It's opportune time to "Pick China," not "Peak China"

Tourists taste food during a food festival in Harbin, northeast China's Heilongjiang Province, Jan. 20, 2024. (Xinhua/Xie Jianfei)

Defying the "Peak China" rhetoric, which refers to the narrative that China has reached the height of its economic power, the internal dynamics of the world's second-largest economy are perhaps far stronger than one would think.

by Xinhua writer Wang Xinyi

China retains the top spot for growth rate among major economies in 2023 with a gross domestic product (GDP) expansion of 5.2 percent year on year, beating the government's pre-set yearly target of around 5 percent and outpacing the 3 percent increase in 2022, official data showed.

This is a hard-won performance for an economy as big as roughly 17 percent of the global total when the world economies are still feeling the sting of the COVID-19 pandemic and trying to overcome the pangs of global changes and chaos.

This cannot be realized without vibrant services spending, vigorous investments in smart manufacturing and vital foreign trade activities. Defying the "Peak China" rhetoric, which refers to the narrative that China has reached the height of its economic power, the internal dynamics of the world's second-largest economy are perhaps far stronger than one would think.

A travel spree is taking place in northeast China's bitter cold, coupled with an unexpected consumption craze. The past few weeks have witnessed the rise to stardom of Harbin, the snowy capital of Heilongjiang province with a record influx of visitors. This freezing "ice city," once spurned by winter travelers, has re-emerged as a popular holiday destination due to a burgeoning, nationwide enthusiasm for winter sports in recent years.

There are broad implications behind the city's latest tourism victory. First off, it marks an encouraging step forward by the government in its vigorous push to revitalize the country's Northeast. It's also one step closer to a more balanced recovery in a vast country with vastly different natural endowments from region to region.

Now the game is on for tourism bureaus across China as they rebrand their cities and woo visitors with original promotion events online and offline, to showcase their natural landscapes, cultural experiences and culinary delights.

This wooing of tourists once again shows the huge momentum of domestic consumption, underpinned by the world's largest middle-income group of more than 400 million people.

Consumption has been gaining steam, serving as a significant growth driver of the Chinese economy last year. Final consumption contributed 82.5 percent to GDP growth in 2023, with retail sales of consumer goods up 7.2 percent year-on-year. The service sector saw its value-added output rise 5.8 percent from a year ago, accounting for 54.6 percent of GDP.

During the World Economic Forum in Davos this week, former Australian Prime Minister Kevin Rudd hit back at the "Peak China" narrative, saying it is "intellectually and analytically flawed" and there is "untapped potential" in China's consumer market to propel long-term growth that cannot be dwarfed by a temporary economic lull.

"You don't have to have been to China hundreds of times over 40 years to conclude that the Chinese consumer is the best guarantor of China's economic future. So long as the Chinese consumer has confidence in China's future, the economy will continue to grow reasonably well. That's a core fact. And remember, the scale of the Chinese consumer market is unprecedented in global economic history," Rudd said.

New cars are shown on the stage during BYD grand launch in Jakarta, Indonesia, Jan. 18, 2024. China's BYD, a global leader in the sale of pure electric vehicles (EV), launched three new electric passenger cars, SEAL, Atto 3, and Dolphin, in Jakarta, Indonesia on Thursday to further expand in the Southeast Asia region. (Xinhua/Xu Qin)

Meanwhile, in southeast China, factories are gearing up for a shift toward smart manufacturing. Shenzhen-based automaker BYD, China's electric vehicle (EV) giant, is topping the world in EV sales, overtaking Tesla for the first time in Q4 of 2023.

China has emerged as a world-leading car exporter with 5.22 million vehicles exported in 2023. Of all vehicle exports, about one-third were new energy vehicles (NEVs), totaling 1.773 million units, up 67.1 percent year on year, showed statistics from the General Administration of Customs.

As a bellwether for innovation and progress, China's high-tech industries have experienced a remarkable uptick, with investments soaring by 10.3 percent year on year. The investment in high-tech manufacturing and high-tech services registered growth rates of 9.9 percent and 11.4 percent, respectively.

China is the only country with industries across all categories in the United Nations (UN) industrial classification, and home to over 200 mature industry clusters. The added value of its manufacturing industry accounts for around 30 percent of the global total, leading the world for 14 years in a row.

The shift towards smart manufacturing and green energy, as represented by the EV boom, is channeling investments, resources and talents into sunrise industries such as renewable energy and electrification, and is backing the country's industrial upgrading, diversifying trade, and helping to stabilize industrial and supply chains at home and abroad. And that is increasingly redefining the Chinese economy.

While naysayers are pushing for a case of lurking economic strains by magnifying a property sector slump, they are selectively overlooking the fact that the Chinese economy isn't just about property, that industries are restructuring, and opportunities abound.

Just like in other economies, it's unwise to have one's savings totally tied up in property investment. Confidence may wane temporarily here but build again elsewhere.

Pandemic woes and cyclical risks are not unique to China. Against the odds, the country has been repositioning itself in the global market, identifying priorities, leveraging strengths, fixing inadequacies and recalibrating its growth roadmap.

As stagflation dims hope across the world, China's recovery, which is on a solid footing, comes as a pick-me-up for the ailing global economy, given its status as a huge market, global trade hub, world manufacturing base, and a magnet for talents and capital.

"That is good news for China and also good news for Asia and the world because China delivers one-third of global growth," Kristalina Georgieva, managing director of the International Monetary Fund, told Xinhua in Davos.

In 2023, China's trade with Belt and Road partners grew by 2.8 percent to 19.47 trillion yuan (2.74 trillion U.S. dollars). The Regional Comprehensive Economic Partnership (RCEP), a free trade agreement that went into effect in 2022, has helped cut trade costs and boost trade between China and the other 14 member countries. China's trade with the other RCEP member countries totaled 12.6 trillion yuan (1.77 trillion dollars) in 2023, up 5.3 percent from 2021 before the agreement came into effect.

China can contribute to rebuilding trust because of its significant economic and trade heft and desire to build a more peaceful world, said World Economic Forum President Borge Brende, noting, "The steps that China takes are incredibly important for the world."

Will "the mojo" return? With China's annual Spring Festival holiday season unfolding, it's time to ring in another consumption boom and everybody may hope for the best. Enditem

(Xinhua reporter Chen Binjie in Geneva also contributed to the commentary.)