China’s growth gives impetus to global economy
The annual gatherings of the National People’s Congress and the Chinese People’s Political Consultative Conference are in progress. As such, the executives of automakers like Geely and SAIC Group, battery maker CATL and internet search giant Baidu have su
Owing to the effects of the COVID-19 pandemic, 2020 was an uneasy year for the world, especially for the global economy. Against a background of severe and complicated situation abroad, and arduous reform tasks at home, China’s hard-won positive economic performance (mentioned by Premier Li Keqiang in this year’s Government Work Report) received considerable attention and appreciation worldwide.
Three major factors are key to China’s efforts for sustainable growth this year.
First, thanks to the effective measures of epidemic prevention and control last year, the country’s stable economic growth and social development have laid a solid foundation for its manufacturers to export more products to the global market.
With its economy entering a normalized growth track, China’s foreign trade will be firmly supported by stable supply and industrial chains, ensuring supply capacity for its exports and further expanding domestic demand.
Second, there is an opportunity in the enhanced innovation ability of China’s export-oriented companies. Many of them already further pushed consumption upgrade domestically and generated consumer demand through new products, technologies and business models globally in recent years.
Despite the headwinds, China’s foreign trade beat expectations and registered a historic high in 2020, providing a favorable condition for a better performance this year.
Third, another opportunity arises from the government’s reform and opening-up policies. As the Regional Comprehensive Economic Partnership agreement is expected to take effect by the end of this year, it will enable more than one-third of China’s foreign trade goods to enjoy zero tariffs in the next stage.
Even though China has signed many free trade agreements with various partners, the RCEP platform will create fresh momentum for economic growth in China and provide new impetus to regional and even global economic recovery and growth.
One-third of the trade volume involved in China’s free trade agreements will be further boosted if the RCEP is implemented in place in the future. As a result, the role of free trade zones can be further enhanced in stabilizing China’s foreign trade.
Thanks to member countries’ efforts to support the RCEP, the arrangement of a freetrade agreement has also been established between China and Japan for the first time. It has enhanced China’s business ties with Japan, one of the world’s major economies.
Moreover, based on its growth demand, China will further expand the networks of the free trade zones, and upgrade the negotiation of the existing free trade agreements during its 14th Five-Year Plan period (20212025).
These moves will certainly further optimize the nation’s foreign trade strength and service environment.
Facing the future, the development of the Chinese economy will inevitably require a close combination of domestic demand and external demand, because the country’s dual-circulation development paradigm will be a strategic response to the specific historical phase of China’s economic growth and economic globalization during the 14th Five-Year Plan period and for a longer period of development.
To reach these goals, the government must continue to boost the scale of the domestic market, and use the expansion of domestic demand as a strategic tool to promote the continuous recovery of consumption. More efforts are needed to stimulate the purchasing power of consumers, improve consumption policies and the overall economic environment.
Though the final consumption contributed to about 60 percent of China’s GDP growth from 2013 to 2019, it is still lower than the 70 percent to 80 percent levels seen in developed economies, data from the National Bureau of Statistics showed.
Therefore, spurring new consumption forms will improve people’s livelihoods, strengthen economic resilience, accelerate the transformation to new development momentum, contribute to market-oriented industrial upgrade and market entities’ expansion, as well as provide more business opportunities to foreign companies and help stabilize the global economy.
On the other hand, the expansion of the domestic market can provide stronger support for the growth of foreign trade, because a strong domestic market is the most important supporting point to cope with changes of global markets and challenges of protectionism. It can not only ensure the stability of the supply chain for foreign trade, but also increase the scale and quality of imports.
In terms of promoting the dual-circulation growth pattern, China has taken the domestic market as the mainstay to mitigate the adverse impact caused by protectionism, rather than cutting itself off from the outside world and refusing to open up. The nation has not only promoted a sustained and steady rise in domestic demand, but also enabled many foreign trade companies to seize market opportunities.
For example, many countries have strictly restricted the export of epidemic prevention materials after the outbreak. China has not adopted such strict restriction policies. Instead, it encouraged manufacturers to expand production capacity and better meet the needs of the international markets.
Thanks to the government’s supportive policies, many Chinese companies raised their production capacity in a timely manner and realized the growth of related product exports to exploit new opportunities in the international market and meet new demand for anti-epidemic materials.
Innovative, green and low-carbon products and solutions, including 5G, artificial intelligence, big data, the internet of things, new energy vehicles and the next-generation industrial battery, will be the driving force of China’s economic growth, particularly in the area of exports during the 14th Five-Year Plan period.
In the meantime, the country must keep an open mind to further amplify the domestic market by importing more products from other parts of the world, as the proportion of its imports of consumer goods in the total imports is still low compared to developed countries.
To make certain these moves can be implemented smoothly, it is necessary for China to actively participate in global governance and contribute “Chinese wisdom” for the reform of the World Trade Organization, so as to promote further opening-up between the domestic and international circulations from the perspective of rules.
In addition to enriching the tangible growth of the Belt and Road Initiative to build a win-win industrial and supply chain cooperation system and expand third-party markets in 2021, it is also vital for China to prepare well for either implementing or joining new free trade pacts in the future.
For example, since December last year, the Ministry of Commerce has strengthened training on the implementation of the RCEP to systematically introduce articles of the deal on goods, services, investment, rules of origin, Customs facilitation and other areas. It has also assisted local governments, industry organizations and enterprises to be familiar with RCEP rules.
As China announced that it is ready to enhance technical communication and exchanges with members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership on issues regarding joining the pact, its move will promote economic globalization and regional economic integration, in accordance with the requirements for accelerating its new growth pattern in the future.
Compared with the RCEP agreement, the CPTPP is an advanced free trade agreement with a higher entry threshold. It provides greater access to the services sector, investment protection and guarantees, more opportunities in government procurement, a facilitative framework for the digital economy and intellectual property protection.
The CPTPP, which took effect on Dec 30, 2018, is a trade agreement between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Their aggregate GDP accounts for 13 percent of the global economy.
Thanks to member countries’ efforts to support the RCEP, the arrangement of a freetrade agreement has also been established between China and Japan for the first time. It has enhanced China’s business ties with Japan, one of the world’s major economies.
Li proposed that the product safety and transportation management standards of new energy vehicles should be revised, in order to adapt to long-distance railway transportation.
Li said that with the promotion of NEV sales in Europe and other overseas markets, Chinese NEV products are expected to have more development opportunities overseas, which will bring with them increased demand for cross-border logistics.
Li suggested, based on the product characteristics of NEVs, the safety and transportation standards should be amended and special freight trains for NEV transportation should be launched in due course.
Wang called for more efforts to promote the globalization of China’s new energy vehicle industry. She said that in recent years, thanks to policy support, technological innovation and large market scale, China has developed into the world’s largest NEV market. Under that context, the country has embraced the dual-circulation development pattern and China’s automobile industry has ushered in a new development period of globalization.
Wang proposed that China should support automakers that are capable of independent innovation to go global, and establish a defense mechanism to protect key NEV technologies in the process of globalization.
Zeng proposed that China’s automobile industry should give priority to the development of chips. He said that China should concentrate human, financial and material resources to strengthen the construction of an industrial chain in key auto components and parts.
Zeng suggested that the industry should work on both open cooperation and independent innovation to solve short- and long-term chip shortages.
Statistics showed that in 2020, the global auto chip market was worth about 300 billion yuan ($46.36 billion). China accounted for less than 2.5 percent of that with an independent auto chip industry valued at around 7 billion yuan.
Chen said that data collected by intelligent connected vehicles is mainly from outside and inside the vehicle and remote data transmission and exchange, in a large quantity and variety. However, in the process of data acquisition and application, relevant responsibilities and specifications are to be improved.
Chen proposed that a data security system of intelligent connected vehicles should be constructed based on the actual situation of the industry. This is in order to promote the research and formulation of laws and regulations that relate to data security and personal privacy protection.
Chen also suggested that intelligent connected vehicle companies are obliged to inform their users of possible privacy risks.
Li proposed that the commercial applications of autonomous driving and the popularity of intelligent transportation should be accelerated. This would allow people to enjoy green and convenient mobility and help the country achieve its goal of reaching a carbon dioxide emissions peak before 2030.
Li suggested that China strengthen policy innovation and open up legalization paths for the large-scale commercial use of autonomous driving. A largescale commercial promotion mechanism for autonomous driving should be established with the participation of governments at all levels, industry and academia.
Zeng proposed that electrochemical energy storage should be incorporated into the national and local energy development plans as a new form of national infrastructure. This is because it will play a crucial role in helping reaching peak carbon targets and carbon neutrality.
Zeng said that the large-scale commercial application of electrochemical energy storage should rely on the improvement of energy storage policy and the market environment.
He suggested developing electrochemical energy storage in China from the aspect of strengthening top-level design. This would formulate and improve the energy storage standard system.