Commentary: For global investors, "the next China" is China

(Xinhua) 10:57, September 20, 2023

BEIJING, Sept. 20 (Xinhua) -- Two weeks ago, Tesla reached a new milestone in China after its Shanghai Gigafactory rolled out its 2 millionth made-in-China vehicle, cutting the time for producing 1 million units from more than two years to less than 13 months.

The latest triumph for Tesla's largest facility worldwide illustrates the awe of Chinese manufacturing, the role of Chinese suppliers and the potential of the Chinese market, reassuring that "the future of Tesla is in China," as commented by U.S. tech news website The Verge.

But now is not the time for Tesla to sit back and relax. Homegrown EV makers, represented by China's top-selling automaker BYD, are making the rat race increasingly exciting with greater battery performance, autonomous driving technologies and in-car entertainment systems.

To take on Tesla and BYD, BMW has just announced its plan to launch next-generation EVs exclusive to the Chinese market, with about a third of its global auto sales happening in China.

Moreover, opportunities abound as the second-largest economy switches from "made in China" to "design in China," ramping up tech developments and innovation amid a rigorous push for industrial upgrading. Tech moguls were blown away by the recent launch of Huawei's Mate 60 Pro smartphones, featuring high-performance homemade chips developed by the Chinese telecoms giant.

"You are talking about the second-largest economy," said Jenny Johnson, president and chief executive officer with global investment management firm Franklin Templeton. "You are talking about an economy that generates more engineers than any other country in the world every year, and so from innovation I think there is going to be opportunities," she told the Forbes Global CEO Conference in Singapore.

China's potential for economic growth puts it at the head of the pack when attracting investment funds from overseas. Notably, over 100 executives of foreign enterprises have visited China or met with Chinese ministers during the first seven months this year, and more are coming.

In August, China rolled out guidelines containing 24 specific measures to further improve its foreign investment environment and beef up foreign investment inflow, a significant push towards further and higher quality opening-up.

Foreign investors on the hunt for growth potential do not need to look too far for "the next China" because "the next China is China," said Joe Ngai at McKinsey &Company in Greater China.

The size of the Chinese economy, its fundamentals and its resilience speak volumes. When looking at the Chinese economy, one should focus on more than just the growth rate and compare it to the previous years of double-digit growth, when China's economic aggregate was much smaller.

China's gross domestic product expanded 5.5 percent in the first half of the year, outpacing most major economies. A rebound in consumption contributed 77.2 percent to the growth, more than 44 percentage points higher than last year.

Industrial upgrades and innovation gained steam. High-tech investment logged 11.5 percent year on year in the first seven months, and funds for scientific research and technologies grew 23.1 percent. The production of NEVs and solar batteries rose 24.9 percent and 65.1 percent in July, respectively.

The World Bank has projected China's economy to grow at 5.6 percent in 2023, the Organization for Economic Cooperation and Development expects 5.4 percent and the International Monetary Fund projects 5.2 percent growth.

Meanwhile, China's development is inextricably linked to global development. An expanding Chinese economy is generating opportunities from both within and beyond, and few would want to miss out.

Bullish on China listings for now and years to come, Nasdaq Vice Chairman Robert McCooey said, "the pipeline continues to be very strong for companies coming to the U.S. markets from China."

This is partly due to the sustained business growth in China he noticed during a trip there in June. He said he saw "the next generation of companies that are focused on AI and some of the most innovative type of technologies and types of businesses that are being built."

"We really know how important this region is and will continue to be for Nasdaq and for the growth of the global economy," McCooey told a recent business forum via video link.

Weaker momentum is not unique to China. Like other economies, the Chinese economy is not immune to spasms. Instead, its growth was generated and consolidated by overcoming one challenge after another.

Policies to boost domestic consumption are already playing out. In August, China's retail sales of consumer goods, a main gauge of consumption strength, went up 4.6 percent year-on-year, 2.1 percentage points faster than the previous month, data from the National Bureau of Statistics showed on Friday.

Services consumption logged a stellar 20.3 percent expansion in the January-July period, with robust summer vacation tourism. In July, box office revenue surged 111 percent from the previous month.

In a recent piece, Bloomberg foresaw a not too-far-off end to the current setbacks in the Chinese economy, "with the correction occurring at lightning speed, and the steady drip, drip of government stimulus -- from interest rate cuts to lower downpayment requirements for first-time buyers, finally adding up to something" and as "China continues to find new sources of growth."

As China continues to upgrade consumption, ease market access, optimize the business environment and strengthen supply and industrial chains, its long-term growth fundamentals remain unchanged.

A consumption boom is unfolding. Businesses are counting down to the National Day holiday, hoping consumers unleash pent-up demand and herald a new spring for the Chinese economy.

(Web editor: Zhang Kaiwei, Liang Jun)


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