Yao Yang says Chinese companies will invest massively abroad

The PKU professor also believes U.S. protectionism is a huge mistake.

The following is sourced from a blog post within WeChat by the National School of Development (NSD), Peking University. It’s an interview with Yao Yang, Professor and former Dean of NSD, by an online offshoot of Beijing Daily, the official newspaper of the Chinese capital city.

In the brief interview, conducted before the “Liberation Day” tariff hike, Yao Yang reiterates a point he has been making, as The East is Read covered in October 2024, that Chinese companies are on their way to investing massively abroad in manufacturing.

He kindly reviewed this translation before publication.

姚洋：未来20年，中国企业将在海外再造一个“中国”

Yao Yang: In the Next 20 Years, Chinese Companies Will Rebuild a “China” Overseas

From March 25 to 28, 2025, the Boao Forum for Asia 2025 Annual Conference was held in Boao, Hainan. The theme of this year’s conference was “Asia in the Changing World: Towards a Shared Future.” Political leaders, experts, and scholars from multiple countries gathered at Boao, engaging in intellectual exchange and collaborative discussions on development.

In the face of global shifts, what challenges and opportunities do Asian countries face? How should they respond to the protectionist policies of the new U.S. government? On the morning of March 25, Beijing Daily’s online offshoot hosted a special interview at the Boao Forum with Yao Yang, Professor at Peking University, Director of the China Economic Research Center, and Professor at the National School of Development.

Yao Yang believes that while the second term of the Trump administration has created a significant global impact, Asia has instead become more united. Moreover, U.S. restrictions on exports to China have inadvertently encouraged Chinese companies to expand overseas, presenting a prime opportunity for Chinese companies to reshape global manufacturing. Looking ahead 10 to 20 years, Chinese companies will create a “China” overseas.

Trump 2.0 Impact on the World: Asia, Instead, Becomes More United

Interviewer: This year’s Boao Forum theme is “Asia in the Changing World: Towards a Shared Future.” What does this “changing world” mean for the development of Asian countries, including China?

Yao Yang: From a long-term perspective, the global manufacturing industry is shifting toward the East Asia region, centered around China and ASEAN. Asia now accounts for 40-50% of global GDP, and this share is increasing. This trend has remained unchanged, regardless of global events; it is a certain outcome.

From a short-term perspective, since Trump’s second term began, he has implemented numerous unconventional policies that have disrupted the global order. While this chaos affects the entire world, Asia has the capacity to absorb the impact of Trump 2.0.

For example, Trump’s imposition of tariffs on other countries, if this policy spreads, would actually strengthen ties between China and Southeast Asian nations, and even between China and India. Regionally, this may even lead to greater regional integration. In other words, while the U.S. is retreating from globalization, other countries remain open-minded towards globalization, and therefore they continue to benefit from it.

This year’s Boao Forum theme is “Asia in the Changing World: Towards a Shared Future,” which is a great theme. Under the chaotic situation triggered by the Trump administration, Asia will, in fact, become more united. This is a positive development both for China and for the entire Asian region.

U.S. Economy: “Pulling Itself Forward by Its Hair”

Interviewer: Recently, at a Federal Reserve’s press conference, Chairman Jerome Powell mentioned “uncertainty” 16 times in one hour, noting that Trump’s policies have increased uncertainty in the U.S. economy and raised the likelihood of a recession. What risks will U.S. economic uncertainty pose to global economic growth?

Yao Yang: I believe that the U.S. economy now resembles the period from 2000 to 2008, marked by irrational prosperity. The U.S. boom is fueled by excessive money printing, artificially inflating demand. Although the U.S. economy appears to be growing fast, it is like “pulling itself forward by its hair,” which is unsustainable.

For instance, the U.S. stock market has mainly been driven up by the “Magnificent Seven” of the American stock market. Without these companies, the market is actually not performing well and resembles a large bubble driven by just a few firms, which is clearly unsustainable.

We’ve seen China’s DeepSeek emerge, causing a big impact on the U.S. The first thing it shows is that AI (artificial intelligence) is not as mysterious as people think; Chinese startups can rise to the front lines immediately, reducing the myth surrounding AI.

Secondly, DeepSeek’s emergence shows that Nvidia’s chips are not as essential as people had previously believed. The idea of building AI through assembling vast quantities of chips is likely a path that is already nearing its end.

Therefore, the impact of DeepSeek on the entire U.S. stock market was huge, and during that period, the U.S. stock market crashed in response, which further revealed the irrationality of the U.S. market.

We must remain vigilant about the potential for a new U.S. recession, even a repeat of the 2008 financial crisis. But we don’t know when or in what form it will erupt. The only thing we can be certain of is that we need to handle our own affairs well.

U.S. Sanctions and Restrictions on China: A Golden Opportunity for Chinese Companies to Reshape Global Manufacturing

Interviewer: With the U.S. imposing restrictions on exports to China, Chinese companies are striving to expand overseas. How do you evaluate the impact of U.S. policies against China?

Yao Yang: I openly tell Americans that you are making a historic mistake. U.S. policies aimed at suppressing China’s technological development have not only failed to stop China’s technological progress but have actually accelerated it. China can now produce 7-nanometer conventional chips and is leading the world in optoelectronic hybrid chips. These advances were forced by U.S. policies. So, the U.S. policy of suppressing China is utterly wrong. China is not lacking money or intellectual resources; it just lacked the impulse to act. Now, we’ve done it, and the U.S. is left dumbfounded.

On the other hand, as the U.S. now limits our direct exports to America, many Chinese companies are acquiring factories abroad. This is prompting Chinese companies to accelerate their overseas expansion, and in turn, this is a golden opportunity for China to reshape global manufacturing.

I believe that, looking ahead 10 to 20 years, Chinese companies will create a “China” overseas. In fact, the history of other manufacturing powerhouses in the world—such as the U.K., the U.S., and Japan—has been shaped by their overseas assets. The U.K.’s overseas assets are several times its GDP, and Japan and the U.S. also have high figures. China’s overseas assets currently amount to about 50% of its GDP, so China still has a long way to go. But this path will certainly become broader and more open.

Some Troubled Science Reporting at South China Morning Post