Green and Gold Mountains to take flight in 2025.
In December every year China's Central Committee holds a meeting to review the country's economic performance for the year gone, and set the scene for the year ahead.
2025 will be a foundational year, closing out deliverables in the current 14th 5-Year Plan and teeing things up for what will be transformative 15th 5-Year Plan from 2026-2030.
All signs pointing to an acceleration of China's transition to a Green Economy.
How are Australian companies positioning themselves to participate in this new green growth?
Low-Altitude Economy formalised
Nowhere does China's ambition for new "high-quality" growth stand out more than in the policy development rush around New Energy exports, Carbon Markets, a Circular Economy and the newly-announced Low-Altitude Economy.
2024 is the first year of China's official "Low-Altitude Economy" (低空经济), ie: economic activities (products & services) centred around electric manned & unmanned aerial vehicles operating in the airspace usually within 1,000 meters above the ground, or eVTOL).
China's low-altitude economy is taking off with the CAAC - Civil Aviation Administration of China estimating the market will soar from 1.5 trillion yuan in 2025 to more than 3.5 trillion yuan (US$210 billion) by 2035. a 3X growth in 10 years.
Earlier this year for the first time the term "low-altitude economy" was included in the Chinese government's work report triggering a flurry of activity in a number of cities to address the regulatory and market development aspects of this burgeoning new area.
With Greater Bay Area, Yangtze River Delta, Jing-Jin-Ji, Yellow River Basin leading the way, Island Province Hainan also pushing ahead with new policies to attract investment.
As usual, these low-altitude economy ambitions line up with previous National policies around "Dual Carbon 30-60" goals (双碳目标 ) , "Beautiful China" (美丽中国) and "High-Quality" growth (高质量增长).
There's a lot going on up there and Australia (and the Western world) needs to recognise that Green Economy transition means more than just green energy.
This is a transformation impacting every aspect of the economy -
A green, high-tech industrial transformation with and eye on societal benefits, poverty alleviation and rural revitalisation.
2024 Wrap
Since the beginning of 2024 China's focus on "new quality productive forces" and "opening up" have flowed through Provincial and Municipal Government policies to be implemented by renewed State-Owned-Entities and new entrepreneurial enterprises.
The Party-lines of "furthering comprehensive reform", "expand high-level opening up to the outside world", "more proactive and effective macroeconomic policies", "expanding domestic demand", "stabilise the real estate and stock markets" are being addressed across the country - from Xinjiang to Xizang. Hainan to Heilongjiang.
And we need to understand what this means for Australia's export-dependent economy.
What are our strategic risks? Where is our plan B to our commodity economy?
Looking to 2025
A series of important arrangements were set out for next year's economic work plan to drive for progress while maintaining stability and promoting high-quality development.
This meeting sent a clear signal of "being more proactive" in response to the more complex domestic and international situation and introduced a new term of "moderately loose monetary policy".
Expanding domestic demand
China's domestic demand, (consumption & investment), is destined to be the new engine of economic growth connected to environmental and social prosperity.
Since the beginning of 2024 new policies to stimulate consumption such as incentives to replace old-for-new consumer goods have been very effective.
China's consumer demand (retail sales) actually increased by 4.8% year-on-year.
The focus on automobiles, home appliances, digital consumption, "experience" consumption (ie: culture & tourism) have proven very successful.
Industrial development through technological innovation
Scientific and technological innovation will continue to lead the development of China's new quality productive forces and build a modern industrial system.
Since the beginning of this year production levels at China's medium to large high-tech manufacturing companies increased by 9.1% year-on-year.
Robotics and automation leading the way to a manufacturing transformation.
How are Australian manufacturers faring?
China's Investment in high-tech industries increased 10% year-on-year.
The 中国科学院 reinforced the focus on scientific & technological innovation being at the core of developing new high-quality productivity. Innovation-driven development and integration of the 'real economy' with the digital economy is driving advanced manufacturing and modern service industries.
The international media is missing out on what is happening under the hood by looking at old metrics of economic performance.
Achieving breakthroughs in key technology areas and promoting innovation capabilities is foundational for China now.
Strengthening the role of enterprises in scientific and technological innovation and opening up channels for the industrialisation of science and technology are key focus areas.
A great time for entrepreneurs In China. And a great time for foreign companies to invest in collaborate in China.
Reform and opening up to drive economic development
December's economic policy meeting emphasised "deepening reform in expanding high-level opening up to the outside world" to further drive development with more than 300 major reform measures announced.
2024's declining inbound FDI numbers (accentuated by some big US company withdrawals) miss some important underlying trends in the size and type if foreign investment into China.
These are now focussing on supporting China's green economy transformation.
In 2024 the manufacturing sector attracted 28.4 percent of FDI inflow, up 2.8% from last year, and inflows into smart consumer equipment manufacturing and professional technical services were up 332.9% and 103.1% year on year respectively.
China's focus on professional services makes Australia's "Country of Honour" role in 2025 all the more important for Australian companies to leverage.
Despite geo-politics Investment from Germany (up 24.2%) & Singapore (16.2%) were up.
Where is Australia's plan to engage? Which sectors are we leading with to leverage our strengths?
Recently a series of policy measures have also been introduced to promote the reform of digital trade and promote the stable growth of foreign trade.
LATAM, MENA, ASEAN and African Countries seem to be the current beneficiaries of this.
A separate note on new BRICS member countries coming in the New Year.
The 3rd Global Digital Trade Fair held in Hangzhou in September highlighted many of the key growth opportunities from China's digital trade with foreign countries - AI, Smart City tech & services, digital entertainment, digital tourism, Intangible Cultural Heritage, e-commerce, digital currency, robotics, IOT and of course, Low Altitude Economy (eVTOL).
Faster solutions to difficulties faced by foreign enterprises, consolidating the pathways for foreign trade and investment through new models and new formats support major regional strategies to be implemented through new free trade pilot zones.
None more representative of this wholesale transformation than the New Development Zone built North of the Yellow River in Jinan, Shandong Province (济南起步区 )
Much of these opening up loicies will be executed through Green Industrial Development Zones led by research done by the Green Partnership of Industrial Parks China (GPIPC)
Improving people's livelihood
The drive towards new "high-quality development" is fundamental to the goal of ensuring the well-being of the Chinese people, and every effort is being made to share this approach with international trade & investment partners.
The Government has also made important arrangements for consolidating and expanding on poverty alleviation programs and co-ordinating the promotion of new urbanisation into rural revitalisation programs bringing together urban and rural areas.
Key to this is increasing agricultural efficiency, increasing farmers' income and rural vitality.
Green mountains and clear waters are natural wealth, economic wealth and social wealth.
The Government has stressed the need to promote carbon reduction, pollution reduction and green growth to accelerate the comprehensive green transformation of economic and social development.
These are all huge NEW opportunities for Australia and other international markets. Areas to collaborate with China to accelerate the transformation to a Green Economy and grow new domestic champions.
At present the focus is to cultivate green and low-carbon industries, develop advanced manufacturing, green & healthy consumption and develop green products & lifestyles.
So many reasons for us to look for ways to work together for shared benefits.
Net Zero Faster, Together
2025 should be the year for progress in achieving #netzerofastertogether and accelerating the transformation to a Green Economy.
See you there....