Expanding Opening-up and Embracing Economic Globalization
Under its new development paradigm, China intends to further advance its openingup and promote economic globalization, with the vision to build a community with a shared future for mankind.
IN response to the countercurrent to globalization, President Xi Jinping in 2017 reiterated China’s firm stance on defending economic globalization when addressing the World Economic Forum in Davos, Switzerland. His remarks bolstered confidence and injected positive energy in the global community. On important occasions in the following years, including G20 summits, APEC meetings, and the China International Import Expo, he has repeatedly made clear China’s unwavering support for economic globalization and multilateralism.
The president said that economic globalization, a natural requirement and outcome of social productivity growth and scientific and technological progress, is the irreversible trend of the times instead of being at the mercy of the whims of certain people or certain countries. Whether we like it or not, no country can opt to stay out of the global economy. He called for people around the world to have a more open mindset, take more open steps, and work together to make the pie of the global market even bigger. “We need to strengthen the mechanisms for sharing benefits globally, and explore new ways for international cooperation. The goal is to give more impetus to economic globalization and remove impediments as much as we can,” the president said. The anti-globalization moves are merely splashes in the course of economic globalization and cannot hold back the mighty waves of the process. We therefore should stay on the right side of history, and steadfastly pursue wider opening-up, Xi added.
To do as it says, China has taken the initiative to expand opening-up and been actively engaged in global economic governance, aiming to build a community of a shared future for humankind. At the Central Conference on Economic Work held in December 2020, China put forward the vision for a new development paradigm in which domestic circulation is the mainstay and domestic and international circulations reinforce each other. This is the latest plan of China to boost economic globalization.
Building an Open World
Economic development is driven by revolutionary innovation in science, technology, and industries; and impeded by unilateralism, protectionism, and bullying. In general the push is stronger than the pull, and opening-up and cooperation remain the overarching trend. Economic globalization has slowed down but not backtracked, as proven by the following facts.
In 2019, global goods exports increased 17.1 percent over that of 2008 prior to the financial crisis, and global services exports soared by 52.4 percent. The market of cross-border e-commerce is growing at an average annual rate of 30 percent, cross-border digital trade is expected to see explosive growth in the coming years, and regional integration has reached new levels. The number of free trade arrangements that have come into force after registration with the WTO has increased by 237 since the outbreak of the financial crisis. Through regional trade agreements, major countries are elevating their openness to higher levels. Trade negotiations have gone beyond talks on barriers at the border to barriers beyond borders, an indication of further progress in economic globalization.
Economic development is driven by revolutionary innovation in science, technology, and industries; and impeded by unilateralism, protectionism, and bullying.
In the age of the global village, the world’s value chain will be greatly extended, bringing all countries closer to form a community of common interests, shared responsibilities, and a shared future.
With a global vision China is expanding its openingup on all fronts and building an open economy of a higher standard. By opening up itself, China advances the opening-up of the entire world. Its endeavors cover the following areas.
Higher-quality growth in foreign trade: China seeks innovative development of foreign trade. For this purpose it cultivates new forms and modes of business, continuously improves trade structure, lowers tariffs and non-tariff barriers, enhances liberalization and facilitation of regional trade, increases imports of highquality products, and innovates trade in services. For 11 years in a row, China has remained the world’s top exporter. During the first 11 months of 2020, its goods exports rose by 0.6 percent over the same period of 2019, bolstering confidence in positive growth for the year. And its volume of trade in services has been growing at an average rate of six percent year-on-year, the second highest worldwide. These have further enhanced China’s status as a leading trader in the world.
Better use of foreign investment: China has eased market access and foreign equity restrictions in the sectors of banking, securities, and insurance, further opened high-end manufacturing and service industries, enhanced protection of intellectual property rights, and continued to improve the business environment. These make it more appealing to foreign capital. China is now the world’s second largest destination for foreign investment. Paid-in foreign investment entering its hi-tech sector is growing at an annual rate of 24 percent on average. In the first 10 months of 2020, paid-in foreign investment in China added up to US $115.1 billion, up 3.9 percent over the same period of 2019. In the coming years, China will continue to ease market access and better protect the legitimate rights and interests of foreign companies to ensure their sustained development here.
Innovation in outbound investment: Going along the
global trend of industrial transfer, China encourages its enterprises to operate abroad, improve its capacity in allocating resources globally, forge Chinese brands, and establish international networks of trade, investment, production, and services. China is a forerunner in outbound investment worldwide. By the end of 2019, it opened 44,000 businesses in 188 countries and regions, employing over 2.2 million local people. These contribute to the industrialization process and livelihood improvement in their host countries. In the coming years, China will improve its laws, policies, and services to promote and protect outbound investment, help Chinese companies to build up capacity for international operation, and advance common interests to boost common prosperity.
Sharing Experience
Amid mounting global challenges, it is the need of the times to enhance global governance and advance reform of the global economic governance system. A remarkable change of this era is the strong rise of emerging markets and developing countries. Their share in global economy and trade has climbed up about 20 percentage points since the 1990s, and that in global foreign investment has gained 18 percentage points. This has led to multi-polarization in global governance. Developing countries are showing a stronger desire to engage in global governance, and also have stronger ability to do so. Unremitting efforts are needed to make the global governance system more just and equitable.
China seeks more balanced, democratic, and rulesbased globalization, works to build an open world economy, and opposes trade and investment protectionism. It has proposed to build a community of a shared future for humankind, pursues the greater good and shared interests, and champions the principle of extensive consultation, joint contribution, and shared benefits. These have expanded the confluence of interests between China and other countries and added new elements to the conception of global governance. China actively provides public goods to the international community. It has hosted such major events as the Forum on Chinaafrica Cooperation and the China International Import
Expo (CIIE), and established international institutions like the Asian Infrastructure Investment Bank and the New Development Bank. Some of China’s propositions, plans and proposals have become international consensus. The international community looks forward to the country to play a more constructive role in the realms of trade, investment, and digital governance.
China acts in the principle of extensive consultation, joint contribution and shared benefits, and pursues open, green, and clean cooperation under the Belt and Road Initiative. Results of the Belt and Road Forum for International Cooperation have come to fruition one after another. As a result a general connectivity framework consisting of six corridors, six connectivity routes, and multiple countries and ports has been put in place, giving rise to a number of projects that generate good returns and inspire more projects to follow. In the future, China will remain committed to building the Belt and Road of high standard together with international partners, making the initiative a path to unity, health, economic recovery, and growth.
Strong headway has been made in bilateral, multilateral, and regional cooperation. China is an active player in the reform of the WTO and rule-making in emerging sectors such as e-commerce. It has signed 19 free trade pacts with 29 countries and regions. On November 15, 2020, the ASEAN member nations, China, Japan, the
Republic of Korea, Australia, and New Zealand signed the Regional Comprehensive Economic Partnership (RCEP) after eight years of negotiations. It created the largest free trade area on the planet. The 15 signatory countries account for 30 percent of the world’s population, economy, and trade. This agreement is therefore hailed as not only a milestone achievement for closer cooperation in East Asia but also a resounding victory of multilateralism and free trade.
Meanwhile China endeavors to maintain its relationship with the U.S., advance cooperation with Russia and Europe, press ahead in negotiations for an investment pact with Europe and a free trade agreement with Japan and the Republic of Korea, and expand practical cooperation with other developing countries. In the coming years, China will continue to participate in reform of the WTO, implement the strategy of upgrading free trade areas, and reach more high-standard free trade agreements with other countries. Together with more partners around the world, China will promote global openness and development.
High-standard Opening-up
China is the world’s second largest economy, with per capita GDP above US $10,000 and more than 400 million of its 1.4 billion people in the middle class. It has the largest industrial system in the world with the most complete categories, a full range of supporting sectors, and huge market potential. These have made China more appealing internationally.
China is advancing reform to greater depth by pursuing high-standard opening-up. In this course it improves logistics networks in urban and rural areas, stimulates consumption in both the city and countryside as well as in services, integrates domestic economy and foreign trade, and expands imports. In 2019 total retail sales of consumer goods in China reached RMB 41 trillion, the second largest in the world; its imports hit US $2.1 trillion, and exports over the following 10 years is projected at US $22 trillion. At the third CIIE held in November 2020, tentative deals worth US $72.62 billion were reached for one-year purchases of goods and services, injecting energy into international trade. Over the coming years, China will continue to stimulate consumption, improve modern logistics networks, and expand imports of high-quality goods and services so that its market can be shared by all.
The new development paradigm China envisions will be aligned with the country’s strategies of seeking coordinated regional development and building more pilot free trade zones. So far, 21 such zones have opened. After being tested in these zones, 260 institutional innovation results have been replicated and promoted nationwide or industry-wide.
The construction of the Hainan Free Trade Port will facilitate flow of goods, services, capital, personnel, and information. In the coming years, China will focus on high-quality development of pilot free trade zones and free trade ports. The goal is to make them a pivot point in the new development paradigm and a pioneer of opening-up.
China advances opening-up with institutional guarantees. It is working earnestly to align its economic and trade rules with those of the world, increase transparency, enhance protection of intellectual property rights, encourage competition, combat monopolization, and has consequently realized continuous improvement in its business environment. China has refined the management system for foreign investment, promulgated the Foreign Investment Law, and implemented nationwide a management system combining preestablishment national treatment and the negative list for foreign companies. As a result, the ranking of its business environment by the World Bank rose from the 78th to the 31st between 2017 and 2019.
China’s opening-up is extending both in depth and breadth. It has opened up more than 120 of the approximately 160 service sectors listed by the WTO. Steady progress is being made in streamlining administration, delegating power, improving regulation, and upgrading services, and both inland and coastal regions are opened wider. Over the next few years, China will pay more attention to opening-up with institutional guarantees in the fields of rules, norms, management, and standards to cultivate a new system of an open economy of higher standards.
Economic globalization is an irreversible trend. To adapt to it, China will maneuver both domestic and external situations in a coordinated manner, support and participate in the globalization process, expand opening-up, and build a new development paradigm. ■
(The article is based on the Ministry of Commerce report Mastering the General Trend of Economic Globalization and Steadfastly Expanding Opening-up on All Fronts. )