China News Service, July 19 (Zhongxin Finance and Economics Wu Jiaju) "Although China's economy is unstable in the short term, the key fundamentals have not changed, and the medium and long-term economy is stable and improving. At the same time, in the process of industrial modernization and low-carbon development. Driven by this, new competitiveness is being formed rapidly."
Recently, Dai Pu, Co-President of the Global Management Committee of Roland Berger, an international consulting firm, was interviewed by Zhongxin Finance and shared his views on China's economy yesterday, today and tomorrow, "For most multinational companies, China is still attractive. market, advantageous industrial clusters, and efficient innovation centers.”
Dai Pu, Co-President of Roland Berger Global Management Committee.
Photo courtesy of the interviewee
The interview transcript is as follows:
Zhongxin Finance and Economics: How do you view the achievements of China's economic development in the past ten years? What impressed you the most?
Dai Pu:
In the past ten years, I have witnessed profound changes in this country under the gradual opening and reform.
China has achieved extraordinary success, becoming the world's second-largest economic power and rapidly closing the gap with the United States.
I would like to share some of the factors behind China's success: central planning that takes into account the overall situation, adaptive measures to adapt to the situation, a holistic approach from central decision-making to local government implementation, long-term goals, determination to overcome obstacles and time, early Investments in infrastructure and fixed assets enable future growth and the agility to adapt to changing circumstances.
Zhongxin Finance: What attracted Roland Berger to China? How attractive is the Chinese market to foreign companies?
Dai Pu:
Roland Berger's business in China began in 1983, and entered China with Shanghai as the starting point. That was the fifth year of China's "reform and opening up". At that time, China was a market with huge potential.
After years of development, China has become and will continue to be an attractive market, an advantageous industrial cluster and an efficient innovation center.
We see that more and more foreign companies are developing in China, and at the same time helping the development of the Chinese market. They use innovations in technology and business models to develop first in China and eventually go global.
Going forward, we believe that new markets around the modernization and decarbonization of China's economy will continue to present opportunities for multinational companies.
Zhongxin Finance and Economics: How do you view China's current economic situation and future prospects?
Dai Pu:
In 2022, the global economic environment will become increasingly complex.
Escalating geopolitical tensions, repeated COVID-19 outbreaks, and high inflation in the West have put the Chinese economy under more pressure.
Although China's economy is unstable in the short term, the key fundamentals have not changed, and the economy is stable and improving in the medium and long term.
At the same time, driven by industrial modernization and low-carbon development, new competitiveness is being formed rapidly.
Today, China's position as the world's manufacturing powerhouse is more solid.
Since 2020, China's production system has been critical to the world economy's response to the post-pandemic demand surge.
In the second half of 2020 and early 2021, China's production system has shown extraordinary resilience.
From 2022 to the present, China has shown resilience in global supply chains, despite the pressure on its economy.
More importantly, driven by industrial modernization and low-carbon development, China is rapidly building an economic engine of the future.
China's increasing emphasis on industrial modernization, while the twin commitments of carbon peaking in 2030 and carbon neutrality in 2060 are key to maintaining competitiveness, which will further accelerate the modernization process.
Innovation is the fundamental capability that determines China's future.
Aerial photography of the busy Yangshan Deepwater Port in Shanghai.
(Data map) Photo by Yin Liqin
Zhongxin Finance and Economics: This year, China has introduced a series of policies and measures to stabilize the economy. Which policy are you most concerned about? How will these policies help businesses?
Dai Pu:
Since the Central Economic Work Conference in December 2021, the Chinese government has attached great importance to stabilizing growth.
Although some unexpected events occurred in 2022, the main theme of maintaining stability has not changed. China has effectively and flexibly prepared and used a series of economic policy tools.
In May of this year, the State Council issued a "Package of Policy Measures to Solidly Stabilize the Economy", including 33 measures to reduce the impact of the new crown epidemic on the economy.
These include solutions to pressing problems in the short term, as well as initiatives aimed at medium- and long-term development goals.
Among these measures, supportive policies emphasize support for SMEs.
Small and medium-sized enterprises make a great contribution to China's economy, creating 80% of jobs.
At the same time, SMEs are also important players in China's technology sector, with more than 200,000 technology-based SMEs in China.
Under the current situation, small and medium-sized enterprises are facing a series of challenges such as the impact of the epidemic and soaring commodity prices. The implementation of supportive policies will certainly ease the cash flow pressure of small and medium-sized enterprises and reduce the burden on small and medium-sized enterprises to a certain extent.
More importantly, it is necessary to restore and stabilize the operation of enterprises as soon as possible, and establish a more effective support mechanism to bring the economy back to the right track.
Zhongxin Finance and Economics: According to your understanding, has the attractiveness of the Chinese market for foreign companies weakened?
Dai Pu:
China's B2B and B2C markets provide additional growth drivers for many multinational companies.
Before this year's epidemic, multinational companies in China were less affected by the new crown epidemic, which is not only conducive to sales, but also to the creation of considerable profits.
Due to the impact of the epidemic, optimism in the Chinese market has been shaken compared to before, making it more difficult for foreign companies to do business in China.
Among them, the supply chain and businesses that need to operate offline are affected to a certain extent.
Nonetheless, the development of foreign enterprises in China is still deep and extensive, and will continue to focus on medium and long-term development.
Although China's current economy is facing challenges, for most multinational companies, China is still an attractive market, an advantageous industrial cluster, and an efficient innovation center.
China's key fundamentals remain positive and unique compared to the rest of the world.
On the supply side, China's production system will continue to lead due to rising low-carbon productivity and Asian influence in the future.
On the demand side, as the country with the largest middle-income group in the world, the Chinese market will remain attractive and receive strong government support.
Citizens go shopping in Beijing Huaxi LIVE.
(Data map) Photo by Sheng Jiapeng
Zhongxin Finance and Economics: You just mentioned that China has the largest middle-income group. From what you have seen, what changes have occurred in China's consumer behavior in the past ten years?
Dai Pu:
In the past decade, China's demographic characteristics have been changing with the development of China's economy.
Chinese consumer behavior has changed in many ways.
The age structure of Chinese consumers is changing.
"Generation Z" is gradually becoming the main force of consumption and the core group of online consumption.
With the improvement of purchasing power, the different mentality of "Gen Z" will affect their consumption concepts and behaviors, and the lifestyles of Chinese consumers are changing and becoming diversified.
For example, their emotional needs for products and brand values are more diverse; they are more receptive to new things or concepts with the iterative upgrade of products from established brands and the influx of new brands.
With the vast increase in choice among Chinese consumers, it will become more difficult to keep consumers sticky to a single brand.
At the same time, in recent years, Chinese consumers' sense of national pride has been increasing, and they are more willing to embrace local brands.
The younger generation's interest in "international brands" is gradually decreasing.
We have also recently seen that increased environmental awareness has begun to influence the purchasing behavior of Chinese consumers.
Zhongxin Finance: Renewable energy is an important topic for future economic development. What are your prospects for the global and Chinese renewable energy industry?
Dai Pu:
Last year, COP26 (the 26th United Nations Climate Change Conference) set ambitious climate goals, hoping to enhance the resilience of low-carbon energy by promoting renewable energy.
But now it has encountered some difficulties, and the global coal power generation in 2021 will hit a new high.
The possible acceleration of the crisis in Ukraine has highlighted the risks of reliance on fossil fuels and has also made countries increasingly aware of the importance of energy diversification for energy security.
China has pledged to achieve carbon neutrality by 2060, and also proposed that by 2030, the proportion of non-fossil energy consumption will reach about 25%.
China's task remains daunting, as China's coal reserves are huge and energy consumption will continue to grow.
As a result, less time is left for the transition to production mode.
This will accelerate innovation in China, and the scale of China's transformation will drive down marginal costs compared to the rest of the world.
This is nothing new, and the development of solar PV modules and cells in China already reflects this.
China's innovation is crucial to accelerating the world's decarbonization process and tackling climate change.
(Finish)