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The View | Foreign companies are still needed in China’s new era of economic modernisation
- As China’s economy shifts towards high-value growth and home-grown innovation, foreign businesses may be reassessing their presence in the country
- Yet foreign firms remain crucial to, and will continue to benefit from, China’s development
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At the 20th party congress, President Xi Jinping said China was entering a new era of “Chinese-style modernisation”. Considering China’s role in the global economy, it is important for businesses worldwide to understand what this means.
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Xi has indicated that a new growth model is needed to drive China’s evolution into a modern socialist country by 2049. While China intends to maintain its position as one of the world’s largest economies and a major contributor to global economic growth, this new economic era will be characterised by quality and inclusiveness of growth.
“Quality” means China will focus on raising its position in value chains, creating common prosperity for its people, achieving harmony with nature and matching material development with cultural and social progress. Innovation will be the key driver of growth and competitiveness.
“Inclusiveness” has two dimensions. Within the country, it refers to the inclusion of different categories of companies in China’s development: state-owned enterprises, privatively owned businesses, and foreign companies.
On a global scale, it means China will continue to open up to the world, to the extent it is not constrained by other countries. Multilateralism will remain the key principle for international commerce, while the Belt and Road Initiative will be the key mechanism for shared development.
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While China’s industrial economy (manufacturing, construction and transport) will remain important, it will be augmented by a digital economy focused on technologies such as big data, cloud computing, artificial intelligence and blockchain.
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