Editor's note: China's export-oriented economic growth is facing multiple external challenges, and accelerated efforts are needed to explore new avenues for trade development. In an interview with China Economic Times, Huo Jianguo, former head of the Chinese Academy of International Trade and Economic Cooperation, spoke about the changes needed in the country's export structure. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

Going by international experience, driving trade growth through overseas investment is an effective solution when trade faces headwinds.

China's nonfinancial overseas investment reached $143.85 billion in 2024, a year-on-year increase of 10.5 percent, with the stock of overseas investment exceeding $3 trillion. In particular, the successful investments made by China's photovoltaic, battery and electric vehicle sectors in other countries in recent years have further boosted the confidence and determination of Chinese enterprises to invest overseas.

Maintaining an appropriate trade surplus is beneficial to China's economic growth. However, an excessively large trade surplus may have a negative effect. Severe volatility in international markets would hinder growth in exports and could in turn jeopardize the stability of the domestic economy.

A large trade surplus could also lead to tensions in China's bilateral relations with its trading partners.

China needs to pay serious attention to the complex changes in the international landscape and the intensified competition for industry and supply chains. The concept of global industry chains emerged in the second half of the 1970s, when deepening globalization led to the formation of a global production layout mainly featuring multinational corporations.

China's reform and opening-up, as well as its efforts to attract foreign investment, were perfectly aligned with multinational corporations' attempts to invest globally. China began to establish large joint ventures, which facilitated its deep integration into the global value chain.

After joining the World Trade Organization in 2001, China's export-oriented economy made remarkable progress. Its general trade and independent manufacturing capabilities continued to improve, which promoted the country's industrialization and transformed it into a global manufacturing hub. China's economic achievements would not have been possible without its reform and opening-up, nor without its close integration with the world economy.

The exports by Chinese companies to the European and North American markets have reached a saturation point. This means China should actively adjust the structure of its export-oriented economy. Based on the current international situation, such an adjustment is possible in three ways.

First, expand domestic demand and leverage the strengths of China's large market to gradually increase imports and ultimately achieve a balance in imports and exports. Second, enhance exports through trade in services and digital trade to ease the pressure caused by the trade surplus in goods.

Third, promote outbound investment and form industry chains overseas to foster local production and local sales. This is an effective way to achieve balanced development of trade in goods. China could pursue all three approaches simultaneously, and prioritize the one that yields better results.

Of course, overseas investment entails certain risks and challenges. This requires competent authorities to strengthen guidance by formulating reasonable policies and providing necessary facilitation services for companies to "go global". At the same time, companies should enhance their own risk prevention capabilities in all aspects.