New energy, AI can be key economic drivers, expert says

China should firmly develop its new energy and artificial intelligence industries in the face of protectionist and suppressive strategies adopted by the United States, as growth in these sectors can become new key drivers for the Chinese economy, which is increasingly becoming less reliant on the real estate industry, said a former senior finance official.

While emphasizing the need to balance development and security, Zhu Guangyao, former vice-minister of finance, advocated more opening-up measures, especially in cross-border data transfer, to spur innovation and facilitate development in these industries.

Zhu, who spoke to China Daily in an exclusive interview, also said that China's fast development in sectors such as new energy and electric vehicles contributes largely to the global response to climate change. The U.S. suppression of China will dampen global efforts in carbon reduction, including those by the U.S. itself.

The U.S. has recently hyped so-called "overcapacity" in China and substantially increased tariffs on Chinese goods worth approximately $18 billion. The "overcapacity" rhetoric claims that China has exported many new energy products at low prices, hurting other economies.

Sectors affected by the U.S. move include electric vehicles, solar cells and semiconductors, with new tariff rates ranging from 25 percent to 100 percent.

"It is ironic that the U.S. itself is handing out the largest amount of industry subsidies in the world. It has no right to criticize other nations on this issue," Zhu said. "The U.S. should not have double standards. It should respect World Trade Organization rules, rather than just rewrite them anytime it believes they are not in line with U.S. interests."

The world needs China's development in EV and new energy sectors, he said, emphasizing that the country will continue to pursue international cooperation and encourage domestic enterprises to expand overseas.

"We encourage Chinese companies to enter joint ventures with enterprises in other countries and even share some advanced technologies, because we have a common goal of dealing with climate change," Zhu said.

Many European enterprises have benefited from cooperation with Chinese enterprises, which lowers their costs and facilitates local development of new energy and EV industries, he said.

China also needs to deepen reform and opening-up to promote innovation and facilitate the development of its private sector, to further unleash growth potential in new energy and AI industries, leveraging its existing advantages, Zhu said.

"It should provide more support to the private sector and deepen reform that encourage sci-tech research and industrial applications, make State-owned enterprises focus only on very key strategic sectors, and reduce monopolies while boosting foreign direct investment," he said.

China is expected to introduce more measures to promote data flows while balancing development and security, Zhu said.

"We lag behind the U.S. in developing AI technologies, but we are already a leading force in the Fourth Industrial Revolution. We have advanced technologies in power production and transmission, and are a major supplier and consumer of mature chips," he said.

"Development of new energy also supports developing AI, which needs not only computing power but also energy supply. There are opportunities for us to catch up," he added.

However, Zhu warned that China needs to stay alert regarding the U.S.' withdrawal from free cross-border data flows and data localization demands in WTO negotiations in October, as well as its prohibition on transactions of specific data, such as bulk biometric and healthcare data, and financial information with China, as data is a key element for developing AI technologies.

The former vice-minister said the two countries should intensify dialogue and communication to dismantle misunderstandings and miscalculations, therefore boosting trust and promoting bilateral economic and trade relations based on true multilateralism and benefiting the global economy.

"Progress on 30 percent of the targets of the United Nations' Sustainable Development Goals has stalled or gone into reverse, and more than 70 million people globally are returning to poverty. Major economies should enhance policy coordination to jointly deal with common challenges facing the world, including geopolitical tensions and climate change," he said.

"Healthy China-U.S. economic and trade relations are crucial to stabilizing global economic recovery," he added.

A major beneficiary of enhanced Sino-U.S. cooperation is U.S. new energy vehicle maker Tesla Inc. Its Shanghai gigafactory, the first of its kind outside the U.S., has emerged as a key export venue for Tesla globally, contributing to over half of the company's global output last year.

Last month, the company broke ground on a mega factory in Shanghai to manufacture its energy-storage batteries, called Megapacks.

Speaking at a recent forum in Beijing, Grace Tao, vice-president of Tesla, said, "Tesla's strategy is to capitalize on the local environment, resources and the favorable conditions established by the Chinese government, to drive our growth and fulfill our mission of speeding up the world's transition to sustainable energy."