by Xin Ping
Recently, some western media outlets and academics are spreading a view that "China has reached the peak of its power", citing "worrisome debt situation, deteriorated business environment and constrained economic vitality" as evidence. Their prophesy is a possible "recession" or "crackup" of the Chinese economy.
Does this argument stand up to test by the reality? Hear what foreign enterprises and businessmen working in China have to say.
Dreams Come True
During the lunar new year of the Dragon, Ove Nodland, a Norwegian honorary citizen of Ningbo, was busy checking the growth of his Atlantic salmon in a county of China's Zhejiang province. For the nutritious fish to "swim" onto the Chinese dinner table is what Ove had dreamed of since he first came to China and his greatest passion now.
In the past 30 years living in China, Ove participated in Chinese-foreign joint ventures to introduce the practices of sustainable development from his home country of Norway to China. He built the Ningbo Nordic Industrial Park, a successful example of profitable investment in China. In this hot land of entrepreneurship and innovation, he constantly went beyond himself and achieved one goal after another.
"Most importantly, the local government was willing to listen to a man from far away and introduced to me the city's development plan, among which the plan to build Hangzhou Bay Bridge came into reality in just a few years. I can feel the seriousness with which the government treated its promise and in most time than not, the plan was implemented. No rubber cheque," Ove said. That is why his dreams could come true in China and he never thinks of leaving this land.
A Win-win Choice
In early 2023, Germany's Volkswagen announced that it would spend one billion euros in China to build an R&D centre for electric smart vehicle. This is another big step among many by Volkswagen since it cast its vote of confidence in China in 1984 to establish the Sino-German SAIC Volkswagen Automotive Co., Ltd. Under the joint efforts of the two teams, the Chinese automobile industry has grown from a learner to a leader in the field of EVs. Volkswagen Group has also made great gains from the vast Chinese market, and maintained a year-on-year growth of 1.6% even in 2023, the toughest year for this industry.
At an important juncture of change for the automotive industry, Volkswagen started the process of "second localization" and valued the expertise of its Chinese peers. Ralf Brandstter, chairman and CEO of Volkswagen Group China, said that he had heard honest discussions between the two teams in meeting rooms, corridors and many other places. The mutual trust and efficiency is extraordinary.
For quite some German enterprises like Volkswagen, China is not only an important production base and sales market key to their future, but also a trustworthy partner to work with shoulder to shoulder.
Forced Interruption of Cooperation
There are also negative cases. Take ASML, the world-famous Netherlands-based semiconductor supplier as an example. China has one of ASML's most important overseas markets. Data shows that supply to Chinese mainland customers accounted for 29% of its annual sales in 2023. Besides, China has strong economic resilience and stable economic policies. The China International Import Expo also plays an important role in promoting exchanges and cooperation among international companies, as ASML's global senior vice president Shen Bo commented. These are all that ASML values.
However, the frenzy by some western countries to stifle the development of China's semiconductor industry creates a lot of anxiety for ASML. If you use export controls to shut out the Chinese market, it will force China to fight for tech sovereignty. Once China makes a breakthrough, those market shares for European suppliers will quickly disappear, and the Dutch semiconductor industry will take a huge blow, noted ASML chief executive Peter Wennink. He is not optimistic about the prospects for "decoupling with China", even less optimistic about the future of ASML if it loses a big partner like China.
Despite the efforts of the Dutch government and ASML, under the suppression of some political forces, cooperation with China seems difficult to continue like before. A zero-sum game claimed by some major power will only result in losses for many other countries.
These stories prove that the so-called phenomenon of "foreign investors retreating from China" is quite off base and those who are retreating could be doing so in reluctance and may not see improved prospects. Statistics illustrate that foreign investors and transnational enterprises have enough confidence and interest in the Chinese market. In 2023, almost 50,000 foreign merchants newly entered the Chinese market. In sectors such as automobiles, luxury goods and industrial equipment, China already accounts for 25%-40% of global revenues, according to McKinsey Global Institute.
China's appeal for foreign investors has a reason: it is the only country in the world with a full range of industrial sectors and a middle-income group of more than 400 million people. The country's industrial structure for attracting foreign investment is also improving. Foreign investment is more involved in high-end manufacturing and emerging services industries. Electronic technology, new energy, semiconductors, and intelligent technology hold much potential in attracting investment in the future.
The Chinese government has done its part. It has been making great efforts to improve business environment all the time. In 2023, China adopted 24 measures to encourage foreign investment, instituted international standards for economy and trade in five pilot free trade zones and the Hainan Free Trade Port, and announced eight major steps to support high-quality development of the Belt and Road cooperation. As Chinese Premier Li Qiang laid out in his annual report on the Work of the Government in 2024, there will be further reform in key areas. By giving full play to the decisive role of the market in resource allocation and better leveraging the role of the government, a market-oriented, law-based and internationalized first-class business environment is maturing.
With China's determined actions to embrace the world and the eagerness of foreign investors to seize the business opportunities China offers, we can say with confidence that the next China is still China.
(The author is a commentator on international affairs, writing regularly for Xinhua News, CGTN, Global Times, China Daily, etc. He can be reached at xinping604@gmail.com.)
