In a conference commemorating the 40th anniversary of the country’s reform and opening up, General Secretary of the Communist Party of China Central Committee Xi Jinping reiterated that China needs to support a multilateral trade system that is open, transparent, inclusive and non-discriminatory, promoting the liberalization and facilitation of trade and investment. The aim is to guide economic globalization towards a more open, inclusive, balanced and universally beneficial direction. His speech pointed China in a clear direction to expand its opening up.

From the global perspective, in recent years economic globalization has encountered a backward current. In history, Europe’s outward expansion and industrial revolution are regarded as the two major impetuses for economic globalization in its early stages, which promoted the global industrial division. Especially after the Cold War, the global market system dominated by the US profoundly influenced the world, and the global industrial division developed fast. The result is that developed countries dominate the high-end portions of the vast majority of industries, while the low-end portions have been transferred to developing countries and the medium-end portions have been scattered among developed and relatively developed developing countries. These trends of globalization improved people’s welfare on the global scale, but at the same time they accelerated the hollowing out of industries in developed countries. Consequently, some laborers have become victims of globalization. Their interests and demands have formed the foundation of public opinion that supports the ongoing anti-globalization trend in developed countries.

As for developing countries, their contribution to global economic growth is increasing. As the beneficiaries of economic globalization, the developing countries represented by emerging economies hope to enhance their position in the global industrial chain. Therefore, they advocate a more high-quality and balanced direction for economic globalization. At the same time, the comparative advantages of developed countries are still concentrated in the high-end of the industrial chain, contributing a major portion of the Gross National Product (GNP). Workers in these sectors, the medium- and senior-level managerial personnel and some primary-level personnel are still firm upholders of economic globalization. Therefore, from a more far-reaching and long-term perspective, the anti-globalization trends that have arisen in some of the developed countries are partial and single-faceted, being only a tributary of a stream.

China has maintained fast growth for decades within the tides of economic globalization, having become the second largest economy in the world. Such an achievement indicates that for a populous country like China, continuing to open up and actively participate in global competition can invigorate development.

China’s economic growth currently faces challenges both internally and externally. From the domestic perspective, investment-led growth is bottlenecked by rising labor costs and heavy environmental pressure. Under these conditions, China should accelerate transforming the extensive mode of economic growth. Feasible measures include the following: fostering urbanization through reform of the household registration system to unleash consumption; further reforming the vocational education system to facilitate the upgrading of manufacturing; and cultivating globally superior industries by means of science and technological innovation so as to improve the country’s status in the global industrial chain.

Internationally, the slowing down of the global economy, rising trade protectionism and other factors all augment future uncertainty. Faced with today’s confused currents of economic globalization, China must open to the world at a wider scale. It is necessary to promote reform through opening up, eliminate hurdles of economic development and release the potential comparative advantages of the Chinese economy. In addition, solidarity with the forces that support economic globalization in other developing and developed countries is important.

 

This article was edited and translated from People’s Daily. Xue Li is a research fellow from the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.

(edited by BAI LE)