Economists offer insights for Chinese modernization
By Zhang Shasha  ·  2024-01-19  ·   Source: Web Exclusive

Following the release of China’s key economic indicators for 2023, economists from different fields on January 18 gathered in Beijing for a forum on the country’s economic status quo and exchanged their perspectives on future economic development and Chinese modernization.  

China’s gross domestic product (GDP) grew by 5.2 percent year on year to 126.06 trillion yuan ($17.7 trillion) in 2023, the National Bureau of Statistics announced on January 17.  

“This is an encouraging piece of news that uplifts people worldwide and represents a substantial harvest for the Chinese people amid headwinds,” Wei Jianguo, former Vice Minister of the Ministry of Commerce, said at the Guoshi Forum hosted by China News Service.  

Wei underscored the remarkable pace of recovery in China’s consumer market last year. Retail sales of consumer goods rose 7.2 percent year on year to over 47 trillion yuan ($6.55 trillion) and the final consumption contributed 82.5 percent to GDP growth. “This suggests that domestic demand was the primary push for the nation’s economic progress in 2023, and the top priority for the year 2024 will continue to be consumption stimulation.” 

“Despite challenges in external demand, China’s position in the global industrial and supply chain has remained stable, reflecting a resilient export market share,” Guan Tao, global chief economist at BOC International, an investment bank and whole-owned subsidiary of Bank of China Ltd., said at the forum. 

According to the latest data from the World Trade Organization, China’s international market share for exports remained at around 14 percent in the first three quarters of 2023, 0.44 percentage points higher than the average for the same period from 2018 to 2022, Guan said.  

“This year, foreign trade, particularly exports, is expected to improve, subsequently bolstering growth in consumption and investment,” Zhang Xiaotao, dean of the School of International Trade and Economics at the Central University of Finance and Economics, said at the forum. “But it’s also important to acknowledge the reality that China’s foreign trade is under pressure,” he added.  

Zhang said China previously held the advantage in exporting labor-intensive products, but now more and more substitute countries have emerged.  

Despite the rhetoric of globalization, there is a trend toward localization and regionalization. The U.S. and Japan are attracting the reshoring of manufacturing, and regional value chains are forming in North America, Europe and Asia. “The world is changing, and China is adapting to these shifts,” Zhang said.  

In terms of investment, Huang Yu, Executive Vice-President of the China Index Academy, a property research institute, highlighted the importance of urban village renewal.  

Urban villages are characteristic communities in Chinese cities where rural villages were progressively enclosed by urban-built surroundings during the urbanization process.  

“We believe that urban village renewal will likely drive an investment scale of around 1 billion square meters over the next five years,” Huang said. 

Yang Weimin, Vice Chairman of the China Center for International Economic Exchanges, said at the forum that enhancing macroeconomic governance will contribute to ensuring high-quality economic development and driving forward China’s high-quality modernization.  

To enhance macroeconomic governance, he suggested upholding the socialist market economy, ensuring that economic development operates within the legal framework, striving for dynamic balance among multiple goals, and maintaining consistency in policy direction. 

Tian Xuan, associate dean of Tsinghua University’s PBC School of Finance, emphasized the role of innovation in China’s modernization drive at the forum. He mentioned that corporate venture capital (CVC), the investment of corporate funds directly in external startup companies, can help to promote innovation.  

After more than 20 years of development, CVC has gained momentum in China.  

CVC investment in China can be traced back to 1998, a relatively late start compared with other countries. During that first decade, Chinese CVCs remained in a tepid state. However, in 2010, Chinese CVC investment began to develop, as traditional industry giants and tech companies started to establish their strategic investment departments, according to Technode, a Chinese news portal covering the country’s tech and start-up ecosystems. 

Many leading enterprises have already made great progress in CVC. But many middle-tier enterprises, especially those facing the pressures to transform and upgrade, have yet to realize the value of CVC. For them, CVC, as of yet, remains a blue-ocean opportunity, Tian said.  

Copyedited by Elsbeth van Paridon 

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