CGTN Europe spoke to Wang Dan, Hang Seng Bank (China) Chief Economist
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00:00 Wang Dan is the chief economist at Hang Seng Bank China. She says the large number of these so-called lighthouse factories that China has shows the country's competitiveness in the field of manufacturing.
00:12 China has long been investing heavily in its industrial sector and we have seen that in emerging economies especially along the line of new energy supply chain new materials astronautics and aeronautics.
00:28 There are tremendous investment not just from private sector but also from the state sector. There are also heavy investments in the infrastructure.
00:36 And that means in terms of logistics and the provision of industrial inputs. China has a natural advantage. And above that there is also a focus on cultivating
00:47 the talents on that are catering those industries. And it has been a long time before China can really gain enough advantage to build up its domestic
00:58 advantage. So now we have seen this really dramatic change in its landscape of the supply chain. I wonder if you could drill down into some of the
01:09 items that are produced by these lighthouse factories and where particularly China is shining.
01:16 The one that naturally comes to people's mind is the auto industry. Along the auto industry though there's also the battery produces the new materials
01:27 providers and the suppliers for those separate industry as well. And then we have the household appliances in which China had long been a global
01:37 leader. And aside from that there are also the shipyards on the general manufacturers in the equipment or specialized equipment. So China has one of
01:49 the biggest scale of its heavy industry in the world. And that's basically has made sure that China has a good position in global manufacturing.
02:00 Yeah. So that leads on to the next question really. What implications does this success for China have globally.
02:07 There are mixed signals at this point because of course we can see the advantage of China being able to produce at such a scale for so many
02:18 different industries at higher quality. But from the other countries perspective it creates great competition for their domestic factories and
02:28 emerging industries especially for the green technology. So for China it wants to maintain its global dominance in a way by being even
02:38 better prepared in its efficiency in the coherence in the whole supply chain. But also it needs to think about what kind of market it needs to
02:49 explore. Besides the mainland market. What are the challenges. What does need to China need to do to capitalize on the success without
02:59 those barriers. The biggest challenge that China face is to find a bigger market. Actually the demand side is the main bottleneck not on a
03:11 supply side. The domestic market has been growing quite rapidly in the past 30 years. But now the fastest growing market are actually
03:21 in Europe and the US which China both have some of the trade issues going on. And to move things forward of course there will be more
03:31 diplomacy with the Belt and Road countries. But also when it comes to the European market there needs to be a different practice. Maybe
03:40 China can still enjoy the cost advantage and also better productivity in many of the green products. But eventually it has to be a
03:49 coordinated effort to make sure that China's economy and the domestic industries are growing without jeopardizing the European
03:57 counterparts too much.