China's tech ascent to attract investments

China's transformation from a "fast follower" to a global technology leader is likely to attract a new wave of foreign investment over the next decade, said Howard Davies, chair of the International Advisory Council of the China Securities Regulatory Commission.

"I think it's likely that (foreign) investor interest in China will grow over the next decade or two," said Davies, who is also chairman of Inigo Insurance, a professor in practice at the Paris School of International Affairs and former chairman of the United Kingdom's Financial Services Authority.

Davies said that if the Chinese government remains firmly committed to high-quality development — including nurturing companies with a technological edge and promoting Chinese brands globally — then such efforts are likely to succeed and attract greater foreign investor interest.

"China is showing that it is no longer a fast follower — which it was for a long time, really a fast follower in technology terms. And now, it is becoming a leader," he said on Thursday in an exclusive interview with China Daily on the sidelines of the Annual Conference of Financial Street Forum 2025 in Beijing.

He said that while China's labor force has shrunk slightly, its overall quality is improving.

"The number of engineering graduates emerging in China is much greater than in other places — and greater than in India, too," he said, which has helped to foster China's rapid leap in innovation capacity.

"Years ago, if you said, what do you get from China? It was plastic toys," he said. "In the last year or two, it has changed really quite quickly — with electric vehicles, where China has suddenly become a leader in the UK market, and DeepSeek, which altered people's perceptions of China's ability in artificial intelligence. What's astonishing is how quickly these perceptions can change."

Sharing similar sentiments, James Wang, head of China strategy at UBS Investment Bank Research, said the Swiss bank remains positive on Chinese equities, as valuations remain attractive compared to global peers, while the ongoing US interest rate cut cycle and a weaker US dollar are supportive for emerging markets, including Chinese equities.

The US Federal Reserve on Wednesday decided to lower the target range for the federal funds interest rate by 25 basis points, its second rate cut this year.

Still, Davies said there is no "magic formula" for China to remain a technological leader, emphasizing the need to consolidate its innovation-driven growth through stronger research and education and making sure its higher education sector can compete at the very top level globally.

On China's capital market reform, Davies praised the country's commitment to continued opening-up even as the US administration has launched a series of deglobalization measures.

"Had China taken a different view and said, 'Okay, you want to close, we'll close too', then I think the world would be a more dangerous place."

Davies suggested that more should be done to achieve greater outcomes from China's capital market opening-up, and called for further liberalizing foreign financial institutions' activities in China, expanding the qualified foreign institutional investor (QFII) regime and enhancing renminbi convertibility.

Davies also called for continued dialogue between China and the United States in settling disputes surrounding Chinese companies listed in the US, as a wholesale withdrawal of them from the US market would not be in anyone's interests.

"The more overseas companies that are listed in the US market, that creates a more vibrant capital market, which actually also helps the US companies who list there, because the investor base is bigger."

Turning to Beijing's financial landscape, Davies said that while the city's score in the Global Financial Centres Index has risen, its ranking has slipped as Shanghai, Shenzhen (Guangdong province) and Singapore advanced faster. "Beijing's strength," he said, "is that here in Financial Street, you are close to the sources of regulation."