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Chinese Economy: New Cycle and New Strategies

Jun 17-2021   



This year the Chinese economy is ushering in a new boom cycle that will last for five to seven years, says Prof. Yao Yang, Dean of the NSD, in a recent forum. He also talks about major policy areas in the 14th Five-Year Plan that will offer ample opportunities to enterprises.

 

Three forces are converging to drive China’s economic growth. First, China has completed well-managed adjustments to its economy over the decade. By ridding itself of backward productive capabilities and laggard firms, spaces are created for emergent companies. The second force is the positive effect of monetary and fiscal policies of Europe and the US on their respective economies and the global economy at large. The third force has to do with the extensive applications of AI and other new technologies.

 

Both quarterly GDP and export figures have been pointing to the steady and solid recovery of the Chinese economy. De-coupling between the US and China, as some fear, is not happening and the inherent logic undergirding global division of work remains unchanged. The US and China can expect to see an increase in bilateral trade as demand picks up on both sides of the Pacific.

 

Prof. Yao estimates that the Chinese economy will overtake the American one in dollar terms in 2030 the latest. As the pandemic disrupts the global supply chain, some Chinese firms have been forced to adopt domestic components, which further solidify their leading position in the global market. Moreover, China has emerged as one of the leaders in AI and automation, breaking away from its follower position in past tech waves.

 

China’s further development is carefully charted in the 14th Five-Year Plan, which puts special emphasis on implementation. Prof. Yao highlights four major policy areas relevant to companies. The first one concerns the development of indigenous technologies in key fields, a necessity born out of American embargos. Secondly, urbanization will gear up and is likely to see 200 million more people settling down in cities by 2035. While providing a solid boost to national economic volume, it might also entail a widening gap between regions. The third area that will offer abundant opportunities for companies is rural revitalization. The key to unlock such opportunities lies in developing county-level economy rather than agriculture. Lastly, Prof. Yao draws attention to green development, for which China has set ambitious goals. Such moves might add extra costs to production, but the resultant innovations and efficiency gains will make the overall economy even stronger.

Chinese Economy: New Cycle and New Strategies

Jun 17-2021   



This year the Chinese economy is ushering in a new boom cycle that will last for five to seven years, says Prof. Yao Yang, Dean of the NSD, in a recent forum. He also talks about major policy areas in the 14th Five-Year Plan that will offer ample opportunities to enterprises.

 

Three forces are converging to drive China’s economic growth. First, China has completed well-managed adjustments to its economy over the decade. By ridding itself of backward productive capabilities and laggard firms, spaces are created for emergent companies. The second force is the positive effect of monetary and fiscal policies of Europe and the US on their respective economies and the global economy at large. The third force has to do with the extensive applications of AI and other new technologies.

 

Both quarterly GDP and export figures have been pointing to the steady and solid recovery of the Chinese economy. De-coupling between the US and China, as some fear, is not happening and the inherent logic undergirding global division of work remains unchanged. The US and China can expect to see an increase in bilateral trade as demand picks up on both sides of the Pacific.

 

Prof. Yao estimates that the Chinese economy will overtake the American one in dollar terms in 2030 the latest. As the pandemic disrupts the global supply chain, some Chinese firms have been forced to adopt domestic components, which further solidify their leading position in the global market. Moreover, China has emerged as one of the leaders in AI and automation, breaking away from its follower position in past tech waves.

 

China’s further development is carefully charted in the 14th Five-Year Plan, which puts special emphasis on implementation. Prof. Yao highlights four major policy areas relevant to companies. The first one concerns the development of indigenous technologies in key fields, a necessity born out of American embargos. Secondly, urbanization will gear up and is likely to see 200 million more people settling down in cities by 2035. While providing a solid boost to national economic volume, it might also entail a widening gap between regions. The third area that will offer abundant opportunities for companies is rural revitalization. The key to unlock such opportunities lies in developing county-level economy rather than agriculture. Lastly, Prof. Yao draws attention to green development, for which China has set ambitious goals. Such moves might add extra costs to production, but the resultant innovations and efficiency gains will make the overall economy even stronger.