Nation seen on steady growth track despite woes

China is poised for long-term growth, led by innovation and entrepreneurship, despite macroeconomic headwinds and rising global uncertainties, according to a top management expert.

"There are some current macroeconomic challenges … But as a firm believer that China creates prosperity through innovation and new technology, and given how that is evolving here in China, I feel that the prospects are very positive and very good," said Francisco Veloso, dean of INSEAD, one of the world's top business schools with campuses in France, Singapore and the United Arab Emirates.

In a recent exclusive interview with China Daily in Beijing, Veloso also emphasized the importance of maintaining policy support for entrepreneurship while addressing structural imbalances.

"It's important to stay the course in promoting entrepreneurial and innovation-driven growth, while at the same time putting in place the right macroeconomic tools to address some of the imbalances and challenges the Chinese economy is still facing," he said.

While recognizing the obstacles, Veloso remains optimistic about China's ability to move past them by doubling down on science, technology and entrepreneurship — key levers Veloso says are driving the next wave of economic transformation globally.

China has prioritized new quality productive forces and technological innovation in its economic agenda for the year.

According to the Government Work Report, China will strive to develop new quality productive forces in light of local conditions and accelerate the development of a modernized industrial system. This will require the fostering of emerging industries and industries of the future, such as biomanufacturing, quantum technology and artificial intelligence.

Ben Simpfendorfer, a partner at consultancy Oliver Wyman, said China is making strategic moves to secure long-term sustainable growth by doubling down on innovation, with a sharpened focus on emerging fields including AI. "The country is turning from the world's factory to the world's innovation hub. We've seen developments across clean tech, artificial intelligence, as well as biopharmaceuticals that are all very encouraging."

Veloso also praised China's achievements in "recombinant innovation" — a form of entrepreneurship that fuses existing technologies into new business models.

"China has been very strong on this recombining innovation, which is fantastic," he said, noting that companies like DeepSeek exemplify this trend by leveraging open-source models and repurposing technical know-how from one field to build cutting-edge products in another.

Veloso emphasized that recombinant innovation — especially in the AI era — can be just as transformative as breakthroughs born from research and development labs.

Meanwhile, he added that China's progress in climate tech, electric vehicles, and battery technologies is "at the forefront".

"China is not behind any other country," Veloso said.

China's push to translate its R&D investments into entrepreneurial activity is a more recent but critical shift, Veloso said. "What is recent, very promising, is the effort, not only on doing that, but also in finding a way to generate an entrepreneurial economy on the back of that."

He acknowledged that creating globally leading companies from scientific advancements is "very hard to do … not just in China, but anywhere," noting that Europe faces similar struggles. But with proper support, China is well-positioned to succeed, he argued.

"This is something that I think can make a big difference," Veloso said. "Supporting that entrepreneurial economy … is quite important."

He stressed the importance of encouraging both incumbent firms to adopt AI and new startups to experiment with transformative business models. "If you don't do that in a particular region or a particular country, you're going to be left behind… So, it is absolutely essential that we promote, sustain and accelerate the entrepreneurial economy."

Veloso sees Chinese cities like Shenzhen in Guangdong province and Hangzhou in Zhejiang province emerging as innovation powerhouses. "The emergence of Shenzhen and Hangzhou as important engines of economic transformation … is very much in line with what we see from the history of innovation and entrepreneurship."

While the macroeconomic environment may remain turbulent, Veloso believes China's continued investment in innovation, openness to global talent, and support for entrepreneurship offer a compelling path forward.

"Continuing on that push to openness is really, really important for the future of China."