China's major targets for this year include a GDP of about 5 percent, the creation of 12 million jobs and keeping the increase in inflation below 3 percent.

Since 2015, China has been the world's largest economy by GDP(purchasing power parity), with substantial improvements in people's purchasing power and standard of living. First, people's standard of living has improved due to factors such as the increase in per capita GDP. As a result, China now has the largest middle-income group in the world — more than 400 million people.

Second, people's living cost is relatively low because the prices of goods and services in China are lower than in other countries.

And third, the availability of goods is wider and speed of delivery faster in China compared with those in the US, thanks to the booming e-commerce sector and online retail platforms.

Also, for the Chinese people, bank savings and real estate, particularly commercial residential housing, are the most important channels to increase their wealth. By the end of May this year, China had savings of 299 trillion yuan ($41.2 trillion). These savings have helped make the Chinese economy so resilient.

The real estate reform in 1998 kick-started the commercial residential property boom. China is in the midst of the world's largest urbanization drive. While the urbanization rate had reached 66.16 percent by the end of 2023, China's urbanization rate is still lower than 80 percent or more in developed countries.

Urbanization will ensure high-quality growth and make cities more attractive, while better city planning and management will ensure the real estate's qualitative growth.

'Silver economy' new opportunity

Amid all these developments, the fact that Chinese consumers are becoming more sophisticated is evident from their changing tastes and interests, and their focus on value for money. The added advantage is that the middle-adult (45-65) age group is the most affluent among all age groups and, at the same time, willing to spend more.

As for China's "silver economy", it is estimated to be worth 30 trillion yuan by 2035. And elderly people's rising demands for entertainment, travel, luxury goods, healthcare, medicines, further education and wealth management will help further boost overall growth.

China's manufacturing capacity and digital economy can easily meet the urbanization and consumer demands, according to the International Institute for Management Development, because it is by far the world's biggest manufacturing hub. The logistical advantages of China having a complete domestic supply chain become even more prominent when global supply chains are disrupted by pandemics, conflicts, geopolitics and protectionism.

Thanks to the largest e-commerce market, the application of advanced digital technologies and availability of the largest educated workforce, Chinese manufacturers are able to produce at scale, substantially reducing their cost of production. Such a high level of production and innovation capability helps them expand their global footprint. For instance, new e-commerce platforms have showed how China's manufacturing advantages combined with the digital economy to create a perfect loop.

Innovations ensure leadership in AI

Furthermore, the Belt and Road Initiative has injected new vitality into China's supply chain by opening up new markets. China became the world's biggest car exporter in 2023 and is the global leader in making and selling electric vehicles (EVs), Therefore, despite the auto industry having one of the most complex supply chains, China will lead the development of the global EV sector.

Moreover, China has the highest number of university graduates in STEM(science, technology, engineering and mathematics) in the world which, coupled with the national policy of promoting fundamental research and innovation in high-tech, has given rise to a new round of R&D and innovation at scale. As for China's AI+ strategy, it is helping build AI+ infrastructure and supercomputer-manufacturing centers, and applying AI in all aspects of the economy. As a matter of fact, China is particularly strong in developing AI solutions and commercializing AI.

China has applied AI in fields such as new materials, new energy cars, life sciences, and environmental and ecological protection. In smart manufacturing and industrial internet of things, AI is more concentrated in the design and quality control fields, which means virtual reality, augmented reality, mixed reality, industrial robotics and/or edge computing can be applied to improve productivity in any manufacturing area.

Besides, the country has invested more than 3 trillion yuan in research and development in 2023, which may help it to lead in all AI-enabled emerging areas.

However, the financial stability of the Chinese economy is being tested as the country undergoes deeper financial and structural economic reforms. The economy will overcome these challenges, though, thanks to its large consumer market, a burgeoning middle-income group, high agricultural and industrial production capacity, and innovation-driven development.

China has vowed to further open up its economy and already signed visa-free entry agreements with a number of countries. This, along with its high-quality growth, will attract more investors focused on long-term value-based returns.

The author, a German citizen based in Shanghai, is founder and chief executive officer of IMT Management Tech Consultancy, chief growth officer of Smart Factory Kunshan and a researcher at Jiao Tong University Institute of Culture and Creative Industry.

The views don't necessarily reflect those of China Daily.

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