Editor’s Note: China’s development has been one of the greatest phenomena in the world. In 70 years, the once poverty-ridden country has risen to become the second largest economy in the world, developing, modernizing and opening-up at a rate that took other countries hundreds of years to achieve.?

Greater exposure has enabled the international community to know, understand and get closer to China, but as with any dramatic change, reservations and misgivings can transpire. In an effort to bridge this gap and comprehend what “New China” means for the international community, China Focus attended the Fourth Understanding China Conference in Guangzhou and spoke to a number of former world leaders, academics and business professionals regarding their thoughts on China’s development.

Peter Jungen is Chairman of Peter Jungen Holding GmbH, founding Board Member of the China Business Angels Network (CBAN) and one of the 100 most important personalities shaping the future of the New Economy, according to leading German business magazine Wirtschaftswoche.

In this exclusive interview with China Focus, Mr. Jungen shares his views on China’s success in opening-up, why he is confident about the country’s future business environment and how China will become the largest Venture Capital investor in the world.

China Focus: This year is the 70th anniversary of the founding of the PRC. What has, in terms of business, been the biggest change in China over the past 70 years in your opinion?

Peter Jungen: This is also seventy years of the foundation of the Federal Republic of Germany. There are some parallel developments but I think this development in China, not the last seventy years but the last forty years is amazing. And some people talk about German virtus wandern, I think China deserves the title because what we have seen over the last forty years is unseen in the history of mankind.

The first time I was in Guangzhou was 1970 or 1971, in the middle of the Cultural Revolution, and so I’ve seen it as it really was before the reforms and not only after Deng Xiaoping came to power. I think they’ve done a lot of things right and I think this proves that markets work.

China Focus: The Chinese government just released its economic figures from January to September, growth of 6.2 percent. Are you confident about the Chinese economy?

Peter Jungen: Well, there is some very strange reaction to that in western papers, particularly in Germany. They say the lowest growth, they don’t say the lowest growth rate, they say the lowest growth in the last twenty or thirty years, which of course is nonsense. When this growth started the economy was about 2 or 3 hundred billion, now the economy is 13 trillion and 6 percent on 13 trillion is something like 800 billion. It is three times (bigger) at least and to say growth is on a low level is nonsense.

The most important thing is that China understands the problem of falling into the middle – income trap. It is not as much about the invention part, I mean, they are spending a lot of money on research, now more than Europe and almost on par with the US. But I think the most important thing is the innovation part, is the turning the new gained acquired knowledge into new products and services, to make short – turning money into knowledge is the invention part and turning knowledge back into money is the innovation part and then that second part, China is pretty good.

China Focus: What differences can you see between Silicon Valley, Israel and China. How does China compare to these other areas?

Peter Jungen: I think it’s the speed. Venture Capital (CV) in China in 2010 or 2011, the volume was about $3 billion. Last year it was $70 billion so its almost on par now with the US. And with the present growth rate over the last years, it will probably become the largest Venture Capital investor in the world.

[Chinese entrepreneurs] They work hard, no question. I think it is an entrepreneurial culture, it is a spirit. They say, we want to be successful, we want to become rich. We should have known this looking at the success of many overseas Chinese minority groups in many south east Asian countries. Chinese business communities in all these countries are the minority, but economically they are dominating those countries. So, we should have been alerted that once markets and market economies would be introduced in China, then very soon China would become very successful.

China Focus: How do you feel about the business environment in China? What are the competitive advantages of doing business in China? In what aspects does China need to improve its business environment?

Peter Jungen: I want to see that. If that [business environment] is not improving further or maybe scaled back, then there is a chance that China will be stuck in the middle – income trap, which would be bad for the people, particularly for who are still living in poverty.

This is the most amazing thing – that about 800 million people have grown out of dire poverty, and people who criticize China say well we don’t care about the 800 million people, they lack a western style, so it’s not always that we in the west should be very proud about the governance of our democracies.

So, I think it would be in the best interest of the people in continuing to open – up, to improving framework conditions for entrepreneurs, for more start – ups, for founders to grow fast. This is the key and with this they can be successful in achieving the goal that everybody gets out of dire poverty.

China Focus: ?With regards to Germany – China trade, what opportunities are there for German investors in China?

Peter Jungen: For Germany, China is the largest trading partner, and [vice versa in Europe] for China as well. The United States is our largest export market but in volume in both ways it is China – $200 billion last year.

In 1957, when trade started it was the first trade agreement between the private institutions in Germany and the China Council for Promotion of International Trade (CCPIT). The trade volume was $20 million. Last year it was $200 billion, 10,000 times bigger. So, if this is not a success story of opening up borders and getting exchange of products and services, I think then this there is no better example for that.

German Financial Direct Investment (FDI) is still much higher in China than vice versa. Its been shrinking in the last couple of years, and we hope that more FDI will grow in both ways because then they have really to lose a lot and if they have to, that is the best condition for friendly competition.

China Focus: Which sectors would you like to see more Chinese investment in Germany?

Peter Jungen: I can’t say where I would like them to invest, they have to make their own decisions. There are some industries which are having a difficult time and maybe to have received an offer form a Chinese firm is proof that the company is in good shape, and that they do the right things. So, maybe, I say jokingly, if you have not received an offer from a Chinese company for a takeover, you are in bad shape!