleveraging in the old economy, and simultaneously while pushing for innovation that accelerated structural transformation. 

“Instead of purely focusing on the speed of economic growth, policymakers now also emphasise higher productivity, higher profitability, more innovation and efficient distribution,” said a Goldman Sachs note. 

Fred Hu, chairman of Beijing-based private investment firm Primavera Capital Group, said that since China has set a target to become a moderate socialist country in 15 years it will put more emphasis on innovation and technology, consumer services and clean technology such as renewable energy.

“In the next five years, China will focus on economic development and unleash potential for innovation to generate sustainable economic growth,” he said.

China’s march towards a technology-powered “new economy” will be fuelled by the use of big data, cloud computing and the internet of things among others. 

Even China’s tech-savvy consumers are prepared. The country is already the world’s largest e-commerce market with about 500 million people buying almost everything from shampoo to groceries to cars online.

Shopping is being further fuelled by the switch to “cashless society”. For example, by scanning quick response codes using smartphones, Chinese consumers can buy snacks, rent a bike or a car without carrying their wallets around. 

But what the technology brings to the overall economic growth is worth noting. 

PwC research this year estimated that AI technologies would boost global GDP by a further 14 per cent by 2030 – the equivalent of an additional US$15.7 trillion. And China, as the world’s second largest economy, will see an estimated 26 per cent boost to GDP by that time, the most in the world. 

“The adoption of AI is expected to dramatically boost productivity, which is critical for the sustainable economic power of China,” said Scott Likens, new services and emerging technologies leader for the US, China and Japan at PwC Consulting. “AI will enable more personalised production, drive greater product variety and spur consumption demand.”

But Likens said the only challenge was how fast China could complete the workforce shift as the adoption of AI would bring new job openings that required a new set of skills from people and cut low-end repetitive jobs that could easily be replaced by robots. 

Justin Ren, associate professor of operations and technology management at Boston University’s Questrom School of Business, said it was hard to predict the exact trajectory of growth in China’s tech-enabled economy in the coming years and when it would be able to fully make up for the decline of the country’s traditional industries. 

“But it is safe to say that China’s technology component will grow much faster than its traditional industries,” Ren said. “Just take a look at the revenue growth of China’s top three tech players: Baidu, Alibaba, and Tencent. Ten years ago, they accounted for less than 0.02 per cent of China’s GDP. Today, they are likely around 0.5 per cent, a 25-fold increase in less than 10 years,” he said.

While the move to a technology-powered economy is being actively encouraged, some experts want China to exercise caution. China’s policymakers still face urgent problems, ranging from state enterprises’ high debt pile and overcapacity, a frothy property market and lacklustre private investment, and increasing financial risks.

Natixis said in a note that it expected future growth to decelerate, even if moderately. “The reasons are lack of incentives for fixed asset investment – at least private – and worsened outlook for property market.”

Chen Zhiwu, director of the Asia Global Institute at the University of Hong Kong, said the chances of economic turmoil in the next three to five years were “very high”. 

He said that the problems of the economy had been rolled over rather than solved. “By administrative measures you could temporarily curb the capacity, suppress people’s will to expand with leverage. But the harder you push for it, the more severe the market will be distorted.”