The economic potential of China cannot be missed by the world
Chen Jiahe
A trade and logistics park in Lianyungang, east China's Jiangsu Province, November 5, 2020. /Getty

A trade and logistics park in Lianyungang, east China's Jiangsu Province, November 5, 2020. /Getty

Editor's Note: Chen Jiahe is the chief investment officer at Novem Arcae Technologies. The article reflects the author's opinions, and not necessarily the views of CGTN.

Recently the famous American economist, Steven Roach, has published an article named "China Leads Again". In this article, Mr. Roach stated that with the effective defeating of COVID-19 in China and the solid economic growth, China can lead the global economic recovery in the coming years.

While Steven has clearly stated the economic importance of China to the world economy amid the crisis caused by the uncontrolled spreading of the COVID-19, the economic potential of China shall give investors even more confidence in the long-term. For this long-term, I am talking about a period of over ten years or even a few decades.

One of the most importance reasons behind this economic potential is the relative lower economic development level that China has at the moment. While the per capita GDP for developed nations such as the United States, Germany and France usually hovers around $50,000 to $60,000, China's per capita GDP has just crossed the threshold of $10,000.

Although the current per capita GDP of China is much higher than the level that the country had four decades ago at the beginning of the economic reforms, it still has a large room to grow. Consider the scenario that China's per capita GDP reaches $40,000 after 30 years. This will require a compound annual growth rate of only 4.7 percent, a target not very hard to achieve for the Chinese economy.

There are multiple reasons that support a solid economic growth for China in the coming decades. After all, a low economic development level alone is not a sufficient reason for supporting continuous growth. It can only give people confidence that the ceiling of development has not yet been reached.

One reason behind a possible economic growth in the next few decades is China's large market. With 1.4 billion people, the Chinese market can be even larger than the combined size of the U.S. and European market. A large market usually means a huge advantage for business activity, investment and consumption.

Meanwhile, China has an effective government. With actions taken in 2020, this government has been able to almost eliminate the COVID-19 virus within China's boarder. With anti-corruption and poverty elimination actions taken in recent years, China's government proved its effectiveness in running the country and its economy.

Heavy machinery is loaded at the China-Kazakhstan Logistics Cooperation Base in Lianyungang, east China's Jiangsu Province, November 6, 2020. /Getty

Heavy machinery is loaded at the China-Kazakhstan Logistics Cooperation Base in Lianyungang, east China's Jiangsu Province, November 6, 2020. /Getty

Furthermore, Chinese people are also working hard to make their lives better. The education level of China's population has been continuously increasing in the past few decades. The economy is benefiting from more and more university graduates, engineers and scientists every year. The local government in Beijing is recently putting oral English test into the examination system of the city's middle school students, while some middle schools in Guangdong province are starting to put investment and finance courses into their curriculum.

At the same time, Chinese people still save a large part of their income. The income saving rate in China is one of the highest in the world and the foreign exchange reserve that the Chinese government holds is the largest in the world, which is now over $3 trillion.

China's potential can be observed from more perspectives, rather than just the economic indicators. In the crime scene, currently the murder ratio in China is only around 1/10th of the United States. This makes China one of the world's safest countries. Its social security level is comparable to countries such as Japan, Singapore and South Korea. A little walk in any Chinese city in the mid-night rarely result in any worrisome feeling.

When the Chinese economy is promising and bringing hope to the recovery of the global economy, there are many industries that shall be paid special attention. These industries are still developing in China and might enjoy a long-term growth in the coming years or even decades.

For example, the new energy industry is super important when people are looking for investment opportunities in China. For a long period of time, coal was the main source of energy in China. 

China is still rich with coal mines today and the coal reserve is expected to be able to satisfy the country's energy requirement for the next 300 years based on current consumption level. However the air pollution that is created by using this source of energy is considered as unbearable by China's government. Therefore, multiple kinds of new energy, such as solar power and wind energy, are rapidly being developed in China.   

Insurance industry is another area that is poised for growth in the future. Currently, the per capita insurance premium of China is less than 10 percent when compared with countries such as the U.S., France, etc. With Chinese people increasing getting richer and possessing more personal wealth, their requirement for insurance products will gradually increase.

With the economic growth of China in the coming years and even decades, the living standard of Chinese people will rise to an even higher level and the investment made in China's promising industries and companies will return their investors abundantly. This is an opportunity that cannot be easily missed.

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