(Transcribed from recordings, with some edits)
According to China’s development experience, for some strategic and foundational sectors, the sole reliance on market mechanisms often fails to bring necessary investment and construction. For these fields, it is integral to leverage the state’s leading role in the market. At the macro level, the state creates a fair environment, optimizes infrastructure, cultivates talent, and offers financial and legal support. Moreover, the state delves into specific market segments, serving as a systematic integrator and stabilizer.
Take high-speed rail as an example. The rapid development of China’s high-speed railway system would not have been possible without the overall planning by the former Ministry of Railways and the subsequent systematic integration undertaken by the China State Railway Group Co., Ltd. The corporation not only integrates multiple sectors such as engineering construction, equipment manufacturing and communication signaling, but also coordinates domestic and international suppliers to form stable long-term innovative partnerships. Although some rail lines cannot realize profitability in the short term, through unified planning and layout, the general high-speed railway network can break even and serve the long-term interests of the nation and society. This model effectively mitigates market uncertainties, a task which private enterprises struggle to undertake. In comparison, the high-speed rail project in California remains uncompleted after two decades due to the lack of a similar state-led mechanism.
The development of new energy vehicles (NEVs) also reflects the foresight and consistency of national strategy. As early as 1992, strategic scientist Qian Xuesen proposed bypassing the traditional internal combustion engine phase and directly developing electric vehicles. His suggestion received key support under the national “Eighth Five-Year Plan (1991-1995)”. Subsequently, the collaboration among enterprises, universities and research institutes advanced, with leading institutes including Tongji University working on battery and vehicle architecture. After decades of policy support and market cultivation, China has made breakthroughs in brands, technology and design in the NEV sector, securing a global leading position. However, state intervention is not always successful. For example, the attempt to exchange market access for technology in the traditional fuel vehicle sector failed to yield desired results, as international brands long maintained market dominance until the landscape was changed with the rise of the NEV sector.
China’s development demonstrates that building a market system is an exploratory process which requires continuous learning from practice. “Crossing the river by touching the stones” entails risks, but also fosters innovation. For Global South countries, the first step is to identify the most strategically significant and foundational industrial sectors, and reasonably define the roles and responsibilities of state-owned enterprises, private enterprises and joint ventures in the market. Cooperation with foreign investment can be introduced when necessary. Additionally, they should draw on China’s experience in capital market development, local government competition mechanisms and systematic integration models.
Through the Belt and Road Initiative (BRI) and BRICS cooperation, China wishes to share its experience and solutions in market development and strategic sector growth with Global South countries, promoting common development and achieving mutual benefit and win-win outcomes.