China's economy is showing signs of stabilization rather than a decline, according to the head of Roland Berger.

In a recent interview, Denis Depoux, the global managing director at German consultancy Roland Berger, shared his insights on the Chinese economy and its impact on global markets.

Denis Depoux, who oversees the Asia region for Roland Berger and advises global corporations on strategy in China and the region, predicts that the Chinese economy is entering a period of stabilization. This stabilization, he explains, is due to fast-growing trade and investment with the Global South, particularly in Southeast Asia, where investment flows from China are growing "massively."

One of the key drivers of China's growth is its strategic shift in oil imports. Denis Depoux notes that China is importing a lot of oil through Myanmar via pipeline, reducing dependence on the Strait of Malacca. This move signifies China's ambition to diversify its energy sources and secure its supply lines.

The Chinese economy is also emerging as a source of technological innovation. In the automotive industry, for instance, China is making significant strides, according to Depoux. The source of innovation in machine tools is no longer limited to Germany and Northern Europe; it also includes Japan, China, and other regions.

However, the Chinese economy is not without its challenges. Denis Depoux highlights concerns over a slowing real estate market recovery and weak consumption due to societal aging. These issues could potentially impact China's economy in the long run.

On the global stage, the relationship between the US and China is expected to remain strained, regardless of the outcome of the US presidential election in November. This tension could lead to a potential new trade war, with estimates suggesting a 4% impact on the US economy's 2023 GDP and a 10% impact on China's economy.

Despite these challenges, Denis Depoux remains optimistic about the Chinese economy. He characterizes the Chinese economy's growth as "stabilization" rather than a "slowdown." Companies in Japan and Western countries can mitigate risks in China while still participating in its growth by adopting joint ownership structures, reusing proceeds from existing operations for further growth, and localizing decision-making at Chinese affiliates.

This article was first published on Nikkei Asia and is being republished as part of 36Kr's partnership with Nikkei.

China's economy is showing signs of stabilization rather than a decline, according to the head of Roland Berger.