"Innovation takes center stage at the photocopying facility"
China's Economic Ascendancy and the Road Ahead
Frank Sieren, a renowned German China expert, recently delivered a lecture at Pforzheim University's Studium Generale, discussing China's economic development and its implications for the world. The lecture, titled "Superpower China: Inevitable Ascension or Colossus on Shaky Grounds?", was attended by around 600 guests.
Sieren's discussion highlighted that China's economic growth remains robust but faces significant challenges and a policy pivot. According to research and expert commentary from institutions linked to the Sino-German Center at Frankfurt School, China is expected to maintain a growth rate around 4.5% to 5.5%, which is still high relative to advanced economies and given China's status as the world's second-largest economy.
The challenges to China’s economy include domestic issues such as problems in the property sector, power shortages, weakening domestic consumption, and ongoing tighter COVID-19 epidemic controls. International risks like a sluggish global economy, reduced trade, supply chain disruptions, capital outflows triggered by higher interest rates abroad, and rising geopolitical tensions also pose threats.
In response, Chinese policymakers appear ready to implement a more expansionary fiscal policy coupled with moderately supportive monetary measures to sustain growth and address these risks. Regarding innovation and economic implications, Sieren emphasizes that China’s economic strategies, including shifts driven by trade disputes and increased engagement with Europe, stimulate economic and technological policy realignment favoring innovation and diversification.
China's economic growth story began with the idea of Special Economic Zones, which was proposed by Xi Jinping's father. Over the past few decades, China has focused on innovation, particularly in electric mobility and battery research, and its economy gradually became the world's factory, its share of the global economy slowly increasing. Low-cost quality was the recipe for China's success, but production costs have since increased.
The current situation regarding electric mobility shows a shift in this trend. The new rules in the global automotive market are being determined by China, not just by the Chinese. The West must provide more compelling reasons for its interests than in the past.
Looking to the future, China is expected to focus on balancing growth with stability, leveraging innovation, and adjusting to a complex geopolitical environment. This may also foster closer economic ties with Europe as part of broader globalization adaptation.
It's important to note that China has lifted more people out of poverty in a shorter time than any other country. However, China still faces problems such as youth unemployment of about 20%, but this is due to economic cycles and should decrease in 2-3 years. Despite these challenges, China's long-term goal is to regain a 30% share of the global economy, not just be the world's factory.
Two hundred years ago, China was a world power, but it missed the industrial revolution that took place in Europe in the 19th century. Today, China has a stable economy with low inflation and no significant foreign debt, making it a formidable player on the global stage.
[1] Based on research and expert commentary from institutions linked to the Sino-German Center at Frankfurt School.
The discourse at Pforzheim University revealed that China's economic strategies include shifts towards innovation and technological policy realignment, aiming to stimulate growth and diversification (technology).
As a result of China's increased engagement with Europe and adjustments made in response to trade disputes, the global automotive market is seeing China set new rules, with the West needing more compelling reasons for its interests (technology).
