Special Feature: China’s Economic Strength Comes from Within

The past few years have been tumultuous for global economies, with a once-in-a-century pandemic and conflicts in several parts of the world. In 2023, the Chinese economy rebounded and moved upward, with an estimated GDP growth of around 5.2 percent, higher than the around 5 percent target set at the beginning of the year. In this Special Feature, the News Letter would like to walk you through the innate sources of strength that will sustain the continued prospering of the Chinese economy.

First, in promoting economic development, China did not resort to massive stimulus, but instead focused on strengthening the internal drivers. As the second largest economy in the world, China has established, after years of development, sound and solid fundamentals. Just as a healthy person often has a strong immune system, the Chinese economy can handle ups and downs in its performance. The overall trend of long-term growth will not change. In terms of the industrial base, China is the only country with industries across all categories in the U.N. industrial classification. The added value of China’s manufacturing industry accounts for around 30 percent of the global total, ranking first in the world for 14 consecutive years. China is also home to over 200 mature industry clusters. With its large scale, complete categories and strong supporting capacity, China’s industrial system can meet the demand of the rapid development of social productivity and will contribute to better global allocation of production factors and the rise in global productivity. In terms of production factors, China’s demographic dividend is turning into talent dividend. We now rank first in the world in terms of the size of talent pool, human resources in science and technology and the total number of researchers. Capital shortage is replaced by abundance. Our global share of annual capital formation has risen to about 30 percent. In addition, with its huge data output and rich data resources, China has the second largest data mine in the world. In terms of innovation capacity, China’s total input in research and development and investment in the high-tech sector have been growing at double-digit rates for several years running. New technologies, including cloud computing, big data, artificial intelligence and blockchain, are being applied at a faster pace. New products and new business forms such as intelligent terminals, robots and telemedicine keep emerging. China now has some 400,000 high-tech enterprises and ranks second globally in the number of unicorn companies. All this will boost the formation and cultivation of new growth drivers in China. Looking at the broader picture, we are now advancing Chinese modernization on all fronts through high-quality development. Delivering modernization to more than 1.4 billion people will be a remarkable achievement in human history, one that will provide continuous impetus to the development of China and the wider world.

Second, China has a supersize market with rapidly unlocked demand. It will continue to provide a big stage for various businesses and talents. In face of weak global demand, market becomes the most scarce resource. The Chinese market, with its vast space and growing depth, will play an important role in boosting aggregate global demand. In China, there are now over 400 million people in the middle-income bracket, and the number is expected to reach 800 million in the next decade or so. For a growing range of products and services, the focus of consumer demand is shifting from quantity to quality, which will generate strong driving force for upgrading consumption. China’s urbanization rate is now more than 10 percentage points lower than the average level of the developed countries. There is much room for infrastructural upgrading in urban renewal, transportation and telecommunications, among others. There are also some 300 million rural migrants who are acquiring permanent urban residency at a faster pace. These will create massive demand in areas such as housing, education, medical services and elderly care. China is deepening its transition toward green and low-carbon growth. Close to half of the world’s installed photovoltaic capacity is in China. Over half of the world’s new energy vehicles (NEVs) run on roads in China, and its NEV ownership has reached over 20 million units. China contributes one-fourth of the increased area of afforestation in the world. China is also cultivating large-scale new growth drivers in sectors such as green infrastructure, green energy, green transportation and green lifestyle. This will generate investment and consumption markets with an estimated size of RMB10 trillion yuan annually, and promises huge potential. We will keep exploring and unleashing such market demand, increase import of high-quality goods and services from all over the world, attract more foreign investment in areas including medium- and high-end manufacturing and biopharmaceuticals, and provide broader space for boosting global trade and investment.