"South Korea Targets China's National Project of New Infrastructure in Post-Corona Era"

Hear from Li Xiangyang, Director of the Asia-Pacific and International Strategy Institute at the Chinese Academy of Social Sciences
①Deterioration of US-China Relations, Rather an Opportunity to Expand Korea-China Cooperation

[Asia Economy Beijing=Special Correspondent Sunmi Park] "Korean companies should pay attention to China's New Infrastructure Construction (Xin Jijiang), a national project actively promoted after the COVID-19 pandemic. Opportunities can be found here."

China, hit hard by the COVID-19 shock, recorded an economic growth rate of -6.8% in the first quarter of this year, experiencing negative growth for the first time since 1976, the last year of the Cultural Revolution. Amid unprecedented economic crises caused by trade conflicts with the U.S. and COVID-19, China clearly stated at last month's Two Sessions (Lianghui - National People's Congress and Chinese People's Political Consultative Conference) that it will turn current difficulties into an opportunity by announcing large-scale economic stimulus and new industry development policies. How should Korean companies leverage this opportunity? Li Xiangyang (李向陽), Director of the Asia-Pacific and International Strategy Institute at the Chinese Academy of Social Sciences, advises that opportunities can be found in the 'New Infrastructure Construction (Xin Jijiang)' actively promoted by the Chinese government as a national project.

In an interview with Asia Economy Newspaper, Director Li expressed confidence that this year's economic policy direction of the Chinese government could also serve as an opportunity for foreign companies operating in China. As the international economic environment deteriorates due to COVID-19, the Chinese government is accelerating reform and opening-up, so foreign companies can see this as a chance to newly enter or expand their presence in the Chinese market. On the 11th of last month, the Chinese Communist Party Central Committee and the State Council issued 'Opinions on Accelerating the Improvement of the Socialist Market Economy System in the New Era,' emphasizing reform methods focused on complementing property rights systems and the allocation of production factors through the market, and stressed the need to implement a more proactive and dynamic opening-up strategy. This reminded that China will carry out comprehensive opening-up on a broader scale, in wider areas, and at a deeper level.

◆ "Hainan Free Trade Port Guarantees Entry into China" = The basis for opening-up he cited was the 'Hainan Free Trade Port Construction Plan' announced on the 1st, which focuses on trade and investment liberalization and facilitation.

The Chinese government presented specific implementation plans, and Director Li confidently stated that "it will provide foreign companies with broader space and institutional guarantees to enter the Chinese market." Regarding macroeconomic policy, he pointed out that at last month's Two Sessions, the Chinese government reiterated that it would use 'New Infrastructure Construction (Xin Jijiang)' as a means to attract domestic investment demand in response to pressures from declining external demand. He explained, "Compared to the large-scale infrastructure investment implemented during the global financial crisis, 'Xin Jijiang' emphasizes technological innovation more and lays the foundation for a new scientific and technological revolution."

He emphasized, "At some point in the future, 'Xin Jijiang' will become the focus of China's industrial development."

"'Xin Jijiang' includes industrial chains related to seven major areas: 5G base stations, new energy vehicles and charging stations, big data centers, artificial intelligence, industrial internet, ultra-high voltage, and intercity and urban rail transit. Both central and local governments are creating conditions to attract domestic and foreign investment, so companies wishing to enter or expand in China should pay attention to these fields."

◆ Despite U.S.-China Conflict, Korea-China Cooperation Will Broaden = Regarding the recent escalation of tensions between China and the U.S., Director Li emphasized, "The momentum for advanced industry development will not stop." He particularly addressed concerns from the U.S. and Europe about China's 'Made in China 2025' strategy, saying, "It is merely the government's basic direction for industrial development," and "The main actors of development are market mechanism-based companies."

In response to concerns that Korea might suffer the most from U.S.-China conflicts, he argued that Korea could rather strengthen industrial cooperation with China. Director Li said, "Due to the deterioration of U.S.-China relations, China will seek to strengthen overall cooperation with Asian countries," adding, "China and Asian countries are part of the same regional value chain and already have relatively high interdependence."

He added, "The fact that ASEAN has become China's largest trading partner reflects this high interdependence." He further noted, "Especially in advanced technology areas, Korean companies have clear comparative advantages. Currently, China's 'Xin Jijiang' investment is creating conditions for foreign companies, including Korean firms, to enter the Chinese market, so there will be more areas where companies from both countries can cooperate."

Regarding some countries, including the U.S., implementing 'reshoring' policies to revive their domestic economies, he dismissed concerns that China's economy would be significantly affected.

He emphasized that China remains an attractive market for foreign investment. He said, "Since the COVID-19 outbreak, more and more developed countries are reviewing the feasibility of reshoring policies, which is a natural phenomenon as the virus poses new challenges to national industries." He added, "The feasibility of reshoring policies depends on the development direction of globalization and changes in the global value chain paradigm. While it is undoubtedly a new challenge for China's economic development, for foreign companies whose final consumer market is in China, it will be difficult to realize reshoring and de-Chinaization."

◆ China's Industrial Chain Superior to Other Developing Countries = He cited not only the open policy direction but also China's still large economic growth potential and huge consumer market as reasons why foreign companies cannot give up on the Chinese market.

Director Li cited recent world economic outlooks released by the International Monetary Fund (IMF) and the World Bank (WB), stating, "Although the global economic growth rate in 2020 is limited to -5.2%, China's economy can still maintain a growth rate of 1%." He emphasized, "If a COVID-19 vaccine can be widely used within the next one to two years, China's economic growth will recover faster."

He devoted himself to promoting China to investors until the end of the interview.

"China's greatest advantage is its huge consumer market, and over the past decade, the contribution of Chinese consumer demand to economic growth has steadily increased. Although China's labor cost advantage has disappeared, its industrial chain is far superior compared to many developing countries. If China maintains its reform and opening-up policy, it will be sufficiently attractive to international investors."

▶ Who is Li Xiangyang (李向陽), Director of the Asia-Pacific and International Strategy Institute at the Chinese Academy of Social Sciences?

Li Xiangyang, affiliated with the Chinese Academy of Social Sciences (CASS), a Chinese think tank, is an authority on international economics. He has published numerous papers on the global economic system and China's economic development strategy. Born in December 1962 in Henan Province, he graduated from the Department of Economics at the Central University of Finance and Economics (now Central University of Finance and Economics) in 1983, and earned his master's and doctoral degrees in economics from the Chinese Academy of Social Sciences between 1985 and 1998.

Until 2009, he worked at the Institute of World Economics and Politics under CASS, then moved to the Asia-Pacific and International Strategy Institute at CASS, where he currently serves as director. He has researched topics such as 'World Trade Organization (WTO) and the World Economic Order,' 'Asian Economic Growth and Regional Economic Cooperation Development Trends,' and 'Theory and Practice of Asian Regional Economic Cooperation.' His major publications include the series 'Analysis and Outlook of the World Economic Situation,' 'Globalization and the World Economy,' and 'Enterprises and Market Institutions.'

This content was produced with the assistance of AI translation services.