SFC Markets and Finance | Chen Wenling: In 2025, China will take an extraordinary path

南方财经全媒体记者 杨雨莱 李依农 广州报道

In 2024, Guangdong submitted a report card with the regional gross product reaching a new level of 14 trillion yuan, total imports and exports increasing by 9.8%, industrial added value above the designated size growing by 4.2%, and the number of market entities exceeding 19 million households. Entering 2025, where lies the path to high-quality development for Guangdong?

Chen Wenling, the former chief economist of the China Center for International Economic Exchanges, expressed in an exclusive interview with SFC that as the anchor of China's economic stability, Guangdong leads the country in terms of economic and trade volume, innovation trends, corporate competitiveness, and government responsibility and action. Moreover, Guangdong's high degree of marketization, internationalization, and innovation capability has always been at the forefront of the country. 

Regarding this, Chen Wenling stated that in building a modern industrial system in the future, Guangdong should not only focus on the scale of industries but more importantly, optimize their structure. " The well-structured industrial system, strong innovation ability, and high-quality development is more important than the economic scale."

During the Spring Festival of 2024, China's DeepSeek, set the global stage ablaze. Chen Wenling considered that the future of disruptive innovation will surely depend on human imagination, creativity, and R&D capabilities. “We need to make our innovation environment more free, allow the minds of our young people to run wild, and ensure that talents have no worries.” 

SFC Markets and Finance: This year marks the third consecutive year the Guangdong High-quality Development Conference has been held. What signal do you think this sends?

Chen Wenling: It signals Guangdong’s historical responsibility as a major economic province. It also highlights Guangdong as China’s top economic province for nearly 40 years, serving as an anchor for the stability of China’s economy. Guangdong is seizing opportunities, on the first day after the Chinese New Year, holding this conference for three years in a row. The conference summarizes 2024, and, more importantly, it sets the tone for 2025, much like a mobilization or rallying event. Guangdong is seizing opportunities, on the first day after the Chinese New Year, holding this conference for three years in a row. The conference summarizes 2024, and, more importantly, it sets the tone for 2025, much like a mobilization or rallying event. 

With the Jingzhe solar term approaching, China’s economic recovery is underway, and in 2025, China will take an extraordinary path. Around the Chinese New Year in 2025, China continues to make groundbreaking breakthroughs. It’s truly inspiring, whether it's TikTok’s resilience in its standoff with the U.S., or DeepSeek a team of just over 100 people, using far less funding than the U.S. to create a large model with just $6 million. Huawei, after years of breakthroughs in many aspects, is teaming up with DeepSeek to reach new heights. At the conference, we heard about Xpeng Motors, and I know Guangdong is home to BYD, ZTE, DJI, Tencent, and EHang.

These leading enterprises in Guangdong with global influence, such density is high. The highest density of top enterprises and the highest density of global influence. As such an economic powerhouse, Guangdong not only represents past achievements but also symbolizes China’s reform and opening up, innovation, and future breakthroughs. This future is reflected in every aspect of Guangdong, especially in the “first meeting of the year”. 

SFC Markets and Finance: You've just mentioned a lot of Guangdong-based enterprises. So I'd like to ask you to elaborate further. Over the past three years, what specific achievements have Guangdong's economy made in terms of high-quality development?

Chen Wenling: I believe Guangdong has paved the way for China’s reform and opening up. Guangdong has always been at the forefront of reform and opening up, whether it’s the first trade deal in Guangdong’s processing trade, the first privately-owned business registered, or many other milestones. Guangdong has always led the way. It is truly a fertile ground for entrepreneurship, business, talent, and innovation. 

I believe Guangdong’s high-quality development has made significant breakthroughs in at least five areas. The first is transformation and upgrading. The pace of upgrading traditional industries has been relatively fast. Since the beginning of reform and opening up, Guangdong has continuously upgraded its industries. Whether it was in the past, shifting from outdated industries to new ones, or today, developing new quality productive forces, Guangdong has been constantly improving and transforming traditional manufacturing, integrating it into the new quality productive forces. I believe this transformation and upgrading is an ongoing process.

The second area is original technologies. Significant breakthroughs have been made in original research. In Guangdong, there are national teams, provincial teams, corporate teams, and local teams of scientists, forming a combined force. Looking at the layout in the 14th Five-Year Plan, and the upcoming 15th Five-Year Plan, Guangdong’s technological innovation will lead modern industries to the forefront of the world, and this is already visible. Guangdong’s technological innovation not only has two innovation hubs, but also two technological innovation corridors. I believe that since the beginning of the 14th Five-Year Plan, this has evolved into an innovation belt. Innovation has become a major driving force for the development and transformation of Guangdong’s manufacturing, and also for services, trade, education, and government management, as a huge boost in the process of transformation. So, I believe this is another area where Guangdong’s high-quality development has achieved great success.

The third characteristic is something very unique to Guangdong, and it might be the biggest distinguishing feature when compared to other provinces that is, the dense presence of world-class innovative enterprises. I believe the density is no accident it’s because Guangdong has a modern, business-friendly environment, a high level of marketization, and a vast number of private enterprises. If you look at the world-leading companies, they all started with just a few people or even just a handful. The speed of their growth is unimaginable. Huawei took over 20 years, Tencent also took over 20 years, DJI just a little over 10 years, BYD only about 10 years, and EHang in Guangzhou has also been around for just over 10 years. So, I think the emergence of these leading companies, with these companies acting as chain leaders has led to the formation of complete industrial and supply chains, I believe these leading enterprises are a priceless asset to Guangdong, ones that can be appreciated, replicated, and expanded.

Moreover, they are a group that can fight and thrive. In the industrial supply chains led by these top companies, a large number of small and medium-sized enterprises have been uplifted. Some of these are champion enterprises. Champion enterprises, according to the Ministry of Industry and Information Technology, are those whose sales, profits, and single products have reached the world’s top in their respective fields. We also have a large number of specialized and innovative small and medium-sized enterprises. So, I think this dense cluster of leading enterprises, specialized and innovative small and medium-sized enterprises, and champion companies forms the backbone of our modern and advanced manufacturing industry. Innovation, in my view, is driven by enterprises. So, I believe that these enterprises in Guangdong are continuously creating new quality productive forces, constantly achieving world-class breakthroughs. I think Guangdong itself is a microcosm of the entire country. While this is true for China as a whole, Guangdong stands out even more. 

The fourth point is that, as part of the Guangdong-Hong Kong-Macao Greater Bay Area, the Greater Bay Area has formed a support for province's economic strength. The nine cities Guangzhou, Foshan, Zhaoqing, Shenzhen, Dongguan, Huizhou, Zhuhai, Zhongshan, and Jiangmen are essentially three city clusters. Together with Hong Kong and Macao, these 11 cities form a city cluster that has been officially positioned in national planning as a world-class city cluster. The first is the Guangdong-Hong Kong-Macao Greater Bay Area, and then the Yangtze River Delta city cluster, and the Beijing-Tianjin-Hebei collaborative development. The key positioning in these plans is that this region should become world-class city clusters. Therefore, I believe the Greater Bay Area, with its nine cities and the advantages of Hong Kong and Macao, has already created a better environment for innovation. Hong Kong offers institutional advantages to attract talent, tax incentives, and connections to international markets, leveraging international law to open up market channels. Macao is a modern commercial city, with advantages similar to those of Hong Kong. In fact, the pilot initiatives in the Greater Bay Area are paving the way for China’s reform and opening up, breaking new ground in this new era. I believe the Greater Bay Area is also a unique advantage that enables Guangdong to guarantee high-quality development.

The fifth area where there has been significant progress is government reform. I’ve also seen that the Guangdong provincial government has made a lot of efforts to create conditions for business innovation through government reform. I feel that the Guangdong government has a strong sense of serving enterprises, with high efficiency in supporting their development. The driving force behind this is still quite strong. From these five aspects, a solid foundation has been laid for Guangdong’s high-quality development.

SFC Markets and Finance: For Guangdong, after achieving so much, the next crucial step is to build a modern industrial system. How can Guangdong exert effort to maintain long-term development advantages? 

Chen Wenling: For the current situation and for a relatively long time in the future, as Guangdong aims to build a modern industrial system, I believe the first requirement is to have the breadth of mind, ambition, sentiment, and responsibility of a major country. 

In terms of the global manufacturing industry, China already accounts for one-third, which is the total of the three major economies of the United States, Japan, and Europe. According to predictions from international organizations, by 2035, China's manufacturing industry will account for 45% of the world.

Now, it's not just about whether the scale is large; the key is the quality of the structure. Higher requirements have been set, which are to regard high-quality development, the cultivation of new quality productive forces, and the advancement of Chinese-style modernization as Guangdong's primary historical mission. It is not about maintaining the economic total volume of a large province or the scale of manufacturing. We cannot be content with this scale. Instead, it is about the structure. The structure is more important than the total volume. A strong quality, high innovation ability, and an optimized structure are more important than the total volume. So I think, as a major economic province, Guangdong should first and foremost take on responsibility and show a sense of commitment.

Secondly, it needs to fully utilize, make the most of, and manage well its existing resources. What do I mean by "existing resources"? Guangdong is the place where the private economy is most developed, where the degree of openness is the highest, where the government's working efficiency is the best, and where the government's ability to serve enterprises is the strongest. Moreover, the continuous reform of the government to adapt to enterprises is also a very precious existing resource in Guangdong.

Another very important existing resource in Guangdong except for the group of world-class leading enterprises is the specialized, refined, unique, and innovative small and medium-sized enterprises and champion enterprises. In fact, there is also a large number of small and medium-sized start-up enterprises. These start-up enterprises will become leading enterprises in the future. I think the evaluation system for enterprises needs to be readjusted.

The future of disruptive innovation will surely depend on human imagination, creativity, and R&D capabilities. We need to make our innovation environment more free, allow the minds of our young people to run wild, and ensure that talents have no worries. Therefore, this may be a very important challenge for future high-quality development: how to turn these young people into resources for entrepreneurship, innovation, and creation. 

In the future, for China to compete with other major powers, it must be willing to adopt good systems, methods, and reform measures in innovation from other countries, even from our competitors. We must ensure that these things do not merely become plans, systems, or documents, but are actually implemented. I believe that unleashing human creativity could play a decisive role in future high-quality development. For Guangdong, in terms of future high-quality development, it is crucial to further cultivate fertile ground.

Thirdly, I actually think Guangdong has done quite well, but it still needs to further integrate the Guangdong-Hong Kong-Macao Greater Bay Area, under the policy of one country, two systems, three customs regions, three currencies, and two legal systems. It is necessary to further break through these constraints and achieve effective alignment, connection, and integration of systems, standards, rules, and laws. This will truly advance the integrated development of the Greater Bay Area. In terms of business flow, logistics, information flow, capital flow, the movement of people, and data flow, barrier-free access should be realized. This will replicate the advantages of Hong Kong and Macao across the entire Greater Bay Area. The Greater Bay Area is not about integrating Hong Kong and Macao into the mainland, but rather about amplifying the advantages already formed by Hong Kong and Macao within the Greater Bay Area to create an overall advantage. As a world-class city cluster, the Greater Bay Area will drive the development of Guangdong and many more regions.

As the development progresses, first is the Greater Bay Area, then the entire province of Guangdong, and subsequently the whole country. I believe that Hong Kong, which still holds advantageous positions in China, is a precious resource for us. Its unique strengths need to continue to be leveraged.

The fourth point is about talent. The integration of industry, academia, and research in Guangdong, as well as the government and enterprises, has already formed an innovative consortium. However, I think it is still necessary to utilize the excellent educational resources from across the country for Guangdong's benefit. Because if Guangdong is to become a fertile ground for innovation, it must first attract various types of talents to flow into this region. Currently, Guangdong does rank first in terms of net talent inflow, which indicates that there are plenty of opportunities for innovation and entrepreneurship here, or in other words, it shows that young people can make a difference in this place.

SFC Markets and Finance: Looking ahead to the "15th Five-Year Plan," how can Guangdong tap into new growth areas, for example, in the fields of robotics and artificial intelligence?

Chen Wenling: I think many of the robotics and AI companies in Guangdong are not originally from Guangdong. Some have relocated from abroad, while others are established by enterprises from other provinces. For instance, Siasun Robot, which I saw in Dongguan, is actually from Jilin province.

But now Guangdong is focusing on robotics, especially the next step of developing humanoid robots.I believe on one hand, we still need to actively explore and develop. On the other hand, it may not necessarily be a rush for everyone to get involved. Elon Musk has proposed that by 2035, he aims to produce 10 billion humanoid robots. With a global population of 8 billion, that means more than one robot per person. So the price of robots might drop to around $20,000. Therefore, we need to consider what the functions of our humanoid robots will be, what their future market positioning will be, and what impact they will have on employment, family ethics, and moral sentiments. 

As we develop the humanoid robots, on one hand, our technology needs to reach the pinnacle of the world. On the other hand, what kind of structure should we develop, to what extent should we develop it, how much quantity should we produce, and should we wait a bit? For example, after Musk's large-scale promotion, whether it will produce any negative spillover effects. I believe the development of the robots needs to be refined, specialized, scientific, rational, and internationalized, and of course, market-oriented.

Manufacturing empowered by artificial intelligence, especially advanced manufacturing, is a form of penetration. It is vertical. This kind of development is a process that multiplies the wealth-creating capacity of our real economy. In contrast, the development of artificial intelligence in the United States lacks this kind of penetration into the real economy.

I believe in this regard, industries empowered by artificial intelligence, including automobiles and green energy, can create wealth. They are the real economy. Artificial intelligence can be deeply integrated with the real economy. We have the real economy. We have advanced manufacturing. We produce tangible goods. The value of these goods keeps increasing, and so does their wealth-creating capacity. So this path of scientific and technological innovation, in my personal view, not only generates a vast amount of data, but also creates new wealth.

SFC Markets and Finance: The real economy is facing quite a few difficulties at present. For example, private entrepreneurs lack confidence. How can we address this issue and restore their confidence? 

Chen Wenling: Regarding restoring confidence, I personally believe that people are not without confidence in China's economy. Confidence actually depends on the direction, intensity, and effectiveness of policy adjustments in China's economy. Since the Central Political Bureau meeting on September 26 2024, a package of incremental policies has been introduced. Moreover, the arbitrary and unlawful administrative law enforcement in some areas towards the private economy has caused psychological harm to entrepreneurs. The central leadership has also pointed out these issues in meetings. I think these matters are being rectified. In terms of local government debt and debts owed to private enterprises, I believe that as long as the government's reforms are in place, the package of incremental policies is implemented effectively, and the governance capacity of our country, especially at the grassroots government level, is up to par, and if we can follow the example of Guangdong's government in protecting, caring for, supporting, and serving entrepreneurs as the top priority of the government, I think the confidence of entrepreneurs will return. 

SFC Markets and Finance: Actually, Guangdong’s economy has confronted many challenges. Last year's growth rate was 3.5%, lower than the national average. How do you see the long-term development of Guangdong’s economy?

Chen Wenling: I think in the long run, Guangdong is the epitome of China. China's GDP has risen from an average of 19.6 % during the reform and opening-up. It's been under 7% for a couple of years, now it's down to 5%. I think that's normal because the bigger scale it gets, the less it grows. It happens all over the world. The countries can keep their GDP with 25 years of consecutive growth, are only a dozen. China's 40 years of consecutive growth is already remarkable. So from high growth to medium-to-high growth to medium growth to low growth, it’s an inevitable process.

So Guangdong as the number one economic province, its GDP growth has slowed down due to the external environment, since it’s the number one import and export province. For the U.S. trade sanctions, additional tariffs against China, and the jurisdiction for businesses and products, the first to suffer is Guangdong. Guangdong's businesses are very much affected, I think that might be the first point.

And the second point as you can see, Guangdong has contributed a lot to the country actually. For one thing, in terms of fiscal transfers, it pays relatively high taxes. And then is the support for 12 partner assistance places, Guangdong has made a huge contribution.

Thirdly, I think over the years, with the progress of the Belt and Road Initiative, companies going overseas, plus some multinationals moving out of China, mainly from the developed provinces, such as Guangdong and Jiangsu, which will also have an impact on the growth of our GDP, and the growth of our manufacturing sector.

But referring to Chinese companies going overseas, Guangdong's enterprises are at the forefront. The fact that companies going overseas inevitably leads to the GDP generated outside the country not being included in Guangdong’s GDP. The trades generated outside the country are not included. The manufacturing output generated outside the country, is not included either. I think this is another significant factor. 

In the future, when we view Guangdong’s GDP, it may depend on the GDP of Guangdong enterprises created in Guangdong, and the GDP created by Guangdong's enterprises overseas. BYD now has manufacturing bases in dozens of countries. The factory in Hungary is the biggest in Europe, and it's got no record. So, I think our epistemology of statistical methods of understanding GDP growth, the basic theories of economics, and the key indicators of good and bad economic performance are now coming to the point where they have to be adjusted.

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