With China’s traditional economic growth drivers faltering, experts at the World Economic Forum in Davos have highlighted the need for a renewed focus on manufacturing and green transformation to sustain the country’s global economic influence. Despite maintaining the world’s largest manufacturing industry for 15 consecutive years and contributing around 30% of global output, China faces growing challenges from economic headwinds and geopolitical tensions.
Manufacturing as the Backbone of Growth
China’s manufacturing sector has long been the foundation of its economic strength, earning it the reputation of the world’s factory. However, as global competition intensifies and pressures mount from Western economies, the country must shift its strategy. Economists emphasize that the next phase of industrial development should prioritize moving up the value chain, incorporating more advanced technologies, and enhancing digitization. Strengthening the “Made in China” brand through high-tech and high-quality production is seen as crucial to maintaining competitiveness in global markets.
Despite its manufacturing dominance, China has faced backlash from the United States and Europe, where political leaders argue that Chinese industrial policies have weakened their domestic industries. The return of US President Donald Trump to the White House has further reinforced this stance, as his administration pushes to revive American manufacturing. The tension underscores the geopolitical complexities China must navigate while advancing its economic agenda.
Balancing Global Investments Amid Tensions
While US-China trade relations remain strained, economic experts in Davos pointed to opportunities for collaboration, particularly in technology-driven industries. China’s ambitions extend beyond its domestic market, with companies seeking greater overseas investments and technology transfers, particularly in sectors like electric vehicle batteries. These investments are viewed as a means of strengthening China’s global economic footprint while fostering potential areas of cooperation with Western economies.
Green Transformation as a New Growth Engine
Alongside manufacturing, China’s transition to a greener economy is emerging as a critical driver of future growth. The country remains heavily dependent on fossil fuel imports, consuming a quarter of the world’s oil and gas supply. This reliance is increasingly seen as unsustainable, both from an economic and environmental standpoint.
China’s push for green transformation aims to address energy security concerns while reducing environmental damage to air, water, and soil. The shift presents an opportunity to restructure its economy towards sustainability, potentially positioning China as a leader in renewable energy and environmental technologies.
Addressing Internal Economic Challenges
Beyond global trade and investment, China’s economic difficulties are also rooted in domestic issues. A worsening property crisis has contributed to financial instability, raising concerns among policymakers about how to stimulate growth without triggering excessive debt accumulation.
Weak domestic consumption remains a key challenge, particularly among the country’s rural population, which lacks a sufficient social safety net. Experts argue that without addressing these fundamental issues, including providing more resources to local governments, economic recovery will remain sluggish.
As China charts its path forward, the balancing act between manufacturing, green innovation, and economic stability will be crucial in determining its long-term trajectory.
