The rise of DeepSeek and Ne Zha 2 signifies that China's innovation ecosystem is gaining a stronger foundation, paving the way for the emergence of more groundbreaking innovations that "we might not even be able to imagine now", said a distinguished economist and financial expert.

This wave of innovation is expected to bolster domestic demand, help the Chinese economy maintain a GDP growth rate of around 5 percent this year, and possibly underpin a sustained rally of Chinese equities, Tian Xuan, associate dean of Tsinghua University's PBC School of Finance, said in an exclusive interview with China Daily.

Tian said three phenomenal events unfolded at the start of the year — the rise of artificial intelligence startup DeepSeek in East China's Zhejiang province; the box office success of animated film Ne Zha 2, whose production team is based in Southwest China's Sichuan province; and the remarkable sales achieved by supermarket chain Pangdonglai in Henan province, central China.

Tian, also chair of the National Institute of Financial Research, Tsinghua University, said that these achievements represent China's latest progress in technology innovation, cultural and creative innovation, and business model innovation.

"The simultaneous blossoming of innovation in different regions indicates that China has developed into a cultivated fertile ground for innovation. With the government continuously launching institutional arrangements to optimize the technological innovation ecosystem, it is entirely possible for some groundbreaking technological innovations and services to emerge in 2025 or beyond, things we might not even be able to imagine now," Tian said.

Such growing momentum of innovation will help China counter the risk of shrinking external demand amid US tariff uncertainties, providing more products and services that meet people's needs and thus vitalizing consumer spending, Tian said, taking the record box office of Ne Zha 2 as an example.

The innovation boom has also bolstered investor confidence in China's stock market, drawing increased allocation from foreign investors, Tian said.

"The valuation of Chinese financial assets, including in the secondary market, is currently at a low point. I believe the re-rating of the valuation of Chinese equities is still in its early stages."

Expecting to see widespread AI adoption in China, Goldman Sachs has raised its 12-month CSI 300 Index target from 4,600 points to 4,700 points, implying a potential 19 percent price increase from now and pointing to the possibility for the Chinese AI story to attract $200 billion of net stock buying.

To further strengthen China's innovation capability, Tian proposed the establishment of a regressive tax system to foster long-term capital investment, whereby taxation rates would decrease as the investment duration lengthens.

"This would encourage investment institutions in the primary market to extend investment horizons, thereby promoting patient capital," said Tian, who is also a deputy to the National People's Congress, the country's top legislature.

Tian made the remarks ahead of this year's two sessions, the meetings of the NPC and the country's top political advisory body, during which key economic targets and policy agenda for 2025 will be unveiled.

Tian said this year's economic growth target will likely remain at "around 5 percent", the same as last year, reflecting the continuity and consistency of policies and aligning with the country's aspirations that its per capita GDP will reach the level of a moderately developed economy by 2035.

"It would be a goal that we need to strive for and reach with extra effort, which can effectively inspire all people across the country to work hard together," Tian said, expecting this year's budgeted deficit-to-GDP ratio to increase to 4 percent or higher.

Tian also expects the government will ramp up support for the property market to bolster economic and financial stability, including encouraging long-term, low-interest loans for real estate companies, optimizing their debt structures and increasing backing for real estate projects via the white list system.

In extreme cases, direct government support may be provided to distressed real estate companies, Tian said, adding that Beijing may lift home purchase limits, except in core areas, in the near future to boost homebuying transactions.

With the proper implementation of policies, Tian said he is "cautiously optimistic" that China's real estate market will stabilize this year in various fronts such as construction, sales and home prices, before experiencing a rally by 2026-27.

Dong Yilang contributed to this story.