Harnessing the horse's power in new year

In Chinese culture, the horse symbolizes forward momentum and resilience. As the Year of the Horse approaches, the metaphor feels apt for China's economy at a time of mounting global and domestic pressures.

Globally, economic recovery remains fragile and growth continues to slow. "De-risking" narratives are accelerating the fragmentation of global supply chains, while geopolitical tensions and volatile energy prices are reshaping trade and capital flows. Export-oriented firms face shrinking orders and rising costs. At home, China still confronts a mismatch between strong supply and weak demand, constraints in key technologies, uneven regional growth, insufficient consumption activation, lingering real estate and local fiscal risks and persistent bottlenecks in the construction of a unified national market. These challenges are overlapping and mutually reinforcing.

Against this backdrop, structural transformation is not optional but the only path forward. Sustained policy discipline and determined action, like a powerful horse pressing on with endurance, are essential to stabilizing growth and breaking through constraints.

First, China must act with the speed and precision of a fleet-footed horse to tackle core technologies. Innovation is the engine of structural upgrading. Just as a galloping horse relies on strong legs, economic transformation depends on the technological foundation.

Persistent efforts in strategic fields such as new energy, quantum technologies and embodied intelligence are critical to overcoming bottlenecks and shifting from traditional manufacturing to intelligent manufacturing.

Second, domestic demand must be steadily cultivated with a long-term commitment. Consumption and investment are the anchors of economic stability. Expanding demand requires disciplined policies — from upgrading county-level commercial infrastructure and smart community services to promoting green appliances and new consumption scenarios. By combining effective investment with consumption activation, policies should align with real household needs and create a virtuous cycle between supply and demand.

Third, China must expand high-level opening-up with the collective momentum of "ten thousand horses galloping". Openness is essential to countering the global "de-risking" narratives. China cannot prosper in isolation, nor can global growth stabilize without China's participation. Through cross-border industrial chain coordination and multilateral trade cooperation, pragmatic partnerships can align global resources with real market demand and lead to shared benefits.

Across the country, regions are pursuing tailored transformation paths. Shenzhen in Guangdong province is advancing embodied intelligence and scaling AI-driven robotics in smart factories, strengthening links between universities and industry to accelerate technology transfer. Zhejiang province is promoting large-scale deployment of general-purpose AI models, targeting over 20 percent revenue growth in the AI core industry while fostering clusters in new materials and the low-altitude economy. These examples show that targeted strategies can turn momentum into tangible outcomes.

Yet deep bottlenecks remain. Advanced chips and specialty materials still have to be imported, and many enterprises face "chokepoints" in key components. The link between innovation and industrialization is incomplete, and the full potential of the new national innovation system has not been realized.

Domestic demand also faces structural constraints. Smart consumption infrastructure remains inadequate in lower-tier and rural markets, new consumption supply lags behind demand, and policy frameworks lack long-term design. Coordination between urban and rural consumption systems is still limited.

Regional growth has also been uneven. In central and western regions, upgrading often remains at the low end of the value chain — such as Guizhou province's Zheng'an guitar industry, which holds a big global market share but largely operates as an OEM (original equipment manufacturer) base, or Yunnan province's Pu'er tea industry, which remains focused on primary processing. Innovation resources remain concentrated in the east, and cross-regional coordination policies are insufficient.

Breaking through these barriers requires renewed policy resolve. First, reforms to the national innovation system should deepen, with increased basic research investment and full-chain policies from laboratories to pilot testing and industrialization. Integrating innovation, industrial, supply, and value chains will help turn scientific breakthroughs into industrial drivers.

Second, a long-term mechanism is needed for stimulating domestic demand growth. Strengthening county-level commercial systems, fostering green and smart consumption scenarios, and optimizing trade-in programs can align short-term measures with long-term structural policies. Third, regional coordination mechanisms must also improve. Transferring innovation resources from the east to central and western regions, supported by targeted policies and cross-regional innovation communities, can enable a more balanced transformation.

Ancient wisdom holds that horses are a vital asset of the nation. Today, the metaphor applies to economic development. Global risks and opportunities coexist, and pressure is accelerating China's structural shift. Policy discipline and endurance are indispensable for high-quality growth.

China's GDP surpassing 140 trillion yuan in 2025 and contributing roughly 30 percent to global growth underscores the importance of transformation and policy resolve. International institutions, including the World Bank, the International Monetary Fund and the Asian Development Bank, have raised their growth forecasts for China.

Looking ahead to 2026, China will rely on niche-sector innovation as the legs of its fleet-footed horse, people-centered policies as its endurance, and openness as the momentum of "ten thousand horses galloping".

By addressing weaknesses and strengthening advantages, China can mitigate risks through transformation, achieve growth through progress, and continue to inject stability and certainty into the global economy.

The author is a professor at the School of Economics, Southwestern University of Finance and Economics.

The views don't necessarily represent those of China Daily.

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