China is positioned for sustained long-term growth, driven significantly by its commitment to innovation and entrepreneurship, despite facing current macroeconomic headwinds and increasing global uncertainties. This optimistic outlook is shared by top management expert Francisco Veloso, dean of INSEAD, who believes in China's capacity to create prosperity through ongoing advancements in innovation and new technology. He asserts that the evolutionary path of these elements within China points towards very positive and good prospects for the future.

Veloso emphasizes the critical importance of maintaining consistent policy support for entrepreneurship while simultaneously addressing existing structural imbalances within the economy. He advises China to "stay the course in promoting entrepreneurial and innovation-driven growth," while employing appropriate macroeconomic tools to tackle challenges. Aligning with this perspective, China's economic agenda for the year prioritizes the development of new quality productive forces and technological innovation. The Government Work Report outlines a strategy to cultivate these forces based on local conditions and to accelerate the modernization of its industrial system, which includes fostering emerging industries like biomanufacturing, quantum technology, and artificial intelligence.

This strategic direction is echoed by Ben Simpfendorfer, a partner at consultancy Oliver Wyman, who notes that China is making deliberate moves to secure long-term sustainable growth by significantly investing in innovation. He highlights a sharpened focus on emerging fields, particularly Artificial Intelligence, observing that "The country is turning from the world's factory to the world's innovation hub." Simpfendorfer also points to encouraging developments across clean technology, AI, and biopharmaceuticals as evidence of this transformation.

Francisco Veloso also praises China's notable achievements in "recombinant innovation"—a form of entrepreneurship that involves skillfully fusing existing technologies to create novel business models. He states, "China has been very strong on this recombining innovation, which is fantastic," citing companies like DeepSeek as examples of this trend. These companies leverage open-source models and repurpose technical expertise from one domain to develop cutting-edge products in another. Veloso underscores that recombinant innovation, especially in the current AI era, can be just as transformative as breakthroughs originating from traditional research and development laboratories.

Furthermore, Veloso highlights that China's progress in critical areas such as climate technology, electric vehicles (EVs), and battery technologies is "at the forefront" globally. He firmly states, "China is not behind any other country" in these domains, indicating significant advancements and leadership potential.

A more recent but critically important shift in China's strategy, according to Veloso, is the concerted effort to translate its substantial R&D investments into tangible entrepreneurial activity. "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 remarks. He acknowledges the inherent difficulty in creating globally leading companies from scientific advancements, a challenge not unique to China but also faced by regions like Europe. However, he believes that with proper support, China is well-positioned to succeed in this endeavor.

Veloso stresses that "Supporting that entrepreneurial economy … is quite important," and this support can make a significant difference. He emphasizes the need to encourage both established 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 warns, highlighting the urgency of fostering this ecosystem.

Emerging innovation powerhouses within China, such as Shenzhen in Guangdong province and Hangzhou in Zhejiang province, are seen by Veloso as testaments to this strategy. "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," he observes. While acknowledging that the macroeconomic environment may remain turbulent, Veloso concludes that China's continued investment in innovation, its openness to global talent, and unwavering support for entrepreneurship provide a compelling path forward. He strongly believes that "Continuing on that push to openness is really, really important for the future of China."