Source: GT    Published: 2024-06-08

Editor's Note: The US' narrative of 'overcapacity' against China's new energy sector which has been echoed in Europe is just a cover and an excuse for their own inability to match China's level of innovation, Daryl Guppy (Guppy), a former national board member of the Australia China Business Council and Australian representative of the Silk Road International Chamber of Commerce, said in an interview with the Global Times (GT) reporter Xiong Xinyi, refuting the 'overcapacity' narrative that has been hyped by the US and some other Western countries. He also shared his opinions on stabilizing China-Australia relations, noting that Australia's economic success depends upon China, not upon the US, India, or Europe.

GT: The IMF recently raised China's GDP growth forecast for 2024 to 5 percent. What are your thoughts on China's economic development so far in 2024 and its efforts in achieving its annual economic growth target of around 5 percent? Have there been highlights you have noticed?

Guppy: China is moving away from an export dependent economy, and it is broadening the base of the economic development. The key is to continue to increase common prosperity and break out of current challenges. The digital economy is advanced in China in comparison to the West. Many of the features Chinese consumers take for granted are still only dreams as far as the West is concerned when it comes to achieving the digitalization of the economy which explains in part why the US is trying to halt China's continued development.

China's 'dual circulation' strategy with a focus on an increase in domestic consumption requires an increase in productivity, and the digital economy is the major driver for boosting the productivity. China's economic future depends upon the growth of the digital economy, and the development of Huawei's chips is an outstanding highlight of this recent development.

The increased productivity will improve currency stability. The internationalization of the yuan is also reducing dependence on foreign sources for expanding supply chains. By broadening the use of the yuan as well as the digital yuan and adapting it for trade settlement outside of the US dominated SWIFT system, the trade settlement process is more efficient with a reduced currency risk of international transactions.

During the visit to Shanghai, Hangzhou, and other places in China organized by the Chongyang Institute for Financial Studies at the Renmin University of China last year, the most impressive experience was to see the development of technology across a whole range of areas such as digital sales and marketplaces, and how the changes promote productivity and sustain the economic growth. The new growth strategy of JD.com shows how the economy is expanding due to digital advances.

GT: As the Dragon Boat Festival approaches, how do you view China's spending power and recovery in consumer spending? How will the consumer economy specifically contribute to China's economic development in 2024?

Guppy: The spending during festival holidays is an important indicator of economic strength and economic confidence. The increasing spending for holidays - which is discretionary expenditure - indicates that there is an increase in consumer spending and that broadens the base of economic development. It shows that people are confident about the future.

The implementation of the 'dual circulation' strategy has been accelerated after the COVID-19 pandemic, and the results are showing that the policy is effective while tourism is an important part in boosting the domestic demand and has a major economic impact.

GT: What are your thoughts on the 'overcapacity' narrative that the US and some other Western countries have been hyping? What are your views on China's development in the new-energy sector and its contribution to a global green transformation?

Guppy: American and European charges of overcapacity are a way of explaining to their own populations why their industries are not as advanced to China. Is there over capacity? No, there is a tremendous demand on a global scale for effective solutions. For instance, electric vehicle (EVs) will help drive their economies toward climate change.

In July 2023, thirty-eight percent of new car registration in China were EVs which cover a variety of high-quality products with various price point for consumers to choose from that suit their income and needs. EV sales in the US are only around 7 percent of new car purchases, and America can't produce enough EVs. The Americans want EVs but their own industry can't do it unless that industry is protected, but such move is leading the way in destroying the global economy.

The US' charge of overcapacity which has been echoed in Europe, is just a cover and an excuse for their own inability to match China's levels of innovation, manufacturing and production efficiency that have been built up over a decade or more.

China has also been contributing to the world's green transformation leading in wind technology, solar technology and promoting green and blue energy in terms of achieving greenhouse gas emission reductions.

With the development of the Global South, new consumer development is taking place. The consumer growth in America relies on debt, and that's unsustainable in the long run. The consumer growth in the Global South relies on real income as they look at China's development model and seek to emulate or adjust it to suit their own needs. There is a growth in consumer demand in the Global South, and they will leapfrog directly into EVs. China is the one that is positioned to be able to service that demand.

GT: How do you view current China-Australia relations? What strengths or advantages do you think China and Australia have across economic and trade cooperation?

Guppy: The relationship is stabilizing. Australia's economic success depends upon China, not upon the US, India, or Europe.

As China continues to grow, the opportunity for Australian products will also grow. China is a market that is simply too important to the world and to Australia to ignore. Australia supplies minerals, clean and safe food products, and there's room for increased cooperation around the development of the green economy, reaching climate goals and other areas.

The largest area of cooperation is in agriculture and resource minerals like iron ore, while tourism is a growth industry and is recovering after the COVID-19 pandemic. There have also been good developments in smaller industry areas such as health and consumers goods, which are important to Australia but small in scale in terms of the China market. Australia has innovation in some areas but it lacks good development patterns, so cooperating in innovation in parallel with Chinese investment and production makes for a great combination

However, the stabilizing relationship is not improving to the same extent that it was returning to the situation that relationship was in 7 or 8 years ago. It's very important that Australia learns to adapt to the changes that are taking place in China and to the changes in China's economic focus, so that both sides can increase the level of cooperation and the level of benefit that comes from that cooperation.

It's also important to put in place measures which will improve Australia's understanding of China and that starts at a government level. The two sides do not only need to stabilize the political environment, but also need to develop greater understanding of what are the legitimate interests of both countries in terms of the political environment.