By GT staff reporters Source: Global Times Published: 2020/11/11

Nation’s transition to inject vitality in post-COVID-19 era

With China on a path to its 14th Five-Year Plan beginning next year, the nation's transition to be consumption-powered amid a push for wider and deeper opening-up will inject more vitality into the global economy that's grappling with the fallout of the COVID-19 pandemic, government officials and industry executives said on Wednesday at an annual high-level conference being held in Beijing.

In a keynote speech to the China Development Forum (CDF) held both in-person and online this year, Chinese Vice Premier Han Zheng said that while the economies of many countries confront problems and the stability of global supply chains is strained, China has scored a major victory in epidemic prevention and containment, and its economy is shown to be stabilizing and turning for the better.

The economy grew 4.9 percent year-on-year in the third quarter and its expansion for the first three quarters tallied 0.7 percent, official data showed.

The recovery was quicker than expected, Han said, expressing confidence about China achieving its major economic development goals for this year.

Looking ahead, the unfolding of a new development paradigm is not a closed loop, but the pursuit of opening-up on a broader scope to enable a "dual circulation" of domestic and international economic activities.

The nation's huge market can foster global cooperation and allow for mutual benefits, Han said, extending an olive branch to multinational companies looking to the Chinese market.

He called for international collaboration in anti-virus treatments and vaccine research, pledged to uphold the multilateral trade mechanism with the WTO as a cornerstone, and proposed an open, collaborative and inclusive approach to global innovation. Such remarks struck a chord with business executives hoping for joint efforts to put the global economy back on track at the earliest time, especially in the technology sphere. 

Collaboration and economic cooperation is crucial amid the onslaught of the COVID-19 pandemic, Ginni Rometty, executive chairman of IBM, said at the forum.

She dismissed the idea of "decoupling as a strategic option," noting that decoupling would cause losses globally totaling $1 trillion in the next five years.

This seems to be particularly the case as the economy, readying itself for a new chapter of growth over the next five years, is envisioned to continue its role as the global growth engine.

The five-year plan is an opportunity to accelerate economic rebalancing from investment to consumption, Axel van Trotsenburg, managing director of operations at the World Bank, said during the CDF.

In an interview with the Global Times via video conference on Wednesday, Paddy Cosgrave, CEO and co-founder of Web Summit, a Dublin-based software company that creates conferences, said that he favors this type of coordination and planning.

"It turns out the success of the US economy, much like Germany and Japan, involves mediation or coordination from planners. It didn't happen by chance. Governments make long-term bets ... We know that venture capitalists invest in - in theory - ideas that don't yet work.

"But some of the time, their bets lead to transformative ideas. That's been the history of technological innovation all through the 20th century.

"And that's what China has done, incredibly successful," Cosgrave said, reckoning such planning leads to job creation and an array of successful new Chinese companies.

In the next five years, there will be more cooperation between multinationals and their Chinese counterparts in research and development (R&D) for not just localization but deeper R&D, Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Wednesday.

It's generally believed that China will be the only major economy to grow this year as the COVID-19 pandemic lingers in major Western economies.

"China is in itself a super-sized market, and naturally heads of multinationals will be keen to know what will happen during the next leg of China's economic development," Cong said.

In many areas, China has already overtaken the US, and the question in some remaining areas such as semiconductors is whether China will leap past the US. In the eyes of Cosgrave, the answer is probably yes.

China now has such a huge domestic market and so many trading partners, and it has invested so heavily in science and education, he said, believing that "the foundations are so strong that whatever area I think China wants to focus on, it will make incredible progress."

Over the next 15 years, the No.1 firm for Cosgrave to invest in the Chinese market would be Commercial Aircraft Corp of China, he revealed, as the state-owned aircraft maker is on a path to becoming a major rival of Boeing and Airbus.

Cosgrave is also keeping an eye on opportunities arising from the continued dominance of Chinese firms in next-generation communications, along with a connectivity evolution toward 6G or 7G by 2035.