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Making New Ground in Pursuing Opening up on All Fronts

Submit Time:05-12-2017 | Zoom In | Zoom Out

Author:Wang Yang | Source:People's Daily (November 10, 2017)

Abstract:

Opening up is the only path to our prosperity and development. Promoting reform and development through opening up is an important weapon for continuously making new achievements in our country's modernization. At the report made to the 19th National Congress of the Communist Party of China, General Secretary Xi Jinping suggested "making new ground in pursuing opening up on all fronts," and emphasized that "openness brings progress, while self-seclusion leaves one behind." "China will not close its door to the world; we will only become more and more open." "China adheres to the fundamental national policy of opening up and pursues development with its doors open wide." "We must develop an open economy of higher standards." Opening up is a major strategic plan made by the CPC Central Committee with Comrade Xi Jinping as its core by adapting to the new trend of economic globalization, accurately determining the new changes in the international community, and profoundly grasping the new requirements for the country's reform and development. It will surely provide strong support for securing a decisive victory in finishing the building of a moderately prosperous society in all respects and striving for the great success of socialism with Chinese characteristics for a new era, inject powerful impetus into the realization of the second centenary goal and the Chinese Dream of national rejuvenation, and contribute positive energy to building a community with a shared future for mankind. 

I. Deeply understanding the new situation facing China's opening up 

Since the 18th National Congress of the CPC, the Party Central Committee with Comrade Xi Jinping as the core has provided overall strategic leadership, and pushed forward the innovation in the theory and practice of opening up. We have established a new concept of opening up and development, implemented the Belt and Road Initiative, accelerated the building of new institutions of the open economy, advocated the development of an open world economy, and actively participated in global economic governance, making major new achievements in opening up. At present, the world is undergoing major developments, transformation, and adjustment. China is at a pivotal stage for transforming our growth model, improving our economic structure, and fostering new drivers of growth. The domestic and international environments confronting opening up are undergoing profound and complex changes that unprecedentedly bring about both opportunities and challenges, but opportunities are more than challenges. 

1. The transition from old drivers of growth to new ones is the key to the recovery and prosperity of the world economy. Since the outbreak of the international financial crisis, deep-seated effects have continued to emerge. The global economic recovery has been difficult and tortuous. Global trade growth has been below world economic growth for five consecutive years, and cross-border investment has not yet returned to its pre-crisis level. Recently, the world economy has shown a good trend of recovery. Global trade and investment have picked up. The international financial markets have been generally stable. A new round of technological revolution and industrial change is gaining momentum. New industries, new technologies and new models are emerging in an endless stream. However, the world economy has not yet got out of the adjustment period featuring sub-health and weak growth. Deep-seated structural contradictions have not been effectively resolved. New drivers of growth have not yet taken shape. The potential growth rate has declined, and there are still many uncertainties. The International Monetary Fund (IMF) estimated that the world economy will grow at an average annual rate of 3.7% in the next five years, lower than the average growth rate of 4.2% in the 10 years before the international financial crisis. The successful transition from old drivers of growth to new ones is the key to economic recovery. How to seize opportunities and resolve challenges in the context of the complicated global economic situation is an important task facing the work of opening up. 

2. Relative international forces are becoming more balanced. The world economic pattern is undergoing deep adjustment. Emerging markets and developing countries are rising, and it is more evident that international forces see the rise of the East and the decline of the West, and the rise of the South and the decline of the North. In 2016, emerging markets and developing countries contributed 80% to the world economic growth, accounting for 38.8% of the global economy, an increase of 10.5 percentage points over 2007; the BRICS countries accounted for 22.4% of the global economy, an increase of 8.8 percentage points. In the past five years, China's contribution to the growth of the world economy has remained above 30%, and China's institutional say in the global economic governance system has risen significantly, which is conducive to safeguarding the development interests of our country. In the meantime, as China gradually approaches the center of the world stage, the international community hopes that China can play a bigger role in international affairs and take more responsibilities in dealing with global challenges. How to play a new international role and shoulder the responsibility that fits its stage of development is an important issue that cannot be avoided. 

3. In-depth development in twists and turns has become a feature of economic globalization. Economic globalization, represented by the liberalization and facilitation of trade and investment, has contributed to world peace, stability and prosperity. It is in the common interest of all countries in the world and represents the direction of the development of human civilization. Economic globalization has never been easy, but it has been moving forward with twists and turns. In recent years, such problems as weak world economy, unbalanced development, governance dilemma and fairness deficit have become more prominent, accompanied by chorus of deglobalization and the rise of protectionism and inward-looking tendency, weighing on the development of world economy and trade. Economic globalization is a trend of the times, and the general trend of deep development is irreversible. However, the pace of economic globalization may slow down, with transitioning drivers of growth and changing rules. How to better adapt to and guide economic globalization and make economic globalization more open, inclusive, and balanced so that its benefits are shared by all is the common responsibility of China and other countries in the world. 

4. Accelerating the fostering of new competitive advantages has become the development direction of China's open economy. China has entered a new normal in economic development. The rising costs of labor, tightening resource constraints, and the saturating carrying capacity of the environment have weakened the traditional competitive advantages of the open economy and hindered the traditional development model. However, the open economy still enjoys comprehensive competitive advantages thanks to our abundant human resources, a huge market size, adequate infrastructure, complete industrial facilities, and improving institutional environment and policy environment for innovation and development. In the context of rigorous and complicated domestic and international circumstances, China's processing trade has experienced accelerated transformation and upgrading, service trade has continued to grow rapidly, and new products, new models and new forms of foreign trade have been emerging. Enterprises have been equipped with stronger international operation capabilities and gained a rising position in the international division of labor. The focus of the work of opening up is to make the best use of the situation to push the faster transition of the open economy from factor-driven growth to innovation-driven growth, from size and speed orientation to quality and effect orientation, and from cost and price advantages to comprehensive competitive advantages in technology, standard, brand, quality and service, so as to achieve changes in quality, efficiency and drivers of growth. 

II. Accurately grasping the basic implications of opening up on all fronts 

The report to the 19th National Congress of the CPC systematically gives answers to such major issues as whether we need to open up in a new era or not, what kind of opening up is needed, and how to better promote opening up, with our internal and international imperatives kept in mind and from both theoretical and practical dimensions. The report proposes opening up on all fronts, which has rich implications. It implies not only a wider scope of openness, a larger range of fields, and a deeper level, but also opening up innovation, layout optimization, and quality improvement. It is an important part of the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the basic policy. 

1. We must pursue a better combination of "bringing in" and "going global," and expand the space for national economic development. Active and effective use of foreign investment is not an expedient measure, but a strategic guideline that must be long adhered to. Although China has abundant savings and foreign exchange reserves, we cannot therefore ignore the role of foreign investment. The use of foreign investment does not simply amount to the introduction of funds, but more importantly, the introduction of advanced technology, business philosophy, management experience and market opportunities associated with foreign investment, in order to enable China's enterprises to join the global industrial chain, value chain and innovation chain. Neither building nor innovation is possible by closing the door to the world. We must give equal emphasis to attracting foreign investment and introducing foreign technologies and talents, and enhance the technology spillover effect and industrial upgrading effect of foreign investment utilization, so as to strengthen various forms of cooperation in the field of innovation and promote the economy to the medium-high level. We should also see that changing from a big trade country to a big investment country and from the export of commodities to the export of capital is the only way for the transformation and upgrading of an open economy. Our country has strong production capacity, adequate technologies, and ample foreign exchange, as well as relatively mature conditions for expanding cooperation in outbound investment. According to the report, we should give equal emphasis to "bringing in" and "going global," and enhance the quality and level of "bringing in" while supporting enterprises in going global actively and prudently. This not only helps ensure the supply of energy resources, drive the export of goods and services, access innovative resources and marketing networks, and improve the quality and efficiency of the national economy, but also facilitates the promotion of economic and social development of the host country and the achievement of win-win results. 

2. We must pursue a better combination of opening up in coastal areas and opening up in inland and border areas, and improve the balance in opening our different regions. China's opening up starts with coastal areas and proceeds progressively from east to west. Since the 18th National Congress of the CPC, great progress has been made in opening up in inland and border areas which are still less open as a whole. West China occupies 72% of the country's land area, 27% of the population and 20% of the economic aggregate, while its foreign trade accounts for only 7% of the country, and the utilization of foreign investment and outbound investment account for 7.6% and 7.7%, respectively. Inland and border areas have abundant labor forces, rich natural resources, and improving infrastructures. Especially with the accelerated advancement of the Belt and Road Initiative, the central and western regions gradually move from the periphery to the frontier of opening up, and the open economy has ample space for development. According to the report, we must open the western region wider. While deepening the opening up in coastal areas, we must transform less open inland and border areas to more open ones, in an effort to make new ground in opening China further through links running eastward and westward, across land and over sea, thus forming a new pattern of coordinated regional development. 

3. We must pursue a better combination of opening up in the manufacturing sector and opening up in the service sector, and promote deeper structural adjustment with a high level of opening up. The manufacturing sector sees earlier and deeper opening up in China, and has been developing rapidly with strong competitiveness. In the future, except for a few sensitive areas, other manufacturing industries should be further opened up and restrictions on share ratio and business scope should be gradually relaxed. In contrast, the service sector has lagged behind in opening up and is less competitive as a whole. It is still an area of weakness in economic development and structural upgrading. The report clearly states that we must significantly ease market access and further open the service sector. While deepening the opening up in the manufacturing sector, we should focus on promoting the orderly opening up in service industries such as finance, education, culture and healthcare, and lift restrictions on foreign investment in such service industries as childcare and elderly care, architectural design, accounting and auditing, commerce and trade logistics, and e-commerce. 

4. We must pursue a better combination of opening up to developed countries and opening up to developing countries, and expand the convergence of interests with other countries. Developed countries are China's major economic and trade partners. Last year, the United States, the European Union and Japan accounted for 36.4% of the total foreign trade of our country, and this proportion will be higher if the transit trade in Hong Kong was included. Consolidating economic and trade cooperation with developed countries can stabilize the foundation of China's open economy. At the same time, the economic and trade ties between our country and the vast number of developing countries are also getting closer. From 2014 to 2016, China's import and export to the countries along the "Belt and Road" reached 3.1 trillion U.S. dollars, accounting for more than 1/4 of the total foreign trade in the same period. The direct investment in the countries along the "Belt and Road" amounted to nearly 50 billion U.S. dollars, accounting for about 1/10 of the total outbound direct investment. According to the report, we should give equal emphasis to opening up to developed countries and opening up to developing countries, and actively develop global partnerships. We should fully develop equality, mutual benefit and cooperation with all countries, and diversify export markets, sources of imports, and investment partnerships. 

5. We must pursue a better combination of multilateral opening up and regional opening up, and build and contribute to an open world economy. The multilateral trading system represented by the World Trade Organization (WTO) and the regional trade agreements represented by free trade zones are two "wheels" that drive the development of economic globalization. The WTO has over 160 members with broad representation, covering 98% of the global trade volume. WTO rules serve as an important institutional guarantee of economic globalization and are in the common interest of all countries in the world. Since the beginning of the new century, the development of the multilateral trading system has been hindered. More open and flexible regional trade agreements have been thriving and become the main engine driving economic globalization. The report clearly states that we must take an active part in reforming and developing the global governance system, support the multilateral trading system, and work to facilitate the establishment of free trade zones and build an open world economy. This is not only a need to expand our own space of opening up, but also a responsibility to safeguard the international economic order. 

III. Main tasks and important measures for making new ground in pursuing opening up on all fronts 

The report to the 19th National Congress of the CPC has distinctive theoretical, strategic and ideological features as well as strong pertinence, practicality and operability. It has clearly defined the concept, strategy, goal, layout, momentum and way of opening up in a new era, presented a roadmap for opening up in the coming period, and launched an array of new tasks and new measures, as follows: 

1. We must solidly promote the Belt and Road Initiative. The Belt and Road Initiative is a major strategic move for opening our country wider and is also the focus of our work of opening up in the coming period. With the concerted efforts of all parties, the Belt and Road Initiative has been gradually transformed from a concept into an action and from vision to reality. The report emphasizes that following the principle of achieving shared growth through discussion and collaboration, we should actively promote international cooperation through the Belt and Road Initiative. In doing so, we hope to achieve policy, infrastructure, trade, financial, and people-to-people connectivity and thus build a new platform for international cooperation to create new drivers of shared development. Therefore, we must do a good job in the following aspects: First, we must seek synergies with the development strategies of the countries along the "Belt and Road," enhance strategic mutual trust, and expand common ground on cooperation, thus building the "Belt and Road" into a path of peace. Second, we should focus on the central task of development. Under the framework of "six economic corridors and six channels for communications and distribution with key countries and ports serving as connection hubs," we must vigorously promote connectivity and industrial cooperation and expand the space for financial cooperation, thus building the "Belt and Road" into a path of prosperity. Third, we must improve trade and investment liberalization and facilitation levels, negotiate preferential trade agreements and investment protection agreements with relevant countries, and comprehensively strengthen cooperation in the areas of customs, inspection and quarantine, transportation, logistics and e-commerce, thus building the "Belt and Road" into a path of openness. Fourth, we should seize opportunities brought about by a new round of scientific and technological revolution and industrial change, and strengthen openness and cooperation in innovation, thus building the "Belt and Road" into a path of innovation. Fifth, we should establish a multi-layered mechanism of people-to-people and cultural cooperation, promote cooperation in such fields as education, science and technology, culture, sports, health, youth, media and think tanks, and lay a solid public opinion foundation, thus building the "Belt and Road" into a path of civilization. 

2. We must accelerate the building of a trader of quality. In the past 40 years since reform and opening up, China's foreign trade has achieved a historic leap forward. However, China is a big trader but not a trader of quality, mainly because of its weak innovation capacity, and low quality, grade and added value of exported products. According to the report, we should expand foreign trade and turn China into a trader of quality. To do so, we should accelerate the shift of the foreign trade development model from trade primarily in goods to balanced trade in goods and services, from following suit to pursuing creation and innovation, and from massive imports and exports to quality imports and exports with excellent quality and high price. First, we should speed up the optimization and upgrading of trade in goods, accelerate the building of foreign trade transformation and upgrading bases, trading platforms and international marketing networks, encourage exports of high and new technologies, equipment and branded products, and guide the transformation and upgrading of the processing trade. Second, we should promote the innovation and development of trade in services, encourage exports of cultural, tourism, construction, software, R&D and design services, vigorously develop service outsourcing, and build a "Chinese Service" national brand. Third, we should develop new models and new forms of trade. We should adhere to the principle of encouraging innovation and being inclusive and prudent, gradually improve the regulatory system, service system and policy framework, support the sound development of cross-border e-commerce, market procurement trade and comprehensive services for foreign trade, and create new growth points for foreign trade. Fourth, we should implement a more proactive import policy, expand imports of advanced technologies, equipment, key components and high-quality consumer goods, and promote the balanced development of import and export. We will make smooth preparations for China International Import Expo to create an open cooperation platform for all countries in the world to display their national images and conduct international trade. 

3. We must improve the environment for foreign investment. At present, the global competition in attracting foreign investment is becoming increasingly fierce. Many countries have lower factor costs and greater preferential policies than our country. Fostering new competitive advantages in attracting foreign investment does not amount to vying for preferential policies but creating a stable, fair, transparent, law-based and predictable business environment. First, we should strengthen the rule of low in the use of foreign investment. We should speed up the unification of laws and regulations related to domestic and foreign investment and formulate new basic laws on foreign investment. We should sort out laws, regulations and policy documents concerning foreign investment, and those that are not in line with the general direction and principle of the state's opening up should be repealed or amended within a time limit. Second, we should improve the foreign investment management system. The 11 pilot free trade zones in our country have achieved remarkable results in implementing the system of pre-establishment national treatment plus a negative list. The time for setting up foreign-funded enterprises has been reduced from the past one month to about three days. The report makes it clear that the full implementation of the system of pre-establishment national treatment plus a negative list is a fundamental change in the foreign investment management system. Third, we should create a market environment for fair competition. The report emphasizes that all businesses registered in China will be treated equally. The Chinese government will grant the same treatment to domestic and foreign-funded enterprises in accordance with the law in terms of licensing, standard setting, government procurement, and enjoying the "Made in China 2025" policy. Fourth, we should protect the legitimate rights and interests of foreign investors. We should conscientiously implement the Opinions of the CPC Central Committee and the State Council on the Improvement in the Property Rights Protection System and the Lawful Protection of the Property Rights. We should not take the compulsory transfer of technology as a prerequisite for market access, and should strengthen the protection of intellectual property rights and crack down on illegal and criminal acts of infringement and counterfeiting. 

4. We must improve the balance in opening our different regions. The report proposes three important measures: First, we should open the western region wider. We need to adhere to the principle of promoting development through opening up, improve open infrastructure for ports and cross-border transportation, and implement more flexible policies. We should establish pilot free trade zones, national level development zones, border economic cooperation zones, cross-border economic cooperation zones and other open platforms, build a group of trade and investment regional hub cities, support the opening up of special industries, and form a number of new growth poles of the open economy in the western region. Second, we should grant more powers to pilot free trade zones to conduct reform. Since 2013, many major developments have been made in the building of China's pilot free trade zones, with a number of important achievements in reform and innovation. In the next step, we should focus on improving the quality of building pilot free trade zones, benchmark international advanced rules, strengthen the systematic integration of reform measures, and encourage local governments to try bravely, explore boldly, and innovate independently, thereby creating more institutional innovation achievements and further demonstrating the role of deepening reform and opening up as an experimental field. Third, we should explore the building of free trade ports. A free port is a specific area set in a country (region) but outside of the Customs territory, where goods, funds and personnel enjoy free in and out and the vast majority of goods are exempt from tariffs, so it is now a special economic function area with the world's highest level of openness. Hong Kong, Singapore, Rotterdam and Dubai are typical free ports. China has a long coastline and rich in offshore resources. Exploring the building of free trade ports with Chinese characteristics and creating new open areas with a higher level of openness, a better business environment and a stronger economic impact are of great significance to promoting the innovation and development of the open economy. 

5. We should develop new ways of making outbound investment. In the past 10 years, China's outbound investment grew at an average annual rate of 27.2%, joining the ranks of large countries of outbound investment. Overall, however, enterprises are still at a primary stage of going global. They are not strong enough to leverage domestic and international markets and resources, and found to have irrational investment and non-standard operation. Some areas have latent risks. Outbound investment needs both encouragement and more guidance. The report calls for developing new ways of making outbound investment and forming globally-oriented networks of trade, investment and financing, production, and services. First, we should promote international cooperation on production capacity and drive China's equipment, technologies, standards and services to go global. Second, we should strengthen the guidance of overseas mergers and acquisitions, focus on expanding market channels, improving innovation capacity and building international brands, and enhance enterprises' core competitiveness. Third, we should regulate overseas business practices, guide enterprises to abide by the host country's laws and regulations, to protect the environment and to fulfill their social responsibilities, and curb vicious competition. Fourth, we should enhance service guarantee, strengthen and improve information, laws, consular protection and other services, protect the safety of overseas personnel, and safeguard overseas interests. 

6. We should promote trade and investment liberalization and facilitation. According to the report, we should adopt policies to promote high-standard liberalization and facilitation of trade and investment. This stresses the need to continuously improve the level of openness and shape an open external environment more actively. First, we should support the multilateral trading system. We should implement the WTO Agreement on Trade Facilitation, promote positive outcomes of the WTO Ministerial Conference, advance the negotiation on the remaining Doha Round issues, and actively participate in the negotiations on the Agreement on Trade in Services, the Agreement on Government Procurement, and so on. Second, we should steadily push forward the building of free trade zones. We should promote the conclusion on the Regional Comprehensive Economic Partnership at an early date, advance the building of the Free Trade Area of the Asia-Pacific, and gradually establish a globally-oriented high-standard network of free trade zones that is based on the periphery and targets the "Belt and Road." Third, we should improve the level of bilateral opening up. We should continue to negotiate high-level investment agreements and various forms of preferential trade arrangements with relevant countries in order to properly handle trade conflicts. 

Making new ground in pursuing opening up on all fronts is an important and arduous task. We should rally more closely around the Party Central Committee with Comrade Xi Jinping as the core and further free our minds. We should remain committed to the new development philosophy, adhere to the fundamental national policy of opening up, and continue to pursue a mutually beneficial strategy of opening up. We should take the initiative to open up, so as to win the initiative in development and international competition, thus contributing to the great success of socialism with Chinese characteristics for a new era and the realization of the Chinese Dream of national rejuvenation. 


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