Expanding high-level opening up
The China-Europe Railway Express from Yiwu to Madrid, Mar. 10th Photo: CFP
The 2022 Government Work Report specified that the government should pursue higher-standard opening up and promote stable growth of foreign trade and investment. “We will make full use of international and domestic markets and resources, continue to expand international economic cooperation and trade, and push for in-depth reform and high-quality development by promoting high-standard opening up.”
Although impacted by the superimposed triple effects of the new industrial revolution, changes in trading environments, and COVID-19, the 14th Five-Year Plan (2021–25) launched with a good start in both foreign trade and investment. This is the result of multiple policy measures taken to stabilize foreign trade and investment, and it is a manifestation of the resilience of China’s industrial and supply chains. Furthermore, it is an outcome of the new development philosophy’s implementation, expansion of high-level opening-up, and promotion of institutional opening up.
Supply chain modernization
We should improve modernization levels of China’s industrial and supply chains and continue to lay a good foundation for the high-quality development of foreign trade.
According to data released by the General Administration of Customs, China’s total goods imports and exports reached 39.1 trillion yuan in 2021, an increase of 21.4% over 2020. Under the extremely uncertain conditions of the external market, the stable growth of foreign trade mainly depends on the resilience of domestic industrial and supply chains. Within the many market entities in China, the upstream and downstream links of the manufacturing industry cooperate with each other, the production service system is constantly being improved, the industrial and supply chains have high stability, and the industrial chain clusters have become an important advantage for China’s manufacturing industry to participate in international competition.
Going forward, we should first continue to implement policies and measures to stabilize foreign trade, expand the coverage of export credit insurance for foreign trade enterprises, strengthen export credit support, optimize foreign exchange services, and accelerate the progress of export tax rebates.
Second, we should vigorously implement an innovation-driven strategy, strive to make core technology breakthroughs, solve the bottleneck of industrial and supply chains, increase the length and height of China’s industrial chain embedded in the global value chains, and guide Chinese enterprises to climb to the upper end of the industrial and supply chains based on the domestic and international dual circulation.
Third, we should strengthen coordination of major regional strategies, promote regional coordinated development, realize the integration of regional industrial and supply chains, and actively respond to the localization, decentralization, and regionalization trend of industrial and supply chains.
Institutional opening up
Institutional opening up should be promoted and the business environment should be optimized. According to data released by the Ministry of Commerce, foreign direct investment into the Chinese mainland, in actual use, reached 1.15 trillion yuan in 2021, achieving double-digit growth for the first time in nearly a decade, with a growth rate of 14.9%, of which the proportion of high-tech industries exceeded 30% for the first time, realizing improvements in both the scale and quality of foreign capital utilization.
Against the backdrop of a sharp decline in global transnational investment, China has improved the quality of stable foreign investment. This is mainly due to continuous improvement of the level of opening up. From 2017 to 2021, China revised the Special Administrative Measures (Negative List) for Foreign Investment Access for the country and pilot free trade zones for five consecutive years, reduced the number from 93 and 122 to 31 and 27, respectively, and launched a number of major opening up measures in manufacturing, service, and other fields, providing a broader development space for foreign investment.
In January 2020, the Foreign Investment Law of the People’s Republic of China came into force. China maintains a system of pre-entry national treatment plus a Negative List management for foreign investment, strengthens support for foreign investment, protects the legitimate rights and interests of foreign investors, and optimizes the foreign investment environment. With the gradual transformation of China’s comparative advantages in the international division of labor, adapting to the new division of labor trend in the GVCs, and the demand for institutional supply from the expansion of the service industry’s opening up, it is necessary to speed up transformation from opening up based on flows of goods and factors of production to an institutional opening up and to allow China’s socialist market economy to become an advantageous factor when participating in international economic cooperation and competition.
To ensure this, we should first take the initiative to benchmark against international economic and trade rules, implement the Negative List of foreign investment access, promote trade and investment liberalization and facilitation. Second, we should speed up the regulatory reform of the domestic service industry, and support foreign investment to increase investment in medium and high-end manufacturing, R&D, modern services, and other fields. Third, we should solidly promote the construction of pilot free trade zones and the Hainan free trade port, and promote the reform and innovation of development zones. Fourth, we should promote the establishment and improvement of the digital trade rule system, and explore rule construction in the field of ecological civilization such as making a “carbon neutrality” plan.
Belt and Road
We should promote high-quality joint construction of the Belt and Road (B&R) initiative. The B&R has become an international public good and a platform for international cooperation. Cooperation in trade and investment is an essential part of the B&R. The joint construction of the B&R has elevated the level of opening up of various regions. According to data released by the Ministry of Commerce, the trade volume of China and B&R countries reached US $1.8 trillion with a 32.4% increase year-on-year. Direct investment in countries along the routes reached US $21.46 billion, an increase of 15.3%.
High-quality joint construction of the B&R needs continuous expansion of new spaces for foreign trade and economic cooperation. First, we should continue to promote cooperation in advantageous industries, tap the trade cooperation potential and expand multi-party market cooperation. The next step is to accelerate the implementation of the Regional Comprehensive Economic Partnership, to promote accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, which will improve liberalization levels and the facilitation of trade and investment. Third, we should steadily expand cooperation in new energy, digital economy, digital trade and new infrastructure, and actively cultivate new growth spots for cooperation. Fourth, we should build high-quality overseas economic and trade cooperation zones, the China-Europe Railway Express and other landmark projects, and promote the integrated development of new business forms. Fifth, we should continue to hold major international and regional exhibitions. Sixth, we should comprehensively strengthen risk prevention and control, strengthen the analysis, monitoring, and early warning system for various risks, and promote trade and investment cooperation.
Mao Yanhua is director of the Institute for Regional Opening up and Cooperation at Sun Yat-sen University.
Edited by ZHAO YUAN
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