Xinhua Commentary: "Next China" to overshadow "Peak China" in unfolding reality-Xinhua

Xinhua Commentary: "Next China" to overshadow "Peak China" in unfolding reality

Source: Xinhua

Editor: huaxia

2024-02-24 15:45:30

by Xinhua writer Zhang Zhongkai

BEIJING, Feb. 24 (Xinhua) -- China, amid evolving demographics and varied sector performances, is confronting a changing economic terrain. Yet, its commitment and readiness to harness these shifts for sustained long-term growth remain clear.

This nuanced situation has captivated global discourse, with opinions polarized over the trajectory of China's economic ascent. Critics cite an aging population and other challenges as signs of a plateau, while proponents of "the 'Next China' is still China" argue for China's enduring allure as a prime investment hub.

The narrative of "Peak China" focuses narrowly on declining metrics such as the headline GDP growth rate, overlooking the enhanced quality and economic momentum underlying China's emerging growth drivers.

China's era of double-digit GDP growth may have passed, yet this does not signify an end to its economic saga. Rather, the nation is transitioning to a model of high-quality development, aiming to shift over a billion people into modernity -- a potential historic feat.

The country's potential economic growth rate forecast, envied by major economies, ranges between 5 and 6 percent. China's 5.2-percent GDP growth in 2023 translated into an economic increase exceeding 6 trillion yuan (about 844.31 billion U.S. dollars), equivalent to the annual output of a mid-sized country.

The Chinese government has pinpointed new levers, such as stimulating consumption and expanding effective investment, to actualize theoretical growth.

China's past reliance on export-driven growth, fueled by abundant "cheap labor," is yielding to a consumer-driven economy, thanks to rising public affluence. This is made evident by record-breaking Spring Festival holiday spending on travel and the box office.

The country's burgeoning middle-income group, projected to swell by 300 million over the next decade, and the urbanization of rural migrants, combine to represent significant consumer potential yet to be unleashed.

Investment opportunities in China also remain vast, particularly in future-oriented sectors.

The country is investing heavily to foster "new productive forces," a key engine for China's new growth model that has been quoted as a development priority by many provincial-level regions in their government work reports for this year.

In 2022, the added value of strategic emerging industries such as new-generation information technology accounted for more than 13 percent of China's GDP. China plans to lift this proportion to over 17 percent by the end of 2025, while it aims for major technological advancements in these sectors by 2027.

China's leadership in green infrastructure, energy, and transportation is notable, with the country producing substantial portions of the world's photovoltaic power and new energy vehicles. These sectors alone are expected to generate an annual market value of 10 trillion yuan.

China is well-equipped to tap its vast consumption and investment markets thanks to thriving innovation and entrepreneurship across the country.

Home to about 40 percent of the world's "lighthouse factories" and the second-largest number of unicorn firms, China also boasts the world's largest 5G network and ranks second globally in terms of computing power. This technological prowess will keep boosting the automation and productivity of Chinese industries.

At the heart of China's growth potential are its industrious and skilled people. The transition of demographic dividend to talent dividend is tangible in China, with over 240 million people, including 42 million engineering professionals, having received higher education -- a figure surpassing the combined such populations of Germany and Japan.

In the latest survey by the German Chamber of Commerce in China, some 40 percent of the surveyed German firms operating in the country said that China's attractiveness as an innovation market was increasing. Nearly half of them foresee Chinese counterparts becoming innovation leaders in their industry within the next five years.

While skeptics remain, rational investors cannot ignore the opportunities presented by China's evolving economic landscape. To overlook the potential of "Next China" could prove a costly misjudgment.