A report unveiled in late March in Beijing suggests that ongoing Chinese modernization could bring compounding-interest-like development to the country.

Titled “China’s Compounding Interest: High-Quality Development and Outlook for 2035,” the report was released by the Chongyang Institute for Financial Studies at Renmin University of China (RDCY), in collaboration with the Center for China-US Cooperation at the University of Denver in the United States, the Free Economic Society of Russia (VEO of Russia), the Geopolitical Economy Research Group at University of Manitoba in Canada, and the India China Economic and Cultural Council. At the press conference and concurrent international symposium, nearly 200 Chinese and foreign experts and scholars discussed the potential and prospects of China’s economic development.

The report introduced the concept of “compounding interest in large countries” for the first time, emphasizing its significance as a useful tool for wealth accumulation, asset preservation, and asset appreciation.

Wang Wen, executive director of the RDCY, explained that the compounding interest in large countries is marked by stability of returns, long-term accumulation, and sustainability. This development approach can serve as a driving force for sustained economic growth and prosperity.

The momentum of China’s modernization, characterized by the development of compounding interest, focuses on taking innovation-driven initiatives, deepening reforms, expanding opening-up, and promoting green development, Wang said.

David Daokui Li, director of the Institute for Chinese Economic Practice and Thinking at Tsinghua University, likened the concept of compounding interest in large countries to the economic concept of “endogenous growth.” The endogenous growth of China’s economy is reflected in two aspects: First, China has a complete industrial chain and huge industrial scale; second, it exhibits a rapid pace of innovation.

In the view of Sergey Glazyev, vice president of the VEO of Russia and an academician of the Russian Academy of Sciences, China’s management system is more effective than that of Western countries, because the former features an organic combination of various policies, with a view to improve people’s wellbeing and living standards on the basis of production growth.

The Chinese economy boasts a strong material and technological foundation, solid factor supply guarantees, and a super-large domestic market, said Zhang Liqun, a research fellow from the Department of Macroeconomic Research at the Development Research Center of China’s State Council. He added that driven by changes in the economic structure, the Chinese economy still possesses huge growth potential.

Attendees agreed that China has realized high-quality development spurred by innovation, reform, opening up, and sustainability, setting an example for other countries and paving the way for humanity’s bright future.

Wang pointed out that the foundation of China’s high-quality development is being consolidated, while the compounding interest of policies concerning internal institutional reform and external high-standard opening up is being steadily unleashed.

“China has a bright future,” said Christopher Thomas, a non-resident senior fellow at the US think tank Brookings Institution, adding that the country has “a large population, a very large market, very smart and hardworking people, and a solid industrial foundation.”

Nonetheless, Thomas recommended that China should further improve its innovation capacity. Domestic companies need to upgrade their use of artificial intelligence and other new technologies, as well as transition from a primarily hardware-based model to a software- and services-based technological model, he suggested.

Chen Wenling, chief economist from the China Center for International Economic Exchanges, noted that the Chinese economy, with tremendous promise, is a powerful driving force of the open world economy. Meanwhile, China is pushing ahead with major reforms to the forces and modes of production, which will unlock greater potential and impetus.

The report also acknowledges China’s challenges in high-quality development, including weak social expectations, information asymmetry, external factors, and institutional reform areas. It suggests deepening reforms, effective policy implementation, bridging the information gap, and prioritizing innovation and sustainability to overcome these challenges.