[Guangming Daily] Wang Xiaosong: High-Level Opening up Drives High-Quality Economic Development

In the past year, China has significantly increased its opening up and taken a series of major measures to promote openness. In April 2018, at the Boao Forum for Asia, President Xi Jinping pointed out that “China will not close its door to the world, and we will only become more and more open”; in November, at the first China International Import Expo, President Xi emphasized that China will continue to boost openness to a higher level; in April 2019, at the second Belt and Road Forum for International Cooperation, President Xi announced that China will adopt a series of major reform and opening up measures and strengthen institutional and structural arrangements to promote higher-level openness. This series of important speeches points out the direction for China to expand a new round of high-level opening up, and also provides a powerful impetus for China’s high-quality economic development.

To achieve a high-quality economic development, China needs to further step up its opening up. Since the reform and opening up, especially since the accession to the WTO, China’s opening up has continued to improve, enabling China to adapt to comparative advantages, participate in the international division of labor, share the globalization dividend and inject momentum to the world’s economic development. It should be noted that there is still room for improvement in China’s opening up. In terms of the width of openness, China’s manufacturing openness is already among the top in the world. However, the openness of telecommunications, medical care, education and other service areas can be further enhanced. The focus of high-level opening up in the future should be in the service sector. In terms of the depth of openness, although China’s tariff level has been greatly lowered and trade facilitation continuously improved, the reduction of the institutional cost of import still needs to be supported by deepening domestic reforms.

A high-quality economic development requires continuous improvements in the quality of opening up. After 40 years of development, China has deeply integrated itself into the world economic system and has been climbing in the global value chain. It has been the world’s largest exporter for many years. Driven by opening up to the outside world, China has made great progress in economic growth and has now become the world’s second largest economy. However, at the crossroads of development, China still needs to improve the quality of its economic development, which should be supported by improving the quality of opening up. On the one hand, for foreign investment, China has implemented a management mode of pre-establishment national treatment plus negative list. In the past year, China has significantly cut the negative list to promote the full opening up of the modern service industry, manufacturing industry and agriculture. It has promised to lift restrictions on the proportion of foreign shares in more important areas such as financial services and high-end manufacturing. The implementation of these measures and commitments is a must for improving the quality of openness. On the other hand, measures to improve the quality of openness are also reflected in the construction of free trade zones. In the future, on the basis of the original free trade pilot zones, the Chinese government will deploy a number of new free trade pilot zones and accelerate the exploration of the construction of free trade ports, which will fully enhance the important role of the free trade zone as a pioneering trial and facilitate the faster promotion of new opening up initiatives across the whole country. Consequently, on the road to improving the quality of opening up, the potential of all sectors in China will be fully mobilized. While foreign trade continues to grow rapidly, the vitality of consumption and investment will be fully stimulated, providing a basis for China’s high-quality economic development.

A high-quality economic development requires a more balanced path to openness. At the beginning of the reform and opening up, China faced the serious problem of funding shortage. The primary goal of developing an export-oriented economy was to earn foreign exchange through exports, so, China vigorously expanded exports. After years of development, China’s foreign trade, especially export trade, has made great progress. Not only has the scale of exports continued to rise, the structure of export products has also been continuously optimized and their technological content continuously improved. However, the rapid growth of exports has caused a series of negative impacts, including the low-end lock-in in the value chain and the rise of resource and energy issues. Consequently, sectors in China recognized that import and export are equally important. Moderate expansion of imports can alleviate energy and resource constraints, promote technological progress and industrial upgrading, and meet the increasing level of domestic consumption, thus achieving a balanced development of foreign trade. For this reason, the first China International Import Expo held in November 2018 took an important step in promoting the balanced development of foreign trade and improving the level of openness.

To achieve a high-quality economic development, China needs to further optimize the opening up environment. Under the background of globalization, the two markets at home and abroad are closely linked and inseparable. The optimization and improvement of China’s domestic market environment directly affects the confidence and decisions of domestic and foreign investors, thus determining the pattern of opening up and the speed and quality of economic development. In March 2019, the National People’s Congress adopted the Foreign Investment Law, aiming to further expand opening up, actively promote foreign investment, protect the legitimate rights and interests of foreign investment, standardize foreign investment management, and promote the formation of a new and all-round opening up pattern. At present, the country should speed up the formulation of supporting laws and regulations to ensure the implementation of the Foreign Investment Law, providing institutional and structural arrangements as well as legal guarantees for global investors to enter the Chinese market without concern. In addition, strengthening IP protection and increasing international cooperation on IP protection is also a necessary measure to maintain investor confidence, encourage research and development, and promote technological innovation at the current stage. It should be noted that China has made major progress in strengthening IP protection in recent years. However, in the future, continuous efforts should be made to strengthen supervision, improve law enforcement capabilities, and step up international cooperation so as to optimize the opening up environment and improve the quality of economic development.

In the future, all sectors in China will march forward on the path to promoting a higher level of openness, continuously improve the quality of economic development, and meet the people’s growing need for a better life. On this basis, China will also promote the construction of an open world economy and a community with a shared future for mankind, benefiting the world with the achievements of China’s economic development.

(The author is a Research Fellow at the National Academy of Development and Strategy, RUC and a Professor at the School of Economics, RUC)

The original article first published at here.