New productive forces a novel opportunity

Editor's note: Zhao Zhongxiu, president of the University of International Business and Economics, shares his views on new quality productive forces with China Daily. Excerpt follows:

Q: What are new quality productive forces? How are they different from the old ones?

A: The new productive forces, they come from knowledge, technology and data. So, these intelligent forces have changed the production method. And also, of course, the consumption method.

Q: What sectors can be characterized as new quality productive forces?

A: We have smart manufacturing. Then we have artificial intelligence. We have the internet of things. We can design and extend the production process and make the network wider. Then we can change our traditional vehicles into electric vehicles. And furthermore, with the technology, we can use the autopilot. So, this is the true fundamental change.

Q: Why would developing new quality productive forces provide opportunities for China and other countries?

A: It provides opportunities both for Chinese domestic entrepreneurs and also for the foreign companies in China. Since China has the most advanced infrastructure, so we can use this, the 5G and even 6G, for this information transition from the consumption side.

The Chinese market is so big. We have over 1.4 billion people and the smartphone penetration ratio is very high, over 70 percent, among them 5G users are over 50 percent. Our purchasing power has increased and people's consumption capacity expanded. So that is a big potential for both Chinese firms and foreign firms to operate and even, of course, compete in the Chinese market.

And the winner will develop more capability, get more profitability to win this market, to win the customers and to satisfy customers. So, for anyone who loses or is absent in this market, they will lose the future. So investing in China, staying with Chinese upgrading strategy is the key for the foreign enterprises, especially some multinational enterprises.

Q: What do you think about China seeking cooperation when some countries advocate decoupling?

A: Unfortunately, due to geopolitical factors, we face these challenges. Especially, some countries, they are reluctant to see the development of China or an emerging China. So, we can give the example of chips. About four years ago, Chinese self-manufactured chips were roughly about 5 percent share of the market, but now they are 20 percent. And in the very near future, we can reach up to 35 percent. So that means this gives the opportunity for China to reach the top, to tier one. You create a competitor and then you lose your own market.

Q: Do you think China's economy is going to stagnate as some Western countries and media claim?

A: China's economy is very resilient and we have stable growth. The growth rate for last year is 5.2 percent. China's manufacturing sector is still very strong. Our supply chain, you know, and industrial chain, are very resilient and quite stable. So China contributes, well, 30 percent of the world output for new growth.

Although we have some turbulence in foreign investment in China, especially in the service sector, but in the manufacturing sector, especially the high-technology sector, there is also continuous growth.

So you can see where the investment comes from, from Germany, from the UK, from Switzerland, from Australia, even from the United States. So we do have some distortion and some export transfer from China through Vietnam, through Mexico to the US.

Yes, this part of exports, or even the manufacturing locally, has reduced some shares for direct import from China. But this increases the cost, both the manufacturing cost and transportation cost. And also, it cannot maintain the same quality well since this cost should be borne by the end market, and the consumers pay more.

So you can see the trade distortion makes the end users and also the companies suffer. They will reduce their profit. So this makes the world economy or the resources allocation less efficient.

The views don't necessarily represent those of China Daily.

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