Recharging Growth in China

Tian Wei: Morning, ladies and gentlemen. Welcome to the session entitled recharging growth in China. My name is Tian Wei. I'm a moderator and host coming from CGTN from China. Such a pleasure to see all of you here. Everybody's fighting the morning traffic to be here for this early session. So really appreciate your presence here today.

Having said that, though, this is one of the most important topics, I think here in this town and also in the world. The state of China's economy and its future potential with all your contributions. We have heard from the Chinese Premier about his understanding of the Chinese economy and the messages coming from the Chinese government in terms of policy and in terms of building a future together. That is on the policy side.

Meanwhile, lately, we've heard about the 5.2 growth of the GDP in China. While at the same time, we understand there is a transformation going on in the Chinese economy. But how fast is it happening? What is really going to be China's relationship with the rest of the world in terms of where its economy is going? What are the roles different stakeholders can play, will play and would like to play?

So, we are going to ask all these questions in our discussion. With a strong panel sitting on the stage, the best thing for a moderator is to be as short as possible in her sentences. I'm going to do exactly that from now on. So my great honour to introduce our panellists one by one. The sitting order is not necessarily about authority. It's really just about the names and mixture of people from different parts of the world. OK, so let's have Ambassador Kevin Rudd, ambassador of Australia to the United States. We call him [untranslated Chinese speech] in China. Good to see you, Mr Ambassador. Thank you [untranslated Chinese speech].

Kevin Rudd: Thank you. It's been a long time.

Tian Wei: Later you translate for yourself. Would you do that? OK. Thank you. OK.

Then we have, with honour, Belen Garijo, chair of the executive board and chief executive officer of Merck, based in Germany. She's also a member of the International Business Council of WEF. Good to see you, Belen. Good morning.

Belen Garijo: Thank you.

Tian Wei: Sitting over there. Mr Jia Shaoqian, chairman of Hisense Group from China, good to see you Mr Jia. And there we have Jin Keyu, Professor of Economics from the London School of Economics and Political Science, based in the UK, good to see you Ms Jin. Last but certainly not least, long-term friend of the Forum and always a very moderate person, Mr Zhu Min, vice chairman of the China Centre for international Economic Exchanges, CCIE, from China. He's also a member of the Board of Trustees of WEF. Good to see you, sir. All right.

So, let's jump directly into the discussion. Why not the challenges first so that everybody feels the questions in our mind can be addressed. Mr Zhu.

Zhu Min: Oh wow.

Tian Wei: Real estate problems, local government debt and the list goes on seems to be what's in the media. What exactly is the state of China's economy? To you.

Zhu Min: Well, I think the growth is 5.2%. So it's not too bad. It shows the resilience of China's economy. If you go down to the details, it will say the consumption actually increased 6.1%, it's quite strong. Actually, the capital investment is only 5%. Not as strong as we expected but it's good because we want to mark a consulting pick out exports this week in only almost zero growth for last year, which was the main growth engine for China.

So, if you will see the whole thing you can see the structure change underway and support all the growth. I think of it as a picture or reading for the Chinese economy today. But when you mentioned the challenges, I think that basically Chinese economy is facing two challenges. One is a cyclical challenges because after 30 years of strong growth, supposedly slowing down. Obviously, you have an ageing population, so you have a lower productivities, you have the structure changes and things. So you will not expect China to have super strong 10% of growth where you cannot do that. So you have to think that growth is you know.

I think quite a few years ago, I did a study on the potential of China's economic growth. We estimate that time Chinese growth would be stabilized in this time, around 4.5%. So if we can do that it's pretty good. I think that is the challenge. But more on the structure, the Chinese economy previously is more driven by three key drives: one is infrastructure investments, which always upon more than 50% of GDP. The second is real estate and really well strongly. And the third is export.

Now those three thing's all gone, because the return of infrastructure structure is so lowest, number one, the last year, the real estate investments was a negative 9.1% that the realtor sells is a 1.1 billion square metre. It is a huge number, 1.1 billion square metre but still drop 8.1% compared with even a year ago. So the real estate is a still a big economy. But not a growth engine.... The export seems to be very strong – 2022, China have a 3% of GDP growth, two percentage points from net exports but loss is zero.

So all is gone, so what's new we'll have to find the new growth engine. So new growth engine basically comes domestic consumption, digitalization manufacturing and the carbon neutral transformation. I think these three things will support China as well as immediate and even longterm. Let me take, say one minute to explain.

The first issue, domestic consumption last year was picked up 7% of wealth so it's not too bad. No, it takes time because we need the increased the social security expenditures from fiscal policies in either boost people's salaries, you make sure people have a confidence to consume. So it takes time, so 7% growth on consumption is a really good number. And digitalization for the manufacturer is important.

China is manufacturer is a 13.3% of a total global manufacturing, equivalent to US plus Japan plus Germany plus South Korea. So after years, we realized that's a real strength of Chinese economy, to deal with the decoupling, the strategy to make sure the manufacturing become ever stronger. So before you leave, you have to come with us because of that. So digitalization moves very fast. If you're looking for the investments in a loss in the manufacturer is – 8% is a very strong on the high tech. So 12.6% of gross carbon neutrality is another big area.

Tian Wei: We're going to talk about some of these news a bit later if I could. I see you're trying to provide a great answer about whether it is cyclical or it's structural. I'm glad, I also want to go to Professor Jin, your thoughts, briefly.

Jin Keyu: Well, first of all booms and busts is a natural feature of market economies. And the last 40 years, China has really never had a bust so bust cycles also oust less productive firms and provides exit mechanisms and that creative destruction I think, is one of the bright spots of the situation.

Look, you know, China's suffering from a severe deficit of demand because of low-wage growth, the scarring effects of the pandemic, of course, the real estate. But just want to say because of China's size today, growing at 3-4% even is not a bad thing. If India grows four percentage points faster than China from now until 2030, China's still gonna contribute $130 trillion of additional GDP more than India will to the world.

Now briefly. I totally agree with Mr Zhu's assessment of transitioning to a productivity innovation driven economy. That's the only way that's gonna sustain growth in the long run. So that's a good thing. But guess what? You know, renewables or digitization in the short term, it can't possibly displace real estate as a provider for growth and employment and the way that it had in the last 10 years or so.

Second, services. Right now it only accounts for half of GDP and only 48% of employment. That number is 80% in advanced economy, so you can imagine a whole amount of room for also absorbing the youth who are underemployed, highly educated, they account for more educated skill force and manufacturing. And you also have almost a billion people who haven't really reached the middle income by international standards living under $300 per month. So I can go on and on.

When even Japan and Korea levelled off their growth, their productivity as a share of the US was already 80% and China's still very low. So a lot of room for convergence. I think we want to separate the cyclical problems in demand from some of the longer term challenges.

Tian Wei: I'm so happy we already got the economist geared up at the very beginning of the conversation. Wow, let's go somewhere.

Then we want to ask, what about the businesses? How are they feeling the temperatures? Given the basic backdrop of the economy that the two economists just painted about international global companies?

I think, Miss Garijo is a great representative based in Germany but has been doing business with China for decades. So tell me how you are feeling the body temperature of China's economy.

Belen Garijo: So indeed, we have been in China for 90 years and of course, China is an important opportunity to ensure sustainable high quality development for future years. I think the challenge in the economy today, which at the end, as other speakers said, seems to be a bit better than expected.

The challenge that we see in China this time is to really balance national security issues, resilience and growth. At the end of the day, China is an export country like Germany is and for that, we need reliable rules. We need global fancy and fair competition, right. So, in a nutshell, we need a level playing field for international businesses so that we can continue to contribute to economic growth in China through our international investments

Tian Wei: We heard from the speech given by Chinese Premier he talks about the size of the Chinese economy at the market, still attractive, meanwhile, talking about the continuous consultation with a global companies, if I remember right, about government procurement and also the flow of data, just to say a few examples.

How do you see these kinds of policy attitudes vis-a-vis your concerns and also your plans for the future of your company in China.

Belen Garijo: Look, we continue to operate under China for China strategy. That means we are extremely well placed to serve the needs of our customers and and to serve the patients in China through our life science, healthcare and electronics business sectors.

So, look, just to take an example of the biopharma business, which is also having a very positive impact on the prospects that we see for our life science business. China today is managing 22% of the global R&D, following the US with 27% and followed by Japan with only 7%. So the booming of biotech and research in China, the booming of new technologies is for a company like ours, a tremendously attractive opportunity.

We operate as I mentioned with a significant presence. We have 5,000 employees in China, we have several factories, innovation hubs but we rely also on trust-based partnerships with local companies to be able to accelerate our contributions to customers and patients and most importantly to continue to contribute to our global growth and resilience.

Tian Wei: You mentioned the word trust. That is, very tempting word. And we're gonna let everybody talk about that, a bit later, I guess. Also all related to the economy. Let me now go to the Chinese entrepreneur. Mr. Josh sitting here at Jasmine Hall. So as we know, Hisense, where you come from is a, Chinese manufacturer, one of the largest, in the country. All these kind. So how do you feel the temperature of the Chinese economy where you are? You recall that element in and tell them, do what he has done and show.

Jia Shaoqian translator: Just share a few words with us about ICD temperature the Chinese economy in your sector 2023 was a very difficult year, not just for us, but also for our counterparts outside China. Now, maintaining 5.2% economic growth was real positive surprise for us. And the government has made a lot of efforts in different very different areas to support companies.

So, as the companies can have high quality development and Hisense had a growth rate of 10% last year, and the profits was 11%. So we can see it has done better than the national average. And also we have had growth at the global level as well as at the local level and the growth has reached double digit figures.

So right now, what we need the companies what we what we need is an open market and also it has to be, of course, market-led and market-based economy. So as also we need stable industrial and supply chains. So you talked about double-digit figures.

Tian Wei: What you said about the double digits. I'm kind of impressed. So how it happened? Can you share some secrets?

Jia Shaoqian translator: Well, I have to keep some confidentiality, these are commercial secrets, of course. But I think it's really important to have innovation and provide high quality products as well as good experience for consumers and clients. And we also need to provide innovative products and services to consumers in China and all over the world. And I think these are all important things for companies.

Tian Wei: That's what you're saying. Very interesting. We see some key words are coming from two business leaders over there. But you know, when you look at the logic behind these keywords, actually, there's some words related.

So if I could just throw another question to both of you before I go to Ambassador Rudd. We see an interesting phenomenon. On the one hand, global companies are operating, working, establishing our business in China, for the Chinese market, in competition with the Chinese companies but also at the same time in cooperation with a Chinese company. And at the same time for the overseas market. You're also competing and working together with your Chinese counterparts if you look at the supply chain and many other factors.

So how does that fascinating sophisticated relationship work? And how is it happening right now, within this current atmosphere of the Chinese economy? Would you like to share some of your thoughts briefly if you can?

Belen Garijo: Absolutely.

Tian Wei: I'm not trying to pick a fight. I'm just trying to pick a conversation here, please.

Belen Garijo: I think this is perfectly compatible. Look, you know, I mean, we as a company, as a science and technology company, which is operating globally, we consider a very significant element of our resilience and future growth, global diversification and in that context, we of course, rely on our own internal portfolio which we develop in China.

I mentioned that already in biopharma delivering essential medicines. Life Science in which we serve biotech and pharma customers, which is a very promising growth avenue and also in electronics for many years, working on display liquid crystals displays and now also on semiconductors materials.

So relying on our organic resources and allocating capital and investing capital in China is definitely very complementary with partnering with highly prestigious pharma and biotech companies in China to increase our impact in the local and international markets. Because we are also relying on some of these emerging innovations and expanding biotech in China to support companies to commercialize products outside of China new products outside of China, which is a win-win for both parties, right.

So we have announced several deals in the last few months in which we have been licenced new modalities for treatment of cancer or other chronic diseases from China partners. So I think this is very, very complimentary. And of course, we do it in a very increases not only the local impact in the in the market, but also our global growth opportunity overall.

Tian Wei: You are saying this not because you know that there there are a lot of Chinese audience watching this session, right?

Belen Garijo: No, I'm saying this because this is really part of our strategy as I said. As a long term partner and as a long-term player in the Chinese market, we really value this honest, transparent, trust-based collaboration to increase the quality of our service. I see the cost to the customers, locally and globally and most importantly to ensure high-quality sustainable development of our business.

Tian Wei: Mr Jia, is that music to your ears?

Jia Shaoqian translator: Well, Hisense is a manufacturing company and it's also a traditional home appliances company. And through our development, we have realized that competition, of course, is a core characteristic of the market.

And, of course, you all know that in 1992, China started the reform and opening up and then China also became member of WTO. And over the last four decades, China has gone through a lot of changes and also, we have learned to accept challenges and by accepting these challenges we have also learned from other companies, from foreign companies.

We have also learned how the market economy, the world market economy works and I think this has been very helpful for us and apart from competation of course, cooperation is the other main characteristic of the market economy. For example, Hisense has started cooperation with Japanese companies many years ago. For example, for air conditioning we worked with Hitachi many years ago. So cooperation will be be the main theme of the future market development.

Tian Wei: Fellow panellists, I cannot let you escape important questions such as geopolitics. We know that you have been observing China from near and afar for decades. One of the uncertainties we all know for this interesting year 2024, is geopolitics and how is it related to both the internal political agendas of different countries and their interactions.

Here I want to say about China, the US as well. So of course, your home country, Australia being an important player in the Asia Pacific region. So tell me more about when you are looking at our topic today, the state of Chinese economy, recharging growth, how are you looking at it from where you are, please, Ambassador?

Kevin Rudd: I first went to work in China probably 40 years ago this year and so I've seen a few things. And the comments earlier about boom and bust, and about structural and cyclical factors, I have observed and analysed over four decades. We are however, I think in quite unique circumstances today. And in large part that's because of the overhang of let's call it geopolitics. And the real world of the economy.

Second point I'd make is when I see – these are my personal views I'm not representing, I'm a China analyst, I'm not representing the government, that's my day job; I'm here at Davos having a conversation as best I can analyse the questions that we are confronting – but I've never really accepted the thesis that you see written in various parts of the world about peak China, that somehow the Chinese economy is peaking, slowing and then hitting towards something worse.

And the reason I analyse it in those terms is because 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 the future, then 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.

But the Chinese consumer, while they don't accept peak China at all, I think it's intellectually and analytically flawed because of the untapped potential of Chinese consumer demand. So Chinese consumers had a rough time in recent years. They, like the rest of us had to endure the pandemic. Since then, you've seen the property market, which represents 28% of GDP, go through unprecedented tumult. And if you've had your savings tied up in property investment, then frankly, you're in negative investment territory. If you're in the equity market, trying to make some money, putting your savings aside and earning some more cash, guess what? China's equity markets have performed poorly as well.

For the poor old Chinese consumer, frankly, in my judgement, thinking about the future, these factors together with youth unemployment, which continues to be problematic is feeling a bit battered. And so the key question for the future is the restoration of Chinese domestic consumer confidence, because that is China's best long term guarantee and lies at the heart of Chinese economic policy and the dual circulation economy model.

Last point. This is confidence. When we've had this conference before, Vice Premier Liu He tell us and tell the Chinese domestic audience about the central importance of the Chinese private sector – 60% of GDP, 90% of innovation 60% plus of Chinese taxation, 70% of new employment creation. The future confidence of the private sector in China is of fundamental importance like that of Chinese consumers. And Chinese business confidence has taken a battering in recent years as well. So, the real question for Chinese policymakers is how do you actually deal with these two confidence equations.

Concluding point, trade, which Zhu Min referred to before and traditionally as a huge driver of Chinese economic growth for at least the last 30 years, if not longer. This is where geopolitics enters into the scene fundamentally. And that is, is it fundamentally disrupting all of our growth models for the future? By which I mean, are we on the cusp of seeing the emergence of a completely bifurcated global economy?

That is competing supply chains across the board. Not just at the high end of technology in semiconductors. You've seen the semiconductor war between China and the United States but through other technology categories, through to general manufacturing, which became a red hot concern in the West during the pandemic, when everyone became concerned with having consigned all of their manufacturing to the Chinese growth factory of the future, that they couldn't get access to what they needed at a time of crisis.

And then thirdly, on basic things such as critical minerals, is this turning into a bifurcated global order as well. And that's where geopolitics has this potential to pull the floor from underneath our historical growth models. So in answer to your question, what are the challenges that would be my set: consumers business confidence, geopolitics and trade bifurcation.

Tian Wei: I want to borrow the lately the policies of the World Economic Forum policy. I have a quote over there saying, "Once you outline the challenges you have to provide the solutions." So I'm gonna come back to you for the solutions.

But what you said is one word about confidence, whether it's consumer confidence, business confidence or confidence about the latest trends of the global order or global interaction. About that, I want to have our economists respond from their perspective and then later, go to the business representative here as well, to voice their opinions. Professor Jin? First, please.

Jin Keyu: Thank you. Confidence has to come from somewhere, right. There are underlying factors that alter confidence and consumption. And of course, we've seen the scarring effects of the pandemic. Don't forget that Chinese households did not get the support that European, American households got during the pandemic. But more importantly, wage growth could be declining. We don't really know for sure but it's not climbing.

So without that you can't possibly get consumption to be really quite enthusiastic. Of course, there's real estate and the stock market again, retail investors account for the majority of the turnover for Chinese A shares and so that has also been performing problematically and of course, youth unemployment is a challenge. But is it coming from a cyclical feature, which is a demand deficit in which case policies could potentially work but you know, as we'll hear from Mr Zhu, there are also constraints, right.

There's a debt overhang on local governments, local governments were the key implementers of economic drivers of growth but now they are suffering from mountainous debt burdens.

So these are some of the kind of short term challenges coming back to the trade challenges. But you know, we're seeing in the data that trade is simply being rerouted. It's been rerouted from countries like Vietnam and Mexico but guess who the ultimate demand and suppliers of that trade is? It's still the US and China. It's going from a longer, taking a longer route and that's going to increase trade cost.

And Chinese, some Chinese companies, from what I learned have also set up factories in Mexico and of course in Vietnam, to kind of circumvent some of these regulatory, circumvent some of these trade barriers but it still has to come ultimately from countries like the US and China.

Tian Wei: About the business side, Mr Jia, if I could. Your company, I was looking at the reference a little bit before we start this conversation is actually what they call a mixed ownership company. That's an interesting terminology for many of our audience here. This is about a mixture of state owned with private ownership together. And you were moving as a state owned company executive to now a mixed-ownership company executive.

So when it comes to business confidence and I see from Ambassador Ross a question, there's the indication about, how about private entrepreneurs? How are they being honoured about their contributions? What is your understanding of the latest development? We know there are policies being reconfirmed recently? We also see a lot of discussions about that since China's central economic work conference, the end of last year. So, Mr Jia.

Jia Shaoqian translator: Well, there's some special things about Chinese companies. Hisense started out as 100% state-owned company but encouraged by the state, we reformed our ownership structure. Seventy-four percent of our equity is now in private hands, only 26% in the state hands, 76% of that is mostly in the hands of certain strategic investors and our own workforce.

So through market forces, corporate governance and the operations of shareholders meeting we operate on a much more of a market footing because we are in a very competitive sector and that puts us on a much better footing. Now we are in a good position to observe what's going on in the Chinese economy, particularly when it comes to private businesses.

Last year, there were close to 300 regulations issued by the various governing bodies encouraging private business. Now, that has given signals which enhanced trust in the prospects of private businesses. Now, Hisense, we operate on a fully corporate footing now, of course, so in sectors like ours is the same, first as for other private businesses, we operate under market forces.

We try to achieve an edge through better technology and innovation and just managing ourselves better as a company from that point of view. Last year and the year before, the difficulties mainly in the real estate sector and there was a crisis in monetary terms but what we see is also a challenge with lack of consumer confidence that has been turned around, is being turned around, by the adoption of various macroeconomic control policies. And I think that is going to rebuild consumer confidence.

Kevin Rudd: The last time I looked, I'm not chairman of Chinese Communist Party but

Tian Wei: And later I like Dr Zhu Min also to respond to the same question.

Kevin Rudd: This is a responsibility of others but a few reflections, one to agree with Jin Keyu, in terms of the Chinese consumer and consumer confidence, there are two things. One relates to wages policy, the second relates to taxation policy and shall we say social provision under the terms of the Chinese budget.

Why do Chinese consumers save so much because they have much less generous social security than the rest of us – from education, to health, to retirement income, etc. You are largely on your own. And if you're concerned simultaneously about your future employability, you're going to save more, particularly for your kids. So dealing robustly with these two questions on average on the level of real wages, which of course goes to the ultimate competitiveness of aspects of the Chinese export model.But if you're going to go to the domestic consumption as a growth driver, this has to be directly addressed.

And secondly, social provision. On business confidence the second point that I made before, the truth is, there's been a perception really, in the last five years that in China, you've seen the advance of the state enterprise sector and the retreat of the private sector. It's a politically incorrect statement in China but I'll make it anyway. [Untranslated Chinese speech] "advance the state retreat the private sector."

So this has actually had an enormous impact on perceptions in terms of private sector business confidence. So therefore, the need for the Chinese government and the CCP [Communist Party of China], to frankly de-emphasise ideology and to re-emphasise the core question of the normal profit incentives for businesses operating within a market economy. It's the fundamental question in terms of restoring business confidence.

Finally on trade that you asked me to answer all three, so being assiduous as a student of Confucius and taking the instruction from the teacher, that's you and that is [untranslated Chinese speech] total and that is this goes to the management of the US-China relationship. What the leaders did in San Francisco, in November, was decide to hit the pause button on geopolitics. That's good.

What we don't know is how long the pause button will remain pressed. Is this a tactical shift over the next 12 months? And then we'll revert to where we were in previous years, where geopolitics would undermine most elements of economic confidence and trade normality or will this become a longer term shift? I hope it's the latter. But that is the core question in the intray of both Joe Biden and Xi Jinping today.

Tian Wei: For 2024 will be even more complicated as to who will answer that question, I guess. I want to go to, I want to go to Dr Zhu Min to respond, also to the earlier interactions among your fellow panellist – briefly because I also have some more questions for you as well, sir.

Zhu Min: Well, that should take an hour.

Tian Wei: I know, I know.

Zhu Min: Because consumption side, Kevin just list a few things. But if you're looking for the data last year, consumption increased 7.1% compared with a 5.2% GDP growth, which is good. So this means consumer confidence is back. The real issue is not consumption growth, it's that overall, Chinese consumption level is low compared with the GDP shares, which is a historical issue.

So, challenges continue to work very hard to lose the share of consumption in the total GDP, currently only roughly a little bit of more than 50%, which is way low. So I think vast issue but there are many things you can do. The fiscal policy, the most money is on safety nets, so as Kevin mentioned, I think it is important and also the wage increases is also important.

But many important issues – there are still 50 million people living in the city without what we call the city ID and local issues. So speed up to reform on the residential ID issue, we'll boost the consumption a bit wide. We expect to see another 150 million people moving to cities in the next 20 years. So grant, this is 300 million people with consumer power, giving them city ID is very important.

Good news is indeed of them the speed up the whole thing so there are concerns in issue that the growth is strong but the level relatively low, it will take a long time. The problem is that confidence has also picked up. I see that they are doing something on trade issues. China trade last year, so 0.2% of gross almost zero as a measure but privately said on trade issues are 6.3% of gross. So profit is at the share in the total trade increases 3.1 percentage of GDP, a percentage point that means previously they only account the 50%.

Now 53.1%, so private sector response to the global environment change, very fast. So I think that's a clear cut. Kevin mentioned one thing so whether the green transformation will be able to meet the gross need. I think this is indeed an issue.

Tian Wei: It's a critical issue.

Zhu Min: Yeah, we saw the green sector grows strongly – EV batteries, it's all fantastic, right? But still, it's a big issue. So in that sense, the government will continue putting an amount of money into the green infrastructure. So this year, we roughly estimate the Chinese authorities invest 10 trillion RMB in the green infrastructures, digital energies, digital facilities, datasets and the power system, digital power systems to facilitate on the green transformation.

Also to avoid over-investing in roads and the bridge. So then we thought that 10 trillion RMB will provide a very strong growth support for the whole economy.

Tian Wei: Following up, I want to say that we love the Chinese economic policies which always come out as in PowerPoints. There's four new as they say, new technology, new infrastructure, new investments and new consumption. That's the four new.

Earlier we also heard the PowerPoints coming from the Chinese Premier talking about the green development there seems to be all while also a long list of possible new green initiatives.

So how will these policies work with the question that all of you critically ask, whether it is enough to gear up the Chinese economic growth? I want to ask also, the business leaders here. Mr Jia, briefly.

Jia Shaoqian translator: Our time is limited. So I'd like to ask you, Mr Jia, just in telegram style now. Well, a lot of what the Premier said was very important for Hisense, in particular, the new emphasis on high technology and that's important for us when we want to vet a satisfied customer needs.

Secondly, in structural terms, the emphasis on replacing low-end products is very important for us. At Hisense, we are also very keen on green manufacturing and green consumption and greening the entire industry value chain, that's the focus of our efforts. Like peers in China, we are trying to improve recycling and reuse of consumer appliances and reduce our own emissions. We hope that we will be able to share best practices with other companies around the world.

Tian Wei: What does that mean for your global supply chain and also your global manufacturing landscape? I hope you will say more about that. Just very briefly.

Jia Shaoqian translator: Just quickly and could you share your views on this. Well, there are similar issues for the global supply chain, ESG is a common language for the global sector now. We have responsibilities when it comes to green development when it comes to climate change. There's a lot of demand out there for green supply chains.

We have 100,000 staff of who 25,000 outside China, they're employed outside China. Now, when it comes to R&D, design and recycling and so on, we have to design and make deployments in green terms that will give us better momentum for the future.

Belen Garijo: Something that has not been mentioned perhaps yet, in the context of restoring business confidence and on really reassuring international investment is that, you know, in my view, China is getting closer and closer to a developed market. Yeah. This time for healthcare, for life science. So something which is very critical is the consistency and predictability of the regulatory environment.

We as a company has been extremely active on portfolio management. And today, one of the, potential constraints and limitations that we encountered when it, when we think of inorganic moves is regulatory constraints related to potential national security issues. I think this is something that has to be very, properly addressed so we can be playing and operating globally. I think that the other one and I need to mention this one because it's super important, is the intellectual property, protection and the regard to innovation in China.

Tian Wei: All right. We have very limited time but our conference World Economic Forum staff, they are so kind and generous, they are giving us some time to ask questions. Why do I collect the two questions? Two questions. Okay. Two questions from the audience. And then we'll quickly ask our panellists to answer those questions.

Let's collect the question first. I see one hand over there, the gentleman over there and then we give another chance on this area. OK. So please, very briefly, what are the questions?

Audience member 1: Question is when is China trying to eliminate coal for energy consumption. OK and when is China stopping the very fast growth of carbon emissions? Twenty-nine percent, three years ago...

Tian Wei: Alright, we got your question, thank you so much. I don't want to cut you short but we are having limited time. Any question from this area, just to be fair, okay. This gentleman over there?

Audience member 2: Well, thank you so much. I just wonder whether there is any plan for structural reform. What I mean by structural reform is that privatization is the leaves and the state banks to improve total productivity. Otherwise, I don't know whether where this goes across, can come from.

Tian Wei: Real structural reform. When. Timeline Yeah? OK. So sorry, we have great questions coming from our audience, much better questions than mine but we have limited time. Let's just throw these two questions to our panellists. Whoever wants to address it.

Kevin Rudd: Zhu Min and Jin Keyu are good on this.

Zhu Min: Oh Kevin should do that. On the coal right the transformation.

Tian Wei: Yes, so very briefly, two sentences.

Zhu Min: Account of 50% of China's energy consumption okay. You can think about. The challenges is daunting, right. So you see, its renewable energy development is so fast. Last year, the whole world installed 500 gigawatts renewable energy. China account for 40%. Yeah. So the first time the new capacity in China, over 50% of a new capacity now.

We will gradually, stop building the coal plant, I think, in the next two to three years and then start 2030, we'll start to retire the existing coal power plant because existing power plants still have more than 25 years life. So it's a gradual approach. But, the coal obviously is a big issue, you will see, because in China the solar power cost is way lower than coal power right now. So that means coal will be out.

Tian Wei: Thank you. About this real structural reform, as phrased by that gentleman. Anyone want to respond to that?

Zhu Min: Well, the structural reform...

Tian Wei: I think the structural reform, we've been talking about that throughout the session but very briefly.

Zhu Min: All the policy today in China deserves structural reform.

Tian Wei: Okay. All right. Let's have a final word from everyone. One or two sentences from everyone and a very brief conclusion for today's session. Why don't we start from, I would just go this, this, this, this and then over there, OK. So maybe Dr Zhu Min, we change a little bit of the sequence, one or two sentences only.

Zhu Min: With Chinese economy, I think it do have its own resilience but the challenge is daunting. It's a long structural reform process. So it will take time but it will get there.

Tian Wei: All right. Ambassador Rudd.

Kevin Rudd: Consumer confidence slowly improving, business confidence remaining static. Stop talking about ideology.

Tian Wei: Ms Garijo.

Belen Garijo: Accelerating growth will require that we continue to operate in a free trade environment. Globalization isn't perfect but it's the best we have. And I don't consider a global world without China.

Tian Wei: Jia... Mr Jia.

Jia Shaoqian translator: I think globalization is the overall trend. I have seen some stumbling blocks later but I think it's the type of future, I'm confident.

Tian Wei: Professor Jin.

Jin Keyu: In so many ways China is in transition. And all this requires a bit of patience, whether it's real estate or debt or carbon and that's how we should see it.

Tian Wei: I am a humble student of the Chinese economy and also an extremely humble student of our panellists today. I think you mentioned some very important keywords: trust confidence and transformation. Really appreciate it for your efforts. And thank you so much also for everyone.

This is a joint session between CGTN and World Economic Forum. I'm Tian Wei. Thanks for watching. Bye.