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Innovation, partnerships key to 'Healthy China'

China Daily | Updated: 2021-08-03 10:28
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Denis Depoux, global managing director at Roland Berger

A1 Central planning and long-term vision are critical factors to China's success. First of all, this institutional determination, articulated with a long-term vision combined with reasonably flexible short to medium-term targets, has enabled the country to bring about infrastructure investment. Second, despite the size of the country and the magnitude of transformation and progress needed, central planning has enabled the building of a holistic vision of objectives, provided needed resources and effectively carried out roles and responsibilities. This vision has been served by disciplined execution, also a key success factor.

A2 The Chinese economy has reached a level of development which calls for transformation: from production and manufacturing to services, from vastly export-driven to dual-circulation, from supply to consumption, from volume to value, from cost competitiveness to climate performance-driven competitiveness and from midlevel income per capita to higher level. This represents high-quality development of an ecological society and entails a deep transformation of business models as well as individual behaviors, particularly those needed to meet ambitious climate performance targets. Roland Berger is already supporting large, heavy industrials in improving their carbon efficiency, and adopting new, lower carbon content business models-a core element of China's development going forward.

A3 Balance certainly is a key motto for the next centenary: balance between economic growth and climate action to fight against climate change; balance between increasing the added value of the Chinese domestic industry, while remaining wide open to investment and innovation driven by multinational companies at home and from the rest of the world. Balance is also needed between domestic industrial development and further integration into global value chains.

A4 China has been massively increasing its fundamental research and development efforts over the last 10 to 15 years. We therefore expect, in the next two decades, success in fundamental research (e.g.quantum transmission, semiconductors, etc) and in overall innovation. This is much needed for China to find a new wave of productivity progress, which this time will not be relying on massive capital expenditure on infrastructure and fixed assets, but rather productivity leaps associated with doing things differently, i.e., inventing new business models. These models can rely on totally new technology, or can rely on what China does incredibly well: scaling up existing technologies, leveraging other advantages (moderate cost of labor, vast and diverse markets across geographies and populations, etc). Recycling and the circular economy could be examples of such new productivity engines.

A5 Foreign investment strategies have long focused on globalizing supply chains and leveraging China's advantages on the one hand, and finding an outlet for foreign products and services in a fast-growing Chinese market on the other hand. While these are still valid, they need to shift to localization, China-specific innovation and exporting Chinese innovation (in products but also in models) to the rest of the world. It is therefore important that China delivers further on the promises of wider opening and access to its market.

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