China's holiday rush is rewriting records more than a billion trips in just a half a week.
What does this travel fever say about China's booming consumer power?
And China's top diplomat Wang Yi is heading to Europe with stops in Italy and Switzerland for high-level talks.
Welcome to Road Today, a news program with a different perspective.
I'm Ge'Anna in Beijing.
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China's cross-regional passenger flow hit a record high during China's National Day and a mid-autumn festival holiday, a clear sign of the country's booming tourism vitality.
The Ministry of Transport reported over 12 billion passenger trips in the first half of the holiday.
On Saturday alone, people made over 300 million trips, up around 6% year-on-year.
Road travel remained the most popular choice.
Railway, waterway and civil aviation trips also increased.
Top destinations included Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu and Xi'an.
The ministry expects the total number of trips during the holiday period to surpass 23 billion, setting a new record for National Day holiday travel in China.
For this and more on China's recent holiday economy.
We are joined by Liu Zhijing, Senior Fellow of Chongyang Institute for Financial Studies at Renmin University of China.
Mr. Liu, thank you so much for joining us today.
And first of all, happy National Day and Mid-Autumn Festival.
It's such a joyful time across the country family dinners, mooncakes and, of course, traffic jams everywhere.
So before we dive into the data, I wonder how you spend your holiday?
Did you get a chance to travel or perhaps stay local and enjoy the festival atmosphere?
Actually, we know that during this past few days we enjoyed the holiday atmosphere everywhere, because I stayed mainly in Beijing.
I know that travelers a lot of China that they are so crowded and also quite busy.
So I like to take this chance to have a holiday in Beijing to enjoy this peaceful and relaxing time.
Actually, I have many meetings with friends and family members.
Of course I met some foreign partners friends, here in Beijing because they visited China from Europe.
I was invited to be here during this week from Switzerland and from Germany.
We had a very enjoyable time together.
We told about history, the story about the festival, especially the cultural heritage in China, and we exchanged some ideas, opinions about the culture coordination together.
So this is a very meaningful and also very happy, exciting holiday for me at the moment.
Speaking of celebrations, the numbers behind this year's travel rush are quite remarkable.
During the first half of the holiday, China recorded over 12 billion cross-regional trips, with highway travel accounting for more than 89, both record highs.
What do these figures reveal about structural changes in China's consumer market?
And since rail, air and waterway passenger volumes all rose simultaneously, what does that tell us about the ongoing consumption upgrade across different income groups in China?
I think the first thing we should understand this figure in some special way.
When the 124 billion trips, this is an amazing number, not only for Chinese, but also for most of the foreigners.
Nobody can imagine that how can we manage such mobility or maneuvering for 12 billion, because many countries have only 5 million or 8 million people population total.
So they cannot imagine how the picture is.
So that shows that China's modernization has come to a point that we have very modernized the transportation system.
We have also very good delivery system to meet all the demands of these different trips, especially these different regions.
They have exchanges, their ideas and cultural differences by such a trip, because the people transport by themselves but they transfer different cultures and opinions and experiences in the past time.
So this is a very important signal for the market outside of China, also for the domestic market, because the production line and the production industry output is getting stronger in order to meet the high demand during this time, special time, and we know that for airway, waterway or highway, all different transportation can meet all such figures.
So this is a very structural challenge for China, but we have very rich experiences to manage such challenges and the problems.
Till today, I think all the trips have been done very well, very smooth, very peaceful, very harmonious, that help the people to enjoy their peaceful life.
Then building on that, let's turn from how people travel to where they travel.
In recent years, we've seen many smaller and lesser-known towns emerging as new hot destinations.
Yet this holiday, major cities like Beijing, Shanghai, Chengdu and Xi'an still lead the list.
How do you interpret this pattern?
Despite the rising appeal of smaller destinations, what common advantages do these major cities continue to hold in attracting visitors, especially during this holiday?
So this is a different culture, different regions.
They exchange the ideas and the cultural differences.
So this is a very important way for people to know each other much better.
In other words, we can see people have more opportunities to travel in China.
So as we know, China's infrastructure for transportation is very modernized.
That's why the people feel very confident. very convenient to go wherever they want to go.
This is a very easy decision and easy done for jobs for China.
So that's why we see that China's infrastructure system and also the social system helped a lot to meet the demands of such a market.
So in this way that we have to do something more to have a high quality trips, high quality holiday, in order to meet the different demands for the people.
We know that big cities, they have their advantage.
They have a rich historical stories and they have a lot of different deliveries or supplies to meet different people's needs.
This is advantage for the big cities.
That's why the big cities always has become the major sport for attractive for visitors.
But for small cities and less known cities, they need to have something that to be modernized.
In my opinion, I think that for such a city you don't need to hurry to be modernized as a big city, because you have to keep your own character to attract your some special visitor to your country, to your city, not so hurry as the big city.
You cannot Compared with Xi'an or even Beijing or even Chengdu, because they have different big picture or big market.
For small towns.
You have to be patient to build a self-sufficient economic system in order to attract more visitors in the future.
Of course, with this surge in travel, managing the flow becomes just as important as encouraging it.
The Ministry of Transport estimates total travel during the entire holiday could reach nearly 24 billion trips, up around 15 from 2019.
So how can authorities and businesses better balance traffic surges with service quality?
As we know, the ministry and the organizations related to the holiday have already prepared for such an event a long time before, even three months or four months before, because they have already made a very deep-sided feasibility study how many visitors possible come to the city, how many differences there are and what amounts or special amounts they will have.
So that's why we find that even we have already more than 2.4 billion trips there.
That is an amazing number as we mentioned.
But still everything is managed very well, very smooth.
This is unbelievable for many countries.
But in China, we have already done for many years.
This year is very special event for the government and for the local authorities because really they have well done and also they have well prepared to meet this demand.
This is a very important thing.
The second is that all these things happened based on the further development of our economic development, because we have already very strong economic development in the past three years.
So we have the strength financially and physically and culturally, to meet such demands and challenges.
And finally, let's talk about the economic side of all this movement.
Looking at the latest data, how much does this holiday economy actually drive the bigger picture of China's economy?
And, more importantly, how do we make sure this short-term excitement translates into long-term growth?
We believe that such a scenario or such event will have long time influence for the economic development.
For instance for the transportation system.
They have to adjust and rebuild the new system to meet the further demand in the future, because now they have to improve the infrastructure facilities.
And secondly, also from Those information transmission supplies equipment.
They need to have more advanced technologies to meet the demands of the newcomers in the future.
Because we know during this holiday, all this information transformation It's very busy and much better than any part of the other industry.
So this information equipment and the facilities and maintenance will remain at a high demand.
And the third is also we know the equipment and the maintenance engineers and the services will be getting ready to meet high demand.
We know that all this, many of the travelers, 24 billion people, that 30 percent buy their own cars.
They travel everywhere.
We can imagine how many tankers we need, the gas lines or how many maintenance on the way to have special service, even including the first aid services.
So all these points were combined together that to have more requirements for different cultures, different industrial sections to be modernized and to be optimized further in order to meet a new development, a new demand of the economic system.
We know that at the rest of the time, three months to go, China's GDP goal will be realized by the whole nation's joint effort, including the travelers and the tourists.
But also we find that all this transportation industry and other industry output has been well managed and modernized.
So the last three months, China will do its best to facilitate and to promote quicker and safer sustainable economic development.
Many thanks Mr. Liu for in-depth perspective.
That was Liu Zhijing, Senior Fellow of Chongyang Institute for Financial Studies at Renmin University of China.
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Chinese Foreign Minister Wang Yi is set to visit Italy and Switzerland this week.
In Italy, the foreign minister will co-chair a joint meeting of China-Italy government committee.
He will then head to Switzerland for a new round of China-Switzerland foreign minister's strategic dialogue.
Wang Yi's trip will run from Tuesday through Sunday.
To delve into this.
Joining us on the line is Professor Cui Hongjian, Academy of Regional and Global Governance at Beijing Foreign Studies University.
Professor, some European media have described Wang's trip as an unexpected visit to Europe.
Do you agree with that characterization?
And how do you view the timing and purpose of this visit?
Well, I think that.
Why some European media to describe this visit by Minister Wang as a kind of unexpected visit?
I think there may be two reasons.
One of them is according to their understanding so far, it looks like the environment or atmosphere for China-Europe relations is not so good.
So perhaps they think that this visit by Minister Wang, perhaps a very, very difficult trip.
Another reason is, as we know, Minister Wang just finished his visit to some other European countries lately.
So I think that it's kind of also unexpected visit by those European media.
They don't understand how China take the importance of its relations with Europe, especially how frequent visit paid by Minister Wang and some other Chinese senior officials.
No matter what happened, I mean for any reason.
I think that clearly the Chinese government has a very different understanding.
And also Chinese government has a very, very big consideration about its relations with Europe.
Even yes, at this moment there are some difficulties in the relations between China and Europe, but it will not be the reason that China will drop down its consideration about Europe and also the value of the China-Europe relations.
With that, let's talk about the two countries he's visiting, Italy and Switzerland.
Starting with Italy.
This visit comes after Italian Prime Minister Giorgia Maloney's trip to Beijing in late July, which was her first visit to China since taking office in 2022.
The Maloney government, according to reports, seems keen to maintain a delicate balance among major powers.
Although Italy voted in favor of the European Commission's decision to impose tariffs on Chinese electric vehicles last year, it has also tried to keep positive relations with Beijing, emphasizing the value of Chinese investment and signing a three-year action plan and several memorandums of understanding with China.
So how would you assess the current state of China-Italy relations?
And what kind of outcomes do you expect from Wang Yi's visit this time?
I think one of the very big reasons from Chinese understanding that Prime Minister Wang to pay the frequent visit to European countries is still we are in the 50th anniversary for these diplomatic links between China and the European Union.
So undoubtedly to keep the frequency of the mutual exchange become very, very important for China and also for Europe.
As we know, Italy is an influential and important member state of the European Union especially, as we understand, recent years after Manoli elected as the prime minister of the Italian government.
Now it looks like Italy should have a lot of potential to keep its political stability and also very very, I think, independent policy on some big issues.
Even, as we know, since the Maloney government took the power, there are some problems between two countries for the cooperation in the structure of the Belt and Road Initiative.
But the Italian side, I think, gives a very clear message that Italy still requires a lot of cooperation from China.
We can find that there are some authorities raised by the Italian government to continue this cooperation with China.
So I think now it's time for China and Italy to continue their cooperation, even in the frame of intergovernment consultation or dialogue.
So this moment, I think Minister Wang's visit to Italy will undoubtedly stabilize the relations and also continue cooperation with Italy in some very, very potential areas, including EVs or some other areas.
Another I think very important thing for both China and Italy is comparing with some other European countries, especially Western European countries.
I think the Italian government now showed a lot of wisdom to keep the relations and cooperation with China.
I think China indeed takes the value of this policy independence.
I think China will continue to strengthen its relations and cooperation with Italy.
Then turning to Switzerland, how do you view the current dynamics of China-Switzerland relations?
And some reports show, the US tariffs war has placed considerable pressure on the Swiss economy and Switzerland has been calling for a multilateral alliance to counter Washington's move.
Do you think this visit might lead to deeper cooperation aimed at easing that economic pressure and loss caused by the US policies for Switzerland?
As we know, Switzerland is a very, very specific country in Europe.
It's not a member state of the European Union, but indeed it has a lot of economic cooperation with the European Union and also some other Western economies, especially on the financial sector.
Switzerland has its very, very, I mean, specific role to help this globalization economically.
But of course, because of its very special economic role, it has a fragile role once there are some more protectionism or some more unilateral measures by the United States.
So I think now yes, because of the terrible measures from the American administration towards not only China and also its so-called allies.
So I think there will be some more common interests for both China and Switzerland to work together to deal with this protectionism and also your natural trade issues.
But of course not only because of the current environment.
If we look at the traditions for China and Switzerland in some corporations, in free trade agreements or some other, I think now it gives more confidence for both sides to strengthen this exchange and also cooperation.
So I think not only this time, Mr Wang will join into the so-called high-level strategic dialogue with his counterpart in Switzerland, And I think that both China and Switzerland, they will try to find some more cooperation, especially in some innovation sectors.
Switzerland has been famous for its innovation and some other industries.
Building on that, we know negotiations to upgrade the China-Switzerland free trade agreement began last year.
Do you expect any breakthroughs to come from this round of talks?
I think firstly, both sides need to strengthen their cooperation in financial sector.
Switzerland has a very, very good infrastructure and also credibility on these areas.
So I think it's also for China, very, very important to develop its R&B internationalization.
So I think there will be very, very big potential for both sides to have some more financial cooperation.
Another, I think, very important area is industry innovation.
Switzerland is known as a very, even small, but more innovative economy.
So I think it's also very, very important for China and Switzerland to have some more cooperation further in some innovative areas, including AI or some other new economies.
Professor, one last question.
Some media have also linked Wang Yi's visit with political changes in the Czech Republic, where former Prime Minister Andriy Babish, his opposition party, is expected to perform strongly in the current elections.
Babish has previously criticized EU restrictions on Chinese technology and expressed a desire for Czech companies to take part in the Belt and Road Initiative, especially in sectors such as auto manufacturing and clean energy.
So, given these shifts, some commentators believe Europe's political landscape is evolving and this visit could mark a turning point for deeper China-EU cooperation.
What's your take on that connection?
Yes, I think on one side, now the European's political landscape is in a very, very deep evolution.
No, not only the change of the Czech Republic government and also recently, I think, a big instability of a government in France.
So I think now for China it will take some more time to understand.
How about the role of the political change in some European countries?
But on the other side, I think, no matter what happens for European countries, political change once China makes a very, very clear understanding of what are common interests between China and some European countries, I think, no matter what happens politically in those European countries, China's cooperation with these European countries will keep always on a stable route.
Even when we take the example of the Czech Republic.
Yes, the last government showed a lot of ideological understanding, or illusion, about China.
But certainly, I think Mr. Babish wants to go back to the power.
He is a very, very, I mean, pragmatic politician.
I think he will rethink about the value of cooperation with China.
So undoubtedly not only Czech Republic and also some other European countries.
While they do have a very clear and reasonable understanding about China, about the communists with China, I do believe that they will also have some more confidence to work together with China.
Thanks, Professor, for those valuable insights.
Professor Cui Hongjian, Academy of Regional and Global Governance at Beijing Foreign Studies University.
Coming up, we'll take a look at why foreign firms are betting big on China's biofarm future.
You're listening to Grow Today.
We'll be back after a short break.
You've been listening to Road Today with Mika Anna in Beijing.
China's biopharma boom is on and foreign investors are flooding in.
As we dive into the billion-dollar wave of foreign investment reshaping China's biotech landscape, checking out why pharma giants like Roche and AstraZeneca are expanding their footprint here.
What strategic edge does China offer in global drug development?
And can the country become a global biopharma innovation powerhouse by 2030?
My colleagues to join Dr Jeremy, the Deputy Director, the Institute of American and Oceania Study.
Chinese Academy of International Trade and Economic Cooperation.
Dr Warwick Powell, adjunct professor at Queensland University of Technology in Australia, and Chen Jiahe, the chief investment officer of Beijing-based Novenarc Technologies, for a close look.
China's biopharmaceutical sector has grown rapidly in recent years, drawing heightened interest from domestic and international investors.
Some analysts are even calling 2025 the Chinese year of biopharma.
Jiahe, let's start with the stock market, often seen as a bellwether for the real economy.
Based on your observations, do you think this optimism is justified?
Yeah, we have saw.
The stock market's related components, or pharmaceutical components, has been rising quite a lot in the past few months.
It became one of the most important parts of the stock market in recent trading months.
And many investors have got quite a lot of money and people are rushing in to look at these companies and their soaring prices as well.
There's been a lot of research going on.
I mean, there are quite a few reasons supporting this rally of the stocks of pharmaceutical companies in China.
First of all, the stock price of these companies have actually gone through quite a long bear market in the past few years.
So their valuation is starting to get quite cheap.
And if you look at the quality of these companies, they are growing pretty fast.
I mean, China is one of the world's most populated countries.
And we've got much higher income than most other countries who have got a similar amount of population.
And also China is putting a lot of focus on the pharmaceutical industry.
We don't just import the medical service from other countries.
We try to create our own industry in order to improve the living standard of the people.
So this industry is actually quite strong and has a pretty large potential compared with many other industries, especially the traditional industries.
So that's why, when their stocks are going to be a pretty low valuation, in the past few years they created an opportunity and with this is really, this opportunity just started to appear and investors actually gained quite a lot of money from it.
Indeed actually, we've seen some clear acceleration on the foreign investment front, especially in the past year or two since the pandemic, like Jack just said.
And a recent example is a Swiss pharmaceutical giant, Roche.
It's investing over 280 million US dollars to build a new biopharmaceutical manufacturing base in Shanghai.
It's second in China.
And the facility will focus on localized production of products by specific antibodies for treating eye diseases.
And before that, AstraZeneca announced a 25 billion plan to establish a new RD hub in Beijing following its acquisition of a Chinese firm, Gracell Biotechnologies, last year.
And other big names like Novartis, Nuvation Bio have also announced acquisition deals in China.
So, Dr. Zhou, do these examples reflect what you see in the data from the Ministry of Commerce?
Yes.
You know, in my understanding, that the FDIs really are trying to have a better understanding about the markets in different countries.
Like you know, for the FDI come here to China.
In the first quarter of this year we have seen that the FDI has, you know, flood into China china, in our much quicker speed compared with last quarter.
So i think that is not just a temporary decision, because we know that for any investment, especially for the pharmaceutical sectors, they do need a lot of preparation before they can earn the profit.
So for those companies who are trying to to choose the destination or the place to invest, they have to consider about several different factors.
As java has mentioned, there are several attractiveness of China's market, but in my understanding there are even more.
So, when we're looking at the cases that you have mentioned, I think that is really our kind of a balance between the risky and the profitabilities of those investments.
Uh shanghai is one of, you know, china's leading areas for the free trade zones.
It has put the pharmaceutical as one of its encouraging sectors and they have assembled these kind of sectors with many talents and also the research institutions and also, you know, in china, without outsourcing.
The third is outsourcing, and one of these very good examples is knowledge outsourcing, including some of the testing before they can just put into the market.
So for many kinds of these research and development abilities, I think these cities are really good to provide them with better support.
So, as FDI in China has played a very important role in understanding that, when we're taking many manufacturing, for example that they are, I would say it's a kind of a very important pioneer in many frontier of the industries and also giving our many good ideas and support the development of China's local industry.
But, on the contrary, Chinese manufacturing basis and China's talent basis are providing those companies with more sustainability.
So I think that is based on the market demand.
But if you're looking at the policy level, government of China.
I mean the central government and also the local governments really are caring about what the FDA can play here in China.
And they are using their own advantages to attract the FDA in different sectors agriculture, the pharmaceutical manufacturing or even services.
So I think that they really are very interested in trying to take the fdis from other countries and they provide a very important support to have an ecosystem to be better for those fdis.
So pharmaceutical is one of the very interesting and i think that many governments are really taking it as a priority for attracting the fdis from other countries.
And it's also our, you know outcome after the current.
There are so many disruptions or some kind of disconnections of the supply chains in the other markets in the world, but in china we are very stable to provide those supply chains.
So that's some of the reasons, apart from local governments, uh policy support and a complete supply chain.
Dr powell, from your perspective, a developed country's perspective, what do you think is driving such changes?
We know that uh Europe, traditionally those big pharma companies traditionally favor the US for biotech investment.
So why are we seeing this pivot to China now?
Look, I think that there's a handful of reasons for this change.
One is at a very broad macro level.
There is a recognition reaching levels of global excellence that perhaps one generation ago was not anticipated.
And we're seeing that across many, many different sectors.
And unsurprisingly, we're also seeing that play out in the biopharma space as well.
The second reason is that there is a substantial market.
There is no doubt that the size of the Chinese market for biopharmaceuticals is anticipated to continue growing strongly, in part because the population's ageing, with growing demand for healthcare.
We've, of course, got significant growth in the middle class, which is able to afford more advanced forms of healthcare services.
And of course there is, in such a large population, the prevalence of many chronic diseases that require attention.
So, broadly speaking, I think we can say that the healthcare market in China is a substantial one that foreign companies actually don't want to miss out on.
The government, of course, has provided significant support over the course of the last decade or so.
It starts off with the Healthy China 2030 strategy, which laid out, I think, a comprehensive roadmap for health care quality and accessibility for the Chinese population.
The strategy supports the development in stem cell research, gene therapy, genetic diagnostics and a range of advanced scientific areas.
And I think one of the things that interests foreign investors is not only the depth of China's own Western scientific capability through its research and development and university training, but also its ability to think laterally.
And I mean by that its ability to draw on its own rich traditions in Chinese medicine, which allows many Chinese researchers to approach problems with an innovative mindset.
So they're the sorts of things that I think are making China an attractive place for foreign pharmaceutical companies to invest in and to establish RD in, and also, of course, to develop manufacturing and distribution.
And I might just add one Last thing, and that is China does have trade relationships with over 150 nations in the world, to a point where China is the largest trading partner of over 140 nations.
And that in and of itself is a very attractive platform for global biopharmaceutical companies to use China as a research and development and a manufacturing and ultimately, a global market access base.
Indeed, those are very positive factors favoring China's attractiveness in this regard.
But there's also a big concern, which is the IP issue, right?
It has been a big concern for a lot of international investors. pharmaceutical companies.
Dr. Powell, isn't that a big concern anymore?
Well, clearly it's not as big a concern as perhaps it might have been half a generation or one generation ago.
If those issues around intellectual property protection were still of substantial concern, then it is unlikely that these global players would find China attractive.
It would represent too great a risk to them, particularly given that intellectual property really sits at the heart of their particular business model.
So I think it is fair to say that China has worked diligently over the course of the last five or six years in particular, to update its patent laws and introduce specific patent extensions for pharmaceutical products or pharmaceutical intellectual property.
It has, of course, pledged to further strengthen protection of clinical trial data, which obviously is an important part of the overall research and development and intellectual property foundations of these businesses.
And, of course, I think we are seeing evidence that Chinese courts are willing to award punitive damages for willful infringement of intellectual property.
And that enforcement capability and punishment regime i think gives foreign investors greater confidence that should there be infringements then they will be acted upon firmly and that in fact these punitive damages at court decisions of late actually acts as a very strong disincentive for others to infringe on intellectual property.
Let's break down the entry strategies.
Are we seeing more joint ventures, acquisitions or licensing deals?
Jiahe, do you have any idea there?
Well, currently we can see that many foreign firms are actually coming into Chinese markets through various ways.
I mean, as you said, joint ventures acquisitions, all these kind of things, because currently China's market is more and more developed.
Regarding the IP issues that we just discussed, China is having better and better protection of IP, especially when we look at the medical service industry, the inventing of new medicine, all these kind of things.
So actually, this is a market that is becoming more and more matured.
So all these kind of ways for example, joint ventures acquisitions, licensing deals or even buying the medical companies from the secondary market, that is, the stock market we see more and more actions like this.
But I would say there is perhaps an increase when we look at the acquisitions.
Basically that's because Chinese local companies are now it's a much larger size compared with maybe say, 10 or 20 years ago, so maybe two decades ago.
When global capital are coming into china, they don't have that many targets for acquisition.
What they can do is that you set up joint ventures with local companies with local talents, with local capital.
So there were more chances for you to make drawing ventures.
But not because there are more and more local companies available and there are more mature companies available, so in this market you have more chances for making acquisitions.
But this is not only one way deal.
That is to say, foreign capital are coming into china to make acquisition of chinese companies and that's also another way.
That is, many chinese capital and chinese companies are also going abroad to seek opportunities to acquire global companies, but most of them are smaller companies at this scale, but they are looking forward to make this acquisition as well.
So that's the thing that you will look at.
When the economy is becoming more and more matured and internationalized, that is, you have more acquisitions overboard, both in and out right, dr powell?
What's your finding there?
Yeah look, i think, historically speaking, the dominant model has been joint ventures.
That certainly dominated the landscape for many, many years.
But we have seen increasingly in the last um, you know, five or six years, the growth in 100 foreign-owned enterprises, a lot more licensing deals, strategic partnerships and, of course, as the previous guest mentioned, mergers and acquisitions.
Um, in terms of wholly owned foreign enterprises, you know, we've seen global majors such as pfizer and merck astrazeneca, even novo nordisk.
They've all established wholly owned r d centers and manufacturing plants and that of course, enables firms like that to retain full control over intellectual property and full control over the way that they want to set up their operations and, of course, significant control over distributions of profits.
We've also seen licensing deals for a lot more co-development opportunities, you know, cross-border IP licenses, clinical development partnerships, et cetera, et cetera.
And in a lot of these cases, the main drive of this particular model is to achieve rapid market entry with limited fixed asset investments, share some risks, particularly in clinical development and, of course, access.
China's fast track approval schemes to Merck has done this, for example, for immunotherapy development, and Beijing's cancer therapies have also been licensed by Novartis and other multinationals.
So they're great examples, I guess, of licensing deals and co-development partnerships.
Of course, joint ventures have historically been the dominant approach and they remain an important part of the organisational configuration, if you will, where JVs can access local distribution networks, they can benefit from streamlined regulatory approvals and, of course, where necessary, gain access to public procurement channels.
So things like that are quite important.
And again, it really depends on the kind of business activity what stage the companies are at, what they're looking to develop, how they want to manage risks, develop opportunities, as well as juggle the issues of fixed capital investment versus rapid market access by leveraging existing infrastructure, both in a hard sense, but also in terms of the relationships with government regulators and access to distribution networks and research and development resources.
Indeed.
And talking about therapies, Dr Zhou, according to your study, which therapeutic areas are foreign firms most focused on?
And probably you can help us understand the regulatory environment behind those choices.
Yeah, I'm not quite sure about that data, but I think that there are several different directions.
The first one is that we know that there are many investments in some of these therapies.
The most widespread illness, I would say that is very common illness like to control the blood pressures or trying to deal with a kind of healthy problems.
And for those investments, they are trying to gain the abilities to be registered in China.
That is very important, very big market.
And the second direction is that they are trying to develop some very effective medicine.
These effective medicines are maybe not that popular but widespread or very easy to be found.
So this is kind of thing that want to deal with, like certain kinds of cancers or, you know, problems that they want to heal.
Well, the third direction is that some companies are trying to look at rare illness because for many kinds of real units it's not that easy for them to find enough patients in other countries.
But in China, you know, when we have such a large population, I would say that the probability may be not that big, but when you multiply that with the population, they still have enough samples.
They really need those medicines.
And for those developments of those medicines.
I think it's really very challenging because it has to put a lot of money prepared to research and development and they don't have enough outcome or profit after many years of development.
So in China, they really want to have some of this outcome.
And that is also what we want to encourage.
But there are still so many challenges.
I think that it's not only for the areas of therapy, as you mentioned, to kill people, but sometimes I think that foreign companies want to come here to help the people to recover from the operation, from the illness.
And there are still very large markets.
This market is not just trying to deal with the problem in the short term.
It helps the patients to recover for maybe one year or even longer.
And this is something that We're hoping that they can do more.
And compared with this kind of demands, I will say there will be another one.
That is aging and it has a lot of impacts on the people's living conditions.
And I think that is also a very important area for the foreign companies to come here.
I noticed that there are several cases that foreign companies to cope with Chinese companies to deal with the brewing problems and also some of these aging problem, to support that with a better, healthy status.
I think that are some of these areas I think that are very important for the cooperation from the foreign companies and Chinese companies.
Moving on to the opportunities and challenges in this process actually touched upon some opportunities brought to the Chinese companies.
They can go overseas and reach foreign markets.
Dr Powell, from your perspective, what kind of opportunities or maybe challenges you want to highlight when foreign capital pouring in to the Chinese market?
Yeah, look.
The main issue always is when there is a large concentration of demand for resources that you need to be careful that you don't cause unwanted disruptions to your foundational resource base.
For example, you want to minimise the extent to which you cause disruptions in your labour force, such as trained research scientists.
And others.
You want to make sure that you are able to align with your downstream market capabilities for research and development, for testing and ultimately, for distribution and sales.
So I think it's important to recognize that whenever there is a large concentration of new activity in any industry, that the risk, if you will, is that there is a little bit of a bubble effect that causes distortions in the way that supply factor markets work.
I should add too, that I think that there is another area of biopharmaceutical developments that is particularly strong from China's point of view, and that goes to traditional Chinese medicine and biotech convergence.
Obviously, there is a long tradition of Chinese medicinal knowledge, together with compounds, and increasingly There is evidence that there are many active ingredients in these traditional Chinese medicines that can be mobilized to tackle all sorts of things, such as tackling issues around genomics and microbiome science in particular.
And, in that area, the gut microbiome.
The stomach is one of those areas that is particularly interesting to look at.
We've of course, got synthetic biology and a bunch of AI-assisted drug discovery as well that leverages off the traditional Chinese medicine capabilities and knowledge.
The other interesting thing and I guess this is one that it is really worth, I think, thinking through and understanding is the growing interest in microbiome-based therapeutics.
And so I'm particularly focused on the gut microbiome.
And in large part it's because there is an ability to target a range of diseases through microbiome-based therapeutics, whether it's a metabolic syndrome, liver fibrosis, Crohn's disease, as well as various forms of colitis.
The work that has been done over many years in China in gut microbiome is frankly globally leading.
It's largely been driven from historical knowledges, but has now been integrated with the knowledge base and the methodologies of Western sciences.
And so we are starting to see dramatic growth in the development of projects around functional foods and probiotics, around microbiome-based diagnostics for various forms of cancer and metabolic disorders.
And, of course, we are also starting to better understand the gut brain relationship, which is exploring the relationship between neurodevelopmental and neurodegenerative diseases and gut health.
So this issue of the gut microbiome is one of the frontier areas that Western companies are beginning to take an interest in in terms of Chinese capabilities.
But, from a global point of view, there's been substantial funds raised by western pharmaceuticals to begin research in these spaces.
But china, in fact, is probably at least 10 years ahead in terms of research and applications, and i mean by that the availability of therapeutic interventions based on gut microbiome knowledge.
That's quite professional.
Dr Zhou, I understand that the investment is now restricted or limited in investing hospitals or clinics focused on Chinese medicine.
But what about in this area?
Yeah, in my understanding that we have some requirement for, you know, the fdi who want to invest in the traditional herbal related medicines industries like to prepare to, you know, make it into the medicines or a certain kind of process, we have some requirement, but it doesn't mean that we forbid them to do that.
It means that when the foreign companies who want to invest in those areas, they have to apply for the permission before they make an investment.
So I think that it is still a little bit different compared with Western system of the medicine.
And Chinese medicines are regulated by our special ministry in China.
So they are taking care of these Chinese traditional medicines and those prescriptions and the receipt and or you know those kind of things very carefully.
So I think that they are really active in promoting the Chinese medicines to go abroad, to export or to be accepted by the foreign countries, like when we discussed about the China and Australia free trade agreements.
I talked with them and they are very actively trying to encourage the bilateral cooperation in that region.
So in my understanding it's not just something that we want to stop the touch from the foreign companies or other companies.
We want to tip it, but the most important goal is trying to make it better, to make these traditional treasuries even more valuable in the future.
So with this kind of concept, some scientists have done some research on trying to make some very effective parts out of the traditional medicines and put it into the western style of producing medicines.
So the investment in the hospital is a little bit different, because in China we have started to open the market of foreigner-owned hospitals in certain areas, like in in Shanghai free trade zones or in Hainan free trade port.
So we started to do that because, you know, the systems are still very different.
Like you know, for the foreign investors, like in the medicine, the medical care or, you know, the hospitals, they require some permits and the qualification requirements are not the same as the Chinese doctors.
So there will be some problems about how can we align those qualifications by different systems.
And I think that is also the reason why we want to do that.
Another challenge is coming from medical insurance problem of social welfare.
You know, for those kind of system, how can we just to match the different requirements, like for the prices, for the medicines, for the skills or even sometime of the?
How can we deal with the accident of the medical?
So there are still a lot of things we have to do and we tried it from several parts.
I think that is some very carefully designed parts but the direction is very clear.
We want to open the market.
So if they want to come here to try their equipment, medicines and even some of the skills, They can do it right now already in Hainan province, in certain areas like in Boao.
There is an area where the companies can do this kind of experience.
We hope that we can do more in the coming days after we have some more experiences.
That was Dr Zhao Mi, the deputy director of the Institute of American and Oceania Study at Chinese Academy of International Trade and Economic Cooperation.
Dr Warwick Powell, adjunct professor at Queensland University of Technology in Australia, and Chen Jiahe, the chief investment officer of Beijing-based Novenark Technologies.
That's all the time for this edition of World Today.
I'm Ge'Anna.
Thank you so much for listening, and happy National Day and Mid-Autumn Festival.
Until next time.
