China’s economic potential creates a need for discussion at the WEF

davos They are hardly ever there, but on everyone’s lips: For Chinese companies, the World Economic Forum in Davos is still a little too early after the end of the corona lockdown. But on the podium, in hallway talks and interviews, you can hardly get past them. Is China the upcoming market and hope for a recovery of the troubled global economy? Or is it rather a danger in view of protectionism and the enormous one-sided dependencies of European companies on the Chinese market or its products? In Davos, entrepreneurs and politicians are struggling to find the right way to deal with the Middle Kingdom.

A larger Chinese delegation could not go to the Switzerland travel, the Chinese are also on the exclusive promenade with elaborately renovated shops – different from about India and Saudi Arabia – not represented. But Vice Premier Liu He was allowed to hold an investment pitch on the big stage, on the opening day and immediately after the President of the European Commission Ursula von der Leyen.

The Deputy Prime Minister responsible for the economy went on a charm offensive in Davos and campaigned against the backdrop of powerful company bosses for confidence in China’s economic course. After the corona-related slump last year, the second largest economy will “most likely return to its normal trend” in 2023. That means growth that countries like Germany can only dream of.

Foreign companies played an important role in the development, Liu He touted.

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Especially with tech entrepreneurs, he is running into open doors – but others are also looking east with hope. The President of the Swiss Bank CreditSuisse sees China as a potential growth driver. In a debate on the impending global recession, Axel Lehmann said he wouldn’t be surprised if the country even surpassed its own forecast for economic growth of 4.5 percent. Other regions of the world could follow suit. “I think there’s a lot of hope there.”

Hong Kong Stock Exchange CEO Laura Cha also called China’s opening up a “key driver of growth.” The manufacturing sector will soon pick up again, as will consumption.

Business praises – politics warns

From the political sphere, on the other hand, there are more warnings – and that is also due to the lessons learned from the corona pandemic and the Ukraine war. During the crises, Europe in particular felt the danger of one-sided dependencies. From gas from Russia as well as from medical devices Asia. And it’s the protectionism of the Chinese economic policywhich displeases the politicians.

EU Commission President von der Leyen criticized China for encouraging energy-intensive companies to relocate their production with promises of cheap energy, low labor costs and a more relaxed regulatory environment. At the same time, the country is heavily subsidizing its own industry and restricting access to the Chinese market. In addition, there are human rights and freedom of expression, which are not very important in China.

Management consultants are therefore also cautious when talking to their clients about China. “We recommend diversifying supply chains and reducing dependency, for example for products such as solar panels,” says Stefan Schaible from the management board of management consultancy Roland Berger. “But there will still have to be interaction at a reasonable level.”

World Economic Forum in Davos

A Swiss policeman observes what is happening from the roof of a hotel.

(Photo: Bloomberg)

Also Christina Raab, the head of the management consultancy responsible for Germany Accenture, emphasizes: “My plea is not to withdraw from China without reflection.” However, the need of the hour is a differentiated strategy. “Every company has to check: What is the Chinese market for me? Is it a sales market, a raw materials market, a development location? And then ask yourself: how dependent am I on it?” Should the conflict between China and Taiwan escalate, it would be “a much bigger shock to the global economy than the current conflict with Russia”.

Therefore, advises Raab, it is strategically wise to look at alternative locations in Southeast Asia – such as India, Vietnam or Indonesia. India in particular makes it easy for the powerful in Davos. Indian companies or pavilions for doing business stand out on almost every corner on the promenade. One of the official debates on Wednesday was specifically dedicated to “India’s Road to a $10 Trillion Economy”. Tata boss Natarajan Chandrasekaran and the Indian Minister for IT and Communications, Ashwini Vaishnaw, campaigned for investments here.

Read more about the World Economic Forum in Davos here:

India is now the fifth largest economy in the world and could soon overtake China with its young population as the most populous country. “We have a fantastic tech sector. We have a huge talent pool,” said the Tata boss in Davos. In addition, large digital transformation projects – and increasingly with “good” energy. So should India be the new China? The Tata boss emphasized that he was not interested in replacing China. “This is a single player game.”

More: Nine lessons from Davos

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