China's stability provides clear, predictable environment for investors
The 'two sessions' are not only a major political event in China but also a key window for the world to observe the country's democratic politics and development trajectory. This year, as in years past, the event has captured considerable global attention, highlighting China's ongoing development and its implications for the world stage. In the 'Unraveling the allure of China' series, the Global Times (GT) invites experts and scholars from around the world to delve into the multifaceted allure of China and explore how the lessons drawn from its unique experiences can provide valuable insights for other nations.
In the third piece of the series, Michele Geraci (Geraci), former undersecretary of state at the Italian Ministry of Economic Development, shared his viewpoints with GT reporter Qian Jiayin on China's economic outlook and how China's steady economic progress can contribute to the world economy.
GT: China targets economic growth of around 5 percent in 2025, according to a government work report submitted Wednesday to the national legislature for deliberation during the ongoing two sessions. What is your prediction for China's economic growth in 2025?
Geraci: It is important to note that predicting GDP based on just one year's worth of data is very difficult. This is where some analysts often go wrong, because China plans with a long-term vision - even with five-year plans.
What really matters is the trajectory over the medium term, not the fluctuations from year to year. There will be years when GDP exceeds expectations, and others when it falls short. Western analysts, in particular, often get overly excited or disappointed by these yearly changes.
In my view, the specific number in any given year doesn't matter that much. What truly matters is the medium-term outlook. For this reason, I typically focus on the five-year forecast, which I see as a much more reliable benchmark.
GT: Recently, many global financial institutions indicated in their 2025 economic outlooks that China's high-quality development is gradually yielding fruits, and they expect higher proportions for consumption and the service sector. In a period of global economic turbulence, how do you think China's high-quality development can contribute to global economic stability?
Geraci: China contributes to global stability not by increasing its dependence on the external economy, but by focusing on growing its domestic economy and boosting domestic demand. By doing so, it becomes less vulnerable to external shocks. As a result, China's economic forecast is one of the most solid and reliable components of global projections.
In contrast, regions like Europe, the US and others often experience greater volatility and variation in their economic forecasts.
GT: Recently, a symposium on private enterprises held in Beijing has attracted considerable attention. What message do you think this symposium conveys? What does the attention it has garnered reflect about the international community's expectations for China's economy?
Geraci: China no longer relies heavily on Western innovation or technology, at least not to the extent it once did. While cooperation with the West is still welcomed, China now has the capacity to develop its own technologies.
DeepSeek, for example, and even innovations from Alibaba, as well as China's progress in semiconductors with companies like SMIC and Huawei, show the world that China is now striving for self-reliance in technology development. The message here is that even if tariffs are imposed on China's exports, China won't be as affected as before, because it is increasingly capable of driving innovation on its own.
The attention garnered from this symposium reflects the international community's keen interest in China's economic development for several reasons.
Western analysts and economists closely monitor China's progress to gauge the level of competition China can bring to the table. The positive side is that Western analysts also see China's technological advancements as a potential opportunity. For example, if DeepSeek's technology can prove to be more efficient than ChatGPT, this would make Western companies interested in developing applications on top of DeepSeek's technology.
So, it's not just about viewing China's technological progress as a competition but also as a valuable opportunity for growth and innovation on a global scale.
GT: Since the new US administration took office, it has continued to wield tariffs as a tool. Some analysts believe that the US' tariff policies will directly affect global trade flows and volumes. How do you think US tariff policies will impact the global economy? What kind of risk-hedging solutions would you suggest for China to adopt?
Geraci: I do believe tariffs will have a painful impact, not only on the global economy but also on the US economy. However, in practice, the impact may be more moderate. In the end, trade will likely continue, albeit with some disruptions here and there.
As for how China can respond, it has already been offering solutions. For example, China has implemented zero tariffs for low-income countries, such as those in Africa, allowing them to export to China without tariff barriers. China is also strengthening its trade relationships within frameworks like the ASEAN-China Free Trade Agreement, and it has the potential to deepen these partnerships, even extending them to countries like Australia, New Zealand, Japan and South Korea through the RCEP (Regional Comprehensive Economic Partnership).
GT: Despite the challenges in China-Europe relations, the annual trade between China and the EU still amounts to nearly $800 billion. At the same time, both China and the EU support a multilateral trade system centered on the World Trade Organization. In light of the rising tide of unilateralism and protectionism, what significance do you see in deepening China-EU cooperation?
Geraci: The China-EU relationship is very complex. On one hand, the EU officially views China as a systemic rival. On the other hand, European companies are eager to do business with China. The opportunity for deeper China-EU cooperation lies in the ability of Chinese companies to engage more directly with individual European companies and countries.
My advice to Chinese companies that want to do business with European firms, especially in terms of imports and exports, would be to focus less on the political actions of the EU government and instead engage directly with European companies. This approach allows for more effective and practical cooperation, bypassing some of the challenges posed by governmental policies.
GT: By the end of 2024, nearly 1.24 million foreign-invested enterprises had been established in China. When delivering the government work report on Wednesday, Chinese Premier Li Qiang noted that major priorities the country should focus on include expanding high-standard opening up and stabilizing foreign trade and investment. In your opinion, what are the main attractions of the Chinese market for foreign companies?
Geraci: The key attraction of the Chinese market for foreign companies lies in its higher growth rate compared to many Western countries. Even if China's growth rate is 5 percent, which may seem lower than in previous years, it is still significantly higher than the growth rates of the European Union, which are around 0.7 percent to 0.6 percent. This gap is substantial and represents a major opportunity for foreign companies seeking to expand.
Another important factor is China's political stability, which offers foreign investors a clear and predictable environment. Investors value certainty, and China's regulatory framework provides that.
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