Writing a New Chapter in Opening Up

By: Zhong ShanFrom:English Edition of Qiushi Journal January-March 2019|Vol.11,No.1,Issue No.38 | Updated: 2019-Jul-9 16:17
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The year 2018 marks the 40th anniversary of the launch of China’s reform and opening up drive. Our experience over the past 40 years has clearly proved that opening up provides an important impetus for economic and social development.

I. Historic achievements of 40 years of opening up

In 1978, the Third Plenary Session of the 11th CPC Central Committee made the historic decision to initi­ate a policy of reform and opening up, sparking a process of tremendous momentum toward opening up. Over the past 40 years, we have pursued development with doors wide open, and made an impressive transition from being a largely closed society to one that is open to the world in all respects. Since the 18th National Congress of the CPC in 2012, China has established a new development philosophy based on the principle of openness, launched the Belt and Road Initiative, and worked to build an open world economy and a com­munity of shared future for human­ity. As a result, the national cause of opening up has achieved extraordi­nary new successes.

1. opening up has greatly un­leashed productive forces.

Over the past 40 years, we have consistently promoted development through opening up, facilitated the free flow and efficient allocation of domestic and foreign production fac­tors, and actively integrated into the global value chain, with the intent to achieve sustained and rapid eco­nomic development. From 1978 to 2017, China’s GDP grew at an aver­age rate of 9.5% per year according to constant prices. In US dollars, foreign trade increased by 14.5% per year, uti­lized foreign investment totaled over 2 trillion dollars, and outward direct investment increased more than 40 fold. China has become the world’s largest trading nation, its levels of utilized foreign investment, outward investment, and foreign exchange re­serves rank among the highest in the world, and its level of economic open­ness is continuously rising.

2. opening up has helped improve the socialist market economy.

Over the past 40 years, we have con­sistently promoted reform through opening up, dismantled barriers cre­ated by vested interests, and over­come institutional shortcomings that hinder development. From reforming foreign trade management in terms of mandatory planning, to entering the WTO and aligning with international economic and trade rules, and fur­ther still to developing a unified and open market, we have continuously liberated the forces of various market entities. In recent years, China has expedited the establishment of new systems for an open economy, con­structed pilot free trade zones, and implemented a management system based on pre-establishment national treatment and a negative list. The substantial number of institutional innovations has allowed us to better exert the decisive role of the market in resource allocation.

3. opening up has raised living standards by a remarkable degree.

Through the opening up of the past 40 years, we have consistently im­proved people’s wellbeing, created more jobs, and enriched the choices for personal consumption, benefiting all Chinese people. By fully utilizing domestic and international markets and resources, we have lifted our peo­ple from lives of shortage and poverty to lives of abundance and modest prosperity. In recent years, China has increased efforts to open up to the outside world, lowered import tariffs on everyday consumer goods, devel­oped cross-border e-commerce, pro­moted coordinated opening up on a regional level, worked to boost development and improve living standards in border regions, and created more opportunities for employment and in­come growth, all of which has helped better meet the people’s needs for a better life. Currently, foreign trade directly or indirectly creates jobs for around 180 million people, account­ing for 23% of total employment in China.

4. opening up has facilitated shared development of all coun­tries.

Over the past 40 years, we have continuously pursued mutual ben­efit through opening up, deepened multilateral and bilateral economic and trade cooperation, and shared development opportunities with other countries. Opening up wider to the outside world has not only been advantageous for China’s own de­velopment, but has also contributed to world economic development. At present, China’s contribution rate to global economic growth surpasses 30%; we have become a major stabi­lizer and engine of the world econo­my. Between 2013 and 2017, the accu­mulated value of imported goods to China was approximately US$9 tril­lion. At the time of this article’s publi­cation, China has signed 16 free trade agreements with 24 countries and regions. In 2017, the trade between China and its free trade partners (ex­cluding Hong Kong, Macao, and Tai­wan) accounted for 25.9% of its total trade volume. There have been no­table achievements in economic and trade cooperation stemming from the Belt and Road Initiative, and the over­all effects of China’s foreign aid pro­visions are on a consistently upward trajectory. In addition, China has of­fered further proposals and solutions on international platforms such as the WTO, the G20, APEC, and BRICS, contributing Chinese wisdom to glo­bal economic governance.

II. Overall requirements of China’s opening up

China’s economic development of the past 40 years was achieved through opening up to the outside world; if it is to achieve high-quality economic development in the future, it must open up even wider. To pro­mote opening up at a higher level, China must meet the following overall requirements.

1. the new development philoso­phy should guide our endeavors in the right direction.

Upholding the principles of innova­tive, coordinated, green, open, and shared development is a profound transformation that affects China’s overall growth. To promote opening up at a higher level in the new era, we need to fully implement this new de­velopment philosophy, prioritize the Belt and Road Initiative, continue to place equal emphasis on “bringing in” and “going global,” make new ground in opening China further through links running eastward and westward across land and over sea, and develop a higher-level open economy, in a resolute effort to facilitate reform, de­velopment, and innovation through opening up.

2. high-quality development should be the fundamental re­quirement of opening up.

To promote opening up at a higher level in the new era, we need to spend energy on adopting new methods, op­timizing layout, and raising quality, further supply-side structural reform, and accelerate efforts to cultivate new advantages for China in international economic cooperation and competi­tion. All of these measures should be taken to push China’s industries to­ward the medium-high end of the glo­bal value chain.

3. satisfying the people’s needs for a better life should be the ulti­mate goal of opening up.

To promote opening up at a higher level, we should remain committed to the notion of people-centered de­velopment, coordinate our utilization of both domestic and international markets and resources, increase the level of two-way investment, expand imports of high-quality goods and services, better meet the demands for upgrading consumption, create more employment opportunities, and promote coordinated development between different regions, so that our people can enjoy a greater sense of gain.

4. Building an open world econ­omy should be the vision of our cooperation.

At present, economic globalization is following a tortuous path; unilater­alism and protectionism are becoming increasingly acute, and multilateralism and the multilateral trade system are being severely impacted. As the world economy undergoes profound adjustment and change, opening up is the only way to ensure mutual ben­efit and common prosperity between countries, as well as their sustained development. To promote opening up at a higher level, we need to advance the liberalization and facilitation of global trade and investment, oppose protectionism, and push economic globalization in a more open, inclu­sive, and balanced direction so that its benefits can be shared by all.

5. Building a community of shared future for humanity should be our common goal.

The global governance system is in the midst of a profound remolding, and all countries are facing a number of challenges, among them imbal­anced and inadequate development. To promote opening up at a higher level, we need to build a framework for major-country relations character­ized by overall stability and balanced development, deepen our cooperation with neighboring countries in line with the principles of affinity, sincer­ity, mutual benefit, and inclusiveness, and strengthen our cooperation with other developing countries in line with the notion of doing greater good while pursuing shared interests and the principle of sincerity, real results, affinity, and good faith. Moreover, we need to actively assume international responsibilities and obligations, and promote international economic co­operation and exchange, in order to realize common prosperity and progress.

III. Strategic arrangements for expanding China’s opening up

1. promoting international coop­eration within the Belt and road initiative

We need to uphold the principle of shared growth through discussion and collaboration, and ensure that the Belt and Road Initiative carries great practical significance, progresses steadily, and endures in the long run. We need to strengthen connectivity of development strategies, markets, industries, and projects with relevant countries, improve mechanisms for the facilitation of trade and invest­ment, invigorate market entities, and guide enterprises toward more effec­tive cooperation. We should make in-depth and careful efforts to ensure optimal and meticulous implementa­tion of major cooperation projects, as this will enhance their overall efficacy. We will launch the “Pearls of the Silk Road” demonstration projects, devel­op “Silk Road e-commerce,” raise the levels of trade and investment coop­eration with relevant countries, and deepen mutually beneficial coopera­tion, so that more countries and peo­ple can enjoy the benefits brought by the Belt and Road Initiative.

2. Building China into a leading trade nation

We will accelerate the transfor­mation of foreign trade drivers and structure, foster new competitive ad­vantages, facilitate high-quality devel­opment of foreign trade, and create strong brands for Chinese commodi­ties and services. We need to create new modes and models of business, raise the levels of trade liberalization and facilitation, and promote the in­novative development of trade in the service industry. In addition, we will actively expand imports to ensure bal­anced trade.

3. actively and effectively utiliz­ing foreign investment

We will implement optimal policies for the liberalization and facilitation of investment, expanding the scale of utilized foreign investment and enhancing its quality and level. While significantly easing market access, we will fully implement the management system based on pre-establishment national treatment and a negative list. We will open up the financial sector in a steady manner, the service indus­try at a continual pace, and the agricultural, mining, and manufacturing industries in a thorough fashion. We will also better guide the utilization of foreign investment, support its inno­vative development, and encourage it in mergers and acquisitions. We will advance the innovation and upgrad­ing of national development zones, and strengthen the role of important platforms for utilizing foreign invest­ment. In addition, we will increase ef­forts to protect intellectual property rights as well as the legitimate rights and interests of foreign investors, thereby creating a favorable and at­tractive business environment.

4. guiding the healthy develop­ment of outward investment

We will create new pathways for outward investment, and continue to encourage strong, credible enterprises to go global. We will guide the over­seas operations of Chinese enterprises, create Chinese brands for investment, and establish an image of Chinese in­vestment.

5. improving the layout of open­ing up in various regions

We will develop pilot free trade zones of high standards and high quality and grant them greater auton­omy in reform, delve further into the exploration of differentiated regional policies, and enhance efforts to spread the experience gained through pilot reforms in other areas. We will ex­plore the opening of free trade ports with Chinese characteristics, and es­tablish new strongholds of higher-lev­el opening up that are characterized by more favorable business environ­ments and a greater spillover effect. We will implement strategies for coordinated regional development such as the Beijing-Tianjin-Hebei integration and the Yangtze River Economic Belt initiative, and promote the develop­ment of the Xiongan New Area and the Guangdong-Hong Kong-Macao Greater Bay Area. We will boost ef­forts to open China’s western region wider to the outside world, improve the infrastructure of ports and cross-border transportation there, and de­velop platforms for regional opening up such as border and cross-border economic cooperation areas.

6. deepening multilateral and bilateral economic and trade rela­tions

We will firmly uphold the rules of the WTO and support the multilat­eral trading system. We will facilitate the development of free trade zones, promote regional economic integra­tion and negotiations for the Regional Comprehensive Economic Partner­ship, and accelerate discussions on free trade agreements and investment treaties with relevant countries and regions. We will also raise the level of bilateral economic and trade co­operation, and tap into the existing potential for cooperation with other countries. We will resolutely oppose protectionism in all its forms and ac­tively respond to economic and trade frictions to guarantee a sound exter­nal environment. We will support the mechanisms of the G20, APEC, and BRICS in playing a greater role, and push for the global economic govern­ance system to develop in a more just and equitable direction.

Zhong Shan is Minister of Commerce of the People’s Republic of China.

(Originally appeared in Qiushi Journal, Chinese edition, No. 17, 2018)