Nomura’s Lu Ting: The strength of China’s emerging industries has been underestimated.

Author | Zhou Zhiyu Editor | Zhang Xiaoling At the important juncture when China’s “15th Five-Year Plan” is about to unfold, the economy is facing a profound structural transformation. Lu Ting, Chief China Economist at Nomura, stated at the 2025 Nomura China Investment Annual Conference that China’s economy is at a critical stage, shifting from export-driven growth to a balance with domestic demand. He believes that future high-quality development should not be an “out with the old, in with the new” industrial substitution, but rather a synergy between new and old drivers; the real prescription for domestic demand lies in fundamental reform of the social security system. Lu Ting emphasized that although China’s economy has faced many challenges in recent years, its resilience—especially the strength of emerging industries—may have been underestimated by the market. He explained that a striking feature of this period is China’s significant climb up the global value chain. This new momentum has already provided strong support for China’s economy. “We have seen many industries perform beyond expectations,” Lu Ting said. From the start of the year, in the field of artificial intelligence represented by DeepSeek, China has shown a level in cutting-edge research second only to the United States; in the automotive industry, China has firmly become the world's largest automobile producer, seller, and exporter, with this year’s export volume expected to reach nearly 8 million units, far ahead. This wave is not limited to these areas. Last year, China’s shipbuilding industry took 75% of global orders; in robotics, one out of every two robots in the world comes from China, with a domestic production rate exceeding 50%; even in the innovative pharmaceuticals sector, after years of accumulation, it has also entered a “harvest period.” Lu Ting believes that in the next five years, China will undoubtedly continue its policy of independent innovation and R&D in the real economy. Despite the strong momentum of emerging industries, Lu Ting specifically cautioned against the misconception of “only developing the new economy and ignoring the old economy,” saying that such an idea “is ultimately unrealistic.” He first fundamentally pointed out: “There is no distinction between new and old in the economy; food, clothing, housing, and transportation will always be extremely important cores of the economy.” From an incremental perspective, China’s current urbanization rate is about 68%, more than 20 percentage points from the level of developed countries, meaning that the real demand regarding “housing” and “transportation” still exists. Therefore, high-quality development also includes upgrading and improving the “old economy.” Lu Ting believes, “Building good houses is also high-quality development, putting good houses in suitable locations, making them affordable, and giving people confidence to buy.” Lu Ting pointed out that real estate’s share in household wealth is extremely critical. In many Chinese families, “the value of housing accounts for more than 50%, far higher than stocks (less than 10%).” The relationship between the two is about “8:1.” This means stability in the real estate sector directly relates to the sense of wealth security for most families. As real estate and exports bid farewell to their high-growth eras, consumption carries high expectations and has become a key variable in the “15th Five-Year Plan.” The government has already introduced “very sincere” consumption policies, such as the “replace old with new” national subsidies totaling 150 billion yuan last year and 300 billion yuan this year. Lu Ting believes the most critical policy to unlock future consumption potential is not short-term cash handouts or subsidies but a firm commitment to reform and improve the social security system. Only by providing a stable, reliable, and decent future outlook for the majority of the population can their present consumption capacity be truly unleashed, allowing “consumption” to become the main engine of economic growth and driving the Chinese economy toward greater health and balance. In addition, the capital market will also play a more important role in the national economy. Lu Ting identified three clear directions for China to enhance the weight of its assets: First, promote RMB internationalization, so China becomes a global financial center, not just a center for trade and manufacturing. Second, cultivate truly globalized enterprises; Chinese firms have made progress in “going global,” but there is still a gap compared with the global business layouts of US and Japanese companies. Third, while continuously pursuing research strength, it is also essential to protect investors and foster healthy industrial development. Lu Ting believes that enhancing the financial weight of Chinese assets is not something that can be achieved overnight. It requires patience and long-term effort in the right directions, such as RMB internationalization, nurturing global enterprises, and protecting investors. Risk Warning and Disclaimer The market carries risks; investment must be prudent. 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