‘China Opportunity 2.0’ means more widely shared development benefits from innovation

As Chinese high-tech products gain global market share, some Western armchair strategists have slapped a new label on their “bogeyman”: “China Shock 2.0”.

Catchy perhaps, but with a hollow ring.

Speaking at the opening of the Summer Davos in Dalian, Liaoning province, on Wednesday, Chinese Premier Li Qiang offered a precise description of the moment. Rather than a shock, he pointed out, the world is experiencing “China Opportunity 2.0” — a new phase of development driven by the country’s innovation, technological upgrading and deeper integration with the global economy.

The difference between the two narratives is revealing. One views China’s technological rise as a “threat”. The other sees it as a boon. One incites fear. The other invites engagement.

The “China Shock 2.0” alarm is being sounded on the fabricated assumptions that China’s economic success is somehow “artificial” and designed to be “pernicious”. Yet the evidence is nothing but a house of cards. China’s competitiveness is the fruit of its long-term input in innovation. The country now spends nearly 4 trillion yuan ($586 billion) annually on research and development. Its R&D intensity has surpassed 2.8 percent of GDP, exceeding the OECD average. Chinese entities filed more than 73,000 international patent applications in various fields last year, more than any other country in the world. These are not the statistics of a country relying on “subsidies”, “overcapacity” or “currency manipulation”, the cards that allegedly support “China Shock 2.0”.

Instead, China’s progress stems from its superlarge competitive domestic market in which enterprises constantly innovate to survive. Companies face relentless pressure from rivals at home and abroad. Competition has acted as a catalyst for innovation. This reality is inconvenient for some Western policymakers because it shifts the focus away from China and back to themselves.

For decades, some advanced economies have prioritized finance over manufacturing, short-term returns over long-term investment and political theater over industrial strategy. The result: infrastructure aged, vocational training weakened, and industrial capacity hollowed out. When the consequences arrived, blaming China proved easier than meaningfully addressing the real causes.

The irony is difficult to miss. Many of the policies now criticized when practiced by China — industrial planning, infrastructure investment, support for emerging industries and strategic technological development — were once central features of the development strategies pursued by today’s advanced economies themselves.

Even more striking is the policy response. Rather than rebuilding competitiveness through investment in education, infrastructure and innovation, some Western countries have increasingly turned to tariffs, sanctions and technology restrictions to “subsidize” the competitiveness of their enterprises. Such measures do little to address underlying structural weaknesses. In many cases, they raise costs for domestic consumers and businesses while fragmenting global supply chains.

The broader point Li made in Dalian deserves attention: Innovation-driven cooperation, not technological containment, offers the most promising path out of the current global growth slowdown. In a world grappling with mounting geopolitical uncertainty, the challenge is not how to contain the world’s second-largest economy, but how to engage more effectively with it and harness the opportunities its continued development creates.

In May alone, China’s foreign trade in yuan-denominated terms grew 16.9 percent year-on-year, exports rose 13.8 percent from the same period last year and imports increased 21.5 percent, underscoring China’s role not only as a producer but also as a major source of demand.

The real lesson of the “China Opportunity 2.0” is that long-termism in the development of technology, human capital and productive capacity still matters. China’s innovation gains, as Li noted, were earned through years of strengthening domestic capabilities and relentless hard work.

[Abridged]