00:00I spoke to Zhou Nye, senior partner and chairman of McKinsey's offices in Greater China,
00:05for his take on China's economic strategy in 2026.
00:09Actually, if you look inside China's economy, I think that obviously over the last two,
00:14three years, there's been a little bit of an overhang of the real estate bubble bursting.
00:21There's a little bit of a Chinese company is facing this intense competition.
00:25But if you look at consumer demand, especially around areas like services,
00:30I mean, people underestimate the fact that last year was the year where Chinese services was growing actually very, very fast.
00:38Look at travel, look at tourism, look at a lot of the non-physical goods.
00:45I think that consumption has been going up.
00:47If you look at actually even this year, white goods, a lot of the appliances, electric vehicles, that has been going up.
00:55I think when you look underneath the hood, there's actually quite a lot of positive signals on the consumption side.
01:02If you look at next year or this year, what they're trying to do,
01:05I do think that the Chinese consumer will be increasing the important part of the Chinese economy.
01:11And I think that that's something to look forward to.
01:13He also pointed to innovation as being a strong engine for growth,
01:17which chimes in with the 15th five-year plan recommendations for industrial policy priorities,
01:24tech self-reliance, sustainability, sustainable high-quality growth.
01:29Is this a new strategic phase?
01:32I think it's been going on.
01:33I mean, in China, you know, there's actually the, call it the old economy and there's a new economy.
01:38In fact, the new economy is all the things that we're talking about, right?
01:41AI, you know, EVs, batteries, right?
01:44All these things where robotics, right?
01:46Where I think, you know, and new life sciences, biotech, and all those.
01:51I mean, those are seeing a, I would say, you know, they're seeing like, what's slowdown?
01:57We are growing as fast as ever before, right?
01:59This is something where they are globally competitive.
02:02So I think that what is important in China these days, how do you align yourself?
02:07How do you use technology?
02:09How do you use these new ways to position yourself in the right swim lanes?
02:16So you're in the growing part of the economy and not in the suffering part of the economy.
02:21And that's really like my message to all clients is around like, where are you?
02:26And if you're in the wrong swim lane, you better get yourself over there.
02:29Otherwise, you'll be suffering.
02:30The message seemed very much to be that China's open for business.
02:34How do you think the next five-year plan is going to signal that China is really good for business?
02:39I think the Chinese economy has always been quite open to foreign businesses.
02:44The difficulty is actually the competition itself in China, right?
02:49So in China, it's not like it's the Chinese company competing against the multinational.
02:54It's every company competing against everybody, right?
02:56So in many ways, when you go into China, this is like the, I call it the world's toughest gym, right?
03:03So the question for them is not one of whether China is open or not.
03:08It's whether they are competitive enough to serve a Chinese consumer who are discerning,
03:14who are intensely looking at all the deals out there, looking for valuable money, right?
03:20And how do you compete and do well in there?
03:25The flip side, though, is if you can win in China, you're pretty competitive in the rest of the world.
03:31So, you know, we do encourage multinationals to say, well, you got to get into that gym.
03:36Because if you're fit in there, right, you go to the rest of the world, right, in those gyms, right, you're pretty good.
03:41So, you're pretty good.
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