WEF delegates optimist over China’s economic prospects
Leading economists and politicians attending the recent World Economic Forum (WEF) expressed optimism about the potential of China to grow its economy over the next 12 months.
They cited the spending power of the burgeoning middle class, evolving consumption patterns, substantial greenfield investment and the integration of artificial intelligence and data into the economic landscape.
Speaking at a WEF session in Davos, Switzerland, Kevin Rudd, Australia’s ambassador to the United States, dismissed the notion of ‘peak China’ and underlined the significant role of the Chinese consumer.
He said: “The Chinese consumer is the best guarantor of China’s economic future. So long as the Chinese consumer has confidence in the future, the economy will continue to grow reasonably well – that’s a core fact.
“Remember, the scale of the Chinese consumer market is unprecedented in global economic history. I don’t accept ‘peak China’ at all. I think it’s intellectually and analytically flawed because of the untapped potential of Chinese consumer demand.”
China’s Premier Li Qiang, in his Davos speech, highlighted the country’s rapidly growing middle-income population, currently comprising more than 400 million people, is projected to double to 800 million in the next decade.
Lu Minfang, CEO of Mengniu Dairy, speaking to the China Daily website in Davos, highlighted three key factors contributing to China’s economic optimism
He cited the rapid expansion of the middle class as a massive consumer market; strategic investments in green initiatives, data and AI; and the industry of the Chinese people, who make China as a global leader in productivity terms.
Official figures released at the end of January by the National Bureau of Statistics (NBS) revealed that the Chinese economy exceeded expectations by growing 5.2% in 2023, surpassing the government’s target of 5%. The figures showed that consumption was as a significant driver of this growth.
Data from the NBS showed consumer consumption contributed 82.5% to GDP growth in 2023, with retail sales of consumer goods up 7.2% year-on-year to more than 47 trillion yuan ($6.6 trillion).
Expressing confidence in China’s commitment to carbon reduction for addressing climate change, Lu said: “In the future, even in industries like dairy, I can confidently say that when you calculate CO2 emissions per kilo of milk, China is going to be the lowest.”
Lu said that the government is addressing the challenges of constraints in infrastructure, healthcare and education. “Once these issues are resolved, the release of buying power from Chinese consumers will propel market innovation and lead to enhancements in product quality,” he said.
Vivian Jiang, chair of Deloitte China, also cited the net-zero economy as a driver for growth. “The consumption behaviours of younger generations will be very different. They will create many opportunities, whether from service consumption or any other areas, such as entertainment, outdoor sports, pet economies,” she said.
Jiang also emphasised the transformative potential of technology, stating: “China probably has the biggest market for user cases… there is a place for businesses to test the commercial viability of those innovations.”
Financial transparency set to attract more foreign investors
China is set to improve its financial transparency and security in order to attract foreign investors and promote the ‘going global’ of Chinese firms, the National Financial Regulatory Administration said in an online statement.
The government will encourage foreign institutions in areas including wealth management, elderly care, healthcare and non-performing asset disposal to come to China, the NFRA said, adding the country will leverage its huge domestic market to attract high-quality financial investments from around the world.
The National Administration of Financial Regulation (NAFR) was officially established in May 2023, opening a new chapter on financial regulation in China. The regulator replaced the former China Banking and Insurance Regulatory Commission (CBIRC), taking over certain financial consumer/investor protection responsibilities from other regulators.
