Commentary: Embracing China brings opportunity, not risk

DAVOS, Switzerland, Jan. 17 (Xinhua) -- During this year's World Economic Forum (WEF) annual meeting, Chinese Premier Li Qiang conveyed a resolute message to the world: China has an unwavering commitment to sharing opportunities with others.

To begin with, the opportunities created by China stem from a colossal market with a rapidly urbanizing population of 1.4 billion people. The sheer size of the population generates substantial demand for a diverse range of goods and services, offering global businesses an unparalleled market.

In the automotive sector, both Chinese automakers such as BYD and their foreign counterparts such as Tesla have witnessed a surge in market share in China. Data indicate that Tesla's share of China's electric vehicle market grew to 12 percent in the first 10 months of 2023, up from 10 percent in 2022. Reuters highlighted Tesla's robust sales performance in China as a "rare bright spot" for the electric vehicle maker.

The opportunities also arise from China's unwavering commitment to economic openness. Currently, China is a pivotal trading partner for over 140 countries and regions, with the overall tariff level reduced to 7.3 percent, approaching that of developed World Trade Organization (WTO) members. Over the last five years, the return on foreign direct investment in China has averaged around 9 percent, a relatively high figure internationally.

In his special address, Li expressed China's warm welcome for investments from businesses of all countries. He said China will steadily expand institutional opening-up, continue to shorten the negative list for foreign investment, and provide national treatment for foreign businesses. China's favorable business environment, coupled with various policy initiatives, encourages multinational corporations to expand their presence in the country.

For instance, BASF, the prominent German chemicals company, is investing up to 10 billion euros (about 10.7 billion U.S. dollars) in China through 2030. French cosmetics giant L'Oreal has founded its first investment company in China and L'Oreal Chairman Jean-Paul Agon said "we believe that investing in China is investing in the future."

Although the U.S. government is encouraging the largest companies to reduce their exposure to China, the first China International Supply Chain Expo, held at the end of 2023, saw U.S. companies constituting a solid 20 percent of foreign exhibitors, demonstrating China's irreplaceable role in global supply chains. Despite political pressure, U.S. businesses are voting with their feet, opposing decoupling.

Simultaneously, China's focus on innovation and technology has propelled it to the forefront of various industries. From telecommunications to electric vehicles, the country's advancements create collaborative opportunities for global enterprises seeking to engage with cutting-edge technologies.

The success of foreign investments in China sharply contrasts with the challenges faced by Chinese companies in Western markets.

Measures such as Washington enacting the "Inflation Reduction Act" and Brussels initiating an anti-subsidy investigation into Chinese electric vehicles are seen by many as counterproductive. Analysts caution that Western attempts to exclude China from supply chains risk increased costs, reduced demand, and potentially "pushing themselves into a corner" by hindering ambitious pursuits like climate transitions.

Moreover, recent research sheds light on how reducing reliance on Chinese supply chains would bring increasing costs and complexities for all involved.

Findings from an October paper by researchers at the Bank for International Settlements indicate that cross-border supplier networks, especially those involving China and the United States, have lengthened since 2021 without becoming more "dense." Essentially, this means that the average number of suppliers per customer hasn't increased. The Wall Street Journal noted that the emergence of more circuitous supply chains with the same number of suppliers hints at heightened complexity and reduced transparency, without necessarily enhancing resilience.

For other countries, cooperation with China and the interdependence that comes with it is a potential boon, not a risk.

At a time when the world economy faces genuine risks such as tight financial conditions, geopolitical rifts, and rapid advances in generative artificial intelligence, as highlighted in the latest Chief Economists Outlook released by the WEF, cooperation with China and the opportunities it brings are needed more than ever.