In the years ahead, globalization might become more fragmented, and supply chains may become more diversified, but China will attract global companies to continue to invest in the country, said Sean Randolph, Senior Director of the Bay Area Council Economic Institute, in an exclusive interview with People’s Daily Online on Aug. 20, 2022.
China remains an essential part of the world economy
For over 40 years, China has been an investment hotspot. And so, will China remain a hot spot for overseas investment in the future?
As an economist who has long observed the economy of the Bay Area region, in northern California of the United States, together with that of Greater China, along with areas for continued mutual U.S.-China cooperation, Randolph believes that due to the size of the Chinese market and the various innovative businesses that China has been incubating, the answer will be “yes.” China has become and will remain an essential part of the world economy.
“Global companies will want to know that they can conduct business effectively (i.e., on a level playing field, with intellectual property rights being respected, minimal political interference in business decisions, and reasonable government oversight). The answers to those questions will be critical to their perceptions of the market and the benefits of investing,” said Randolph.
Climate change will be a growing challenge to sustained economic development. China will also face growing pressures when it comes to compensating for its aging workforce while maintaining overall economic growth.
On the bright side, China is more innovative than ever and has proven its ability to create high-quality and globally competitive companies over the years. Its ability to sustain its growth and competitiveness will depend in part on its ability to support a vibrant private sector that interacts with global partners based on market principles.
Globalization may be more fragmented in the future
Randolph pointed out that global investment and the development of global supply chains have been creating new sources of wealth and markets worldwide, and reversing this trend will be difficult and expensive. But in the future, the global economy may become more fragmented.
“We haven’t had a comprehensive agreement on trade at the WTO in many years, and apart from narrower agreements on specific topics, we may not see one again,” he said. “We also see a realignment of global supply chains with a greater emphasis on domestic production and regional production than in the past. National barriers to trade and investment are also increasing. Because of this, global companies will face new challenges, many of them political. Therefore, globalization may look different in the future.”
In terms of U.S.- China cooperation, Randolph believes that at the sub-national level, there are many opportunities for collaboration among states, provinces, and cities, as well as local and regional business organizations.
China’s Greater Bay Area is one example, as it has become an economic hub that offers specific business opportunities both regionally and internationally. In the U.S., meanwhile, California has maintained a long and productive engagement with China, with cities based in the San Francisco Bay Area leading the way in forging business ties across the Pacific Ocean. For example, California and the Bay Area have actively participated every year in the China International Import Expo, an import-themed national-level trade fair held annually in Shanghai, China.
Therefore, although the environment for U.S.-China business has become more complex in recent years, there are still many opportunities for furthering U.S.-China economic cooperation at these levels, including collaboration in areas of shared interest such as climate and health care, Randolph said.