Fostering integrated and high-quality development
The Suzhou National Hi-tech Industrial Development Zone can give full play to Suzhou’s first-mover advantages in economic development as a central node city and an eastern coastal city. Photo:CFP
During the 14th Five-Year Plan period, with economic development entering a new stage, while getting through the difficulties and blockages in the links of production, distribution, circulation, and consumption, China needs to depend on high-level opening up to promote a new development paradigm of dual circulation whereby domestic and foreign markets can boost each other. Clearly, whether at the international level or the domestic level, integration and high quality is an important focus for China’s efforts to build a new development paradigm.
Large unified market
The Fifth Plenary Session of the 19th CPC Central Committee pointed out that China has entered a high-quality development stage.
The first priority is to “smooth the domestic circulation,” which means to benchmark against international business rules, to break through the resistance from industrial monopoly and local protectionism, so as to serve market entities more effectively, stimulate the market vitality of micro-entities in various links and fields, and form a higher level of dynamic balance where demand drives supply and supply, in turn, creates demand, through the market mechanism.
The second is to “promote the smooth flow of resources and factors of production” which requires strong institutional reform and innovation to promote the coordination and unification of standards, rules, and policies in different regions and industries, accelerate the construction of an integrated domestic unified market, and smooth the domestic circulation through trade liberalization and investment facilitation.
The third is to “promote dual circulation,” which requires accelerating the construction of a unified market with market-oriented allocation of factors and orderly competition as a prerequisite.
In reality, the domestic sales of commodities originally produced for export under market mechanisms and standards at home and abroad are facing the problem of matching and adaptability. To create factor-market integration, we need to focus on eliminating the problems of domestic trade credibility in the domestic circulation, so as to give full play to the advantages of the super large-scale market, promoting the coordinated development of domestic and foreign demand, imports and exports, foreign capital introduction, and investment abroad.
Fourth is to “improve the regulation system of domestic and foreign trade integration.” Currently, in addition to relying on the large domestic market, promoting the same line, standard, and quality, and building a unified large market of “dual circulation,” integrating the domestic and international market is not only the fundamental guarantee, but also an important support to promote the high-quality development of China’s economy.
Fifth is to “employ the innovation drive and high-quality supply to lead and create new demand,” which means encouraging industries and enterprises to carry out R&D innovation, and emphasize that the supply of high-quality products formed by innovation can lead and create new market demand, enjoying sufficient market adaptability.
Therefore, benchmarking against international business rules, striving to promote comprehensive opening up, accelerating the construction of a unified market with orderly competition, and improving the adaptability of supply and demand are vital to the high-quality development of China’s economy.
The core of the construction of a large unified market lies in the realization of the market-oriented allocation of factors and market order with orderly competition. However, while following market rules, the rules of the large unified market and the operation and supervision institutions also need to keep up with the requirements of marketization, integration, internationalization, and high-quality development.
At the international level, the rules and practices of marketization, integration, and internationalization should be used when building a unified market. At the regional level, China needs to take the opportunity of the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to further deepen the cooperation under the “10 + 1” model of the China-ASEAN Free Trade Area.
Central hub and node cities
China’s coastal provinces and cities such as the Yangtze River Delta and the Pearl River Delta need to focus on promoting comprehensive opening up, trade liberalization, and investment facilitation, accelerating the construction of central hub cities and central node cities connecting the dual circulation.
Going forward, the Yangtze River Delta region (centered around Shanghai) needs to cash in on the China International Import Expo (CIIE) to focus on regional integration and high-quality development. Without the integration of the domestic and international dual circulation, it is difficult to realize high-quality circulation. In this light, Shanghai should be built into a central hub city of dual circulation, giving play to the polymerization and spillover effects of the CIIE to connect the domestic and international markets. Hangzhou, Nanjing, and Hefei, adjacent to Shanghai, need to be actively built into central node cities connecting dual circulation.
However, cities in the Yangtze River Delta and the Pearl River Delta need to tackle a core issue, that is, whether they actually have products or brands that represent the level of Chinese manufacturing and highlight world-class quality. Only by making more specified, refined, characterized, innovative, and new high-quality products, can the central cities in these regions better meet the needs of the integrated development strategy of the Yangtze River Delta and the construction of the Great Bay Area of Guangdong, Hong Kong, and Macao, and accelerate the supply of high-quality products and high-level sci-tech.
In addition, China should give full play to the complementary advantages of regional gradients, build a competitive and orderly domestic unified market, and strive to tackle the bottleneck of core technologies. The central hub cities, central node cities, and small and medium-sized towns in east, central, and western China need to explore their own factor endowments, as well as their comparative advantages and competitiveness. At the same time, through reform and innovation, we need to accelerate the development of key industries and tackle the bottlenecks in the fields of integrated circuits, biomedicine, medical devices, and artificial intelligence as soon as possible.
Dual circulation
From an international perspective, the promotion of the new development paradigm should emphasize improving China’s integration with other countries or regions, so as to realize high-quality development together.
To this end, first, the high-quality co-construction of B&R industrial parks should be actively promoted, highlighting the international construction of the industrial parks among the B&R countries, and forming the investment and trade cooperation mechanism of B&R industrial parks.
Second, the development of bilateral trade and free trade zones should be enhanced. The level of trade liberalization and investment facilitation in the China-ASEAN Free Trade Area should be deepened, focusing on increasing the effective distribution of trade and investment to ASEAN countries.
Third, the China-EU Comprehensive Agreement on Investment should be actively promoted. The marginal decline in China’s trade share with the EU should be heeded, thus tapping the potential of trade cooperation and reversing the decline in trade share.
Domestically, the emphasis of facilitating the dual circulation to reinforce each other lies in tackling the difficulties, facilitating the construction of a large domestic market and high-level opening up.
Sci-tech innovation and industrial safety should be promoted, which requires governmental-level support for the development of sci-tech, industrial chains, and innovation. The endogenous requirements and capacity for technological innovation of enterprises should be constantly enhanced. The increase of IP protection to incentivize business innovation and the enhancement of anti-monopoly policies should be organically coordinated, so as to effectively tackle bottlenecks, facilitating the building of a national innovative system.
The key supporting point influencing the high-quality development of enterprises should be restructured. In recent years, the problem of funds occupied by accounts receivable of Chinese enterprises has become increasingly serious, which has greatly restrained the circulation of trade funds within enterprises. Therefore, China should vigorously promote the integrated construction of credit reporting, accelerating the construction of credit data sharing platforms.
The level of opening up should be enhanced, and high-standard agreements should be implemented effectively, which requires in-depth reform from top to bottom. The system of pre-establishment national treatment plus a negative list management system for foreign investment should be optimized, so as to promote trade liberalization and investment facilitation.
Shen Guobing is a professor from the Institute of World Economy at Fudan University.
Edited by ZHAO YUAN