Zhang Yansheng: Achieving More Mutually Beneficiary and Win-win Outcome

—Promoting all-round high-level opening-up

General Secretary Xi Jinping points out that openness brings progress, and isolation leads to backwardness; China’s open door will not be closed but only grow wider. This is not only one of the most important lessons learned by the Chinese nation from the modern history, but also a significant experience is drawn from the theory and practices of China’s reform and opening-up in the past 40 years.

The international environment is undergoing profound and complex changes. Promoting all-round high-level openness unswervingly, focusing on our own tasks, and achieving more mutually beneficiary and win-win outcome are vital for pushing economic globalization forward, meeting the current challenges, and maintaining confidence in our development path, theory, institution and culture; they are also the foundation for us to resist and prevent various bullying, promote strong technological innovation as the primary productive force, create a comprehensive network of international cooperation, and form a strong innovation and industry chain; they will also promote high-quality economic development and build a modern economic system in the new era.

Accurately understand the promotion of the all-round high-level openness in the new era.

Socialist market economy is a comprehensive and open economy, and the socialist road with Chinese characteristics is a comprehensive and open development path. With the help of reform and opening-up, China has integrated itself into the world economy successfully. On the one hand, China has implemented the opening-up as a basic national policy, unswervingly opened itself to the rest of the world, and learnt from the excellent civilization achievements of other countries in the past 40 years. On the other hand, China has adhered to the principle of independence and self-reliance, and effectively prevented various international political and economic shocks. It has realized the all-round opening-up, become an important member of the WTO and the “biggest banner-bearer” of economic globalization. This extraordinary journey has not just changed China profoundly, but also affected the rest of the world.

By actively participating in international economic competition and cooperation, and maximizing its comparative advantage, China has effectively integrated its domestic economy into the international economy, developed the domestic market rapidly, upgraded the economic structure and improved people’s livelihood. The Chinese economy has not just become an important part of the globalization process, but also promoted the formation of a new international political and economic order. Today, China has become the world’s second-largest economy, the largest industrial country, the largest exporter of goods, the second-largest importer of goods, the second-largest FDI receiver, and the second-largest foreign investor. It has a huge consumer market supported by the world’s largest middle-income group and in the past five years, it has contributed more than 30% of the world economic growth, more than the combined contribution of the United States, the Eurozone and Japan, making it the biggest contributor in the world.

Compared with 40 years ago, today’s international power pattern, industrial division of labor, economic cooperation and competition are vey different, and the global economic governance system and rules are facing significant adjustments. The pace and scope of strategies like “introduction of foreign companies” and “Chinese enterprises go abroad” are very different from before. The pressure to deal with external risks and maintain national economic security is also very different from the previous period. Therefore, the problems and tasks we face now are also different from 40 years ago: the question now is not whether or not to open China to the outside world, but to explore how to improve the quality and level of China’s opening-up, how to enhance the internal-external linkages of development., and how to shape a new pattern of the opening-up for the future.

We must properly understand the new connotation of promoting all-round high-level openness in the new era. First, we should promote business facilitation, including further reduction of tariff, eliminate non-tariff measures, and improve trade and investment liberalization and facilitation. Second, we should promote institution-based opening-up, such as reducing direct intervention of industrial policies on the economy, encouraging policy objectivity in ownership and market competition, and connecting China’s labor market, intellectual property, and environmental standard with international standards. Third, we should improve the modernization of governance capabilities and governance system. On the one hand, it is necessary to promote the connection between Chinese and international rules, standards and systems. On the other hand, we should promote the modernization of governance and the rule of law, and push forward international cooperation in the areas of capacity building, system construction, cross-border network construction and so on.

Amid the complex and ever-changing international environment, we should promote the construction of a modern industrial system with all-round high-level opening-up. Specifically, there are three preparatory tasks that need to be completed. First of all, to create a modern economy which covers coordinated development of the real economy, technological innovation, modern finance, and human resources. Secondly, to create a great environment for the market, investment, business, rule of law and innovation. Thirdly, to create five major supporting systems, including the creation of first-class universities and talent support, first-class innovation chain and commercialization of research-finding, modern finance and multi-level capital markets, and excellent cross-border cooperation network for industry chain, supply chain, and value chain.     

Specific initiatives and practical actions to promote all-round high-level opening-up.

In today’s international environment, there are two opposite development options in the world economy.

One development option is against globalization, advocate trade protectionism and unilateralism. For example, the United States is subverting the three magic weapons it used to dominate the world order in the past. First, trade protectionism, “America first” and the abuse of “Reciprocity” in trade policy are replacing free trade; second, the idea of establishing an alliance system is disintegrating; lastly, the United States no longer wants to assume the responsibility of providing global public goods. If these trends continue, the global governance system formed after World War II will eventually disintegrate.

The other development option is to reshape globalization, advocate free and fair trade. China has begun to assume more and more international responsibilities. For example, China assumed a greater responsibility when the international financial crisis broke out in 2008. In 2009, China’s GDP accounted for only 8.5% of the world economy, but China’s contribution to world economic growth was as high as 50%. China’s proposal to jointly build the “Belt and Road” has injected momentum, balance and development into the world economic growth. In response to the weak demand in the world economy, China is the only country that holds an international import fair. The competition between anti-globalization and reshaping globalization has made the international environment more complex.

China’s development has sufficient resilience, great potential and momentum for long-term development, as well as a solid real economy. Furthermore, it has a diversified ecological structure, great advantages in the whole industry chain, strong domestic demand and a competitive labor market. As long as China does not make historical mistakes, it will be able to withstand the challenges of any kind.

In history, the losers of the US-Japan trade war, the US-Soviet Cold War, or the US-British hegemonic alternation and the US-European currency made serious mistakes. To avoid making historical mistakes, we must do at least three things. First, to respect common sense, law and logic, avoid misjudging the strategic intentions of other countries, avoid the loss of control of the zero-sum game between big powers, avoid the intensification of conflicts between major powers, which leads to a global division. Secondly, we should earn support from the American people while isolating the extreme right, so as to build the most extensive international united front. Thirdly, to avoid falling into the trap of distorted opening-up. In order to gain international support, the United States created the competition in development paths between China and the US and created an illusion that China does not want reform, and the trade war will help China to launch a new round of reform and opening-up. The US-Japan trade war, the competition for hegemony between the US and the UK, and the US-European currency war has nothing to do with the competition in development paths. Even if China has developed in full accordance with the development path set by the United States, the China-US trade war is still inevitable.

China is pushing a full-scale, high-level opening-up into a new phase. The Foreign Investment Law passed at the beginning of this year is an important measure for China to create a business environment that is ruled by the law, international and convenient. According to the plan, relevant supporting laws and regulations will be completed at the end of the year to form implementable rules. We will continue to revise the negative list of foreign investment access, the negative list of foreign investment access in the Pilot Free Trade Zone, and the catalogue of encouraging foreign investment in the industry; further reduce the items of the negative list, expand opening-up in telecommunications, medical institutions, education services and other services, infrastructure, energy resources and other fields; continue to enlarge opening-up in financial industry, and promote complete market access to foreign capital in banking, securities and insurance industries; further facilitate foreign-invested enterprises to hold venture capital, establish investment companies, improve relevant regulations for foreign investors to make strategic investment in listed companies and acquire domestic enterprises; promote opening-up in the bond market, and introduce relevant policies to create more convenient conditions for foreign investors to invest and trade Chinese bonds. As long as the enterprises are registered in China, whether domestic or foreign, they will be treated equally and their legitimate rights and interests will be protected.

We need to understand that proper handling of the China-US relations is essential for promoting an all-round high-level opening-up. The current China-US strategic game is more about resilience and patience. We need to unite the righteous forces at home and abroad, oppose trade protectionism, bullying and unilateralism, and make the US ruling authorities moving toward rational cooperation.

At present, the ultra-right forces of the United States are determined to separate the China-US relations to achieve the goal of comprehensively curbing China. In response, China should actively adopt countermeasures to enhance the cooperation between China and the US in science and technology, industry, finance, energy, agriculture and so on. At the same time, we need to make it clear that we oppose any kind of bullying, new Cold War, and strategic containment.

From the perspective of globalization, the new scientific and technological revolution, and the changes in China-US relations, we must actively adjust the industrial chain layout and upgrade the industrial chain; adhere to an all-round high-level opening-up policy, promote more mutual benefit and win-win; promote coordinated development of the real economy, scientific and technological innovation, modern finance, and human resources, and bring China’s industrial chain to the middle and high end of the global value chain.

We must accelerate the promotion of a strong domestic market and build a community with a shared interest, responsibility and destiny. In 2018, China’s Engel coefficient reached 28.4%, indicating that the consumption structure has entered a relatively wealthy stage. China has the world’s largest middle-income group and the people of this group is still increasing. The policies designed to expand consumer demand have already demonstrated significant impact, and the domestic market will become an important engine for promoting all-round high-level opening-up. Nowadays, China has become the largest trading partner of more than 120 countries in the world. Next, China will become the most important export market for goods, services and e-commerce. In other words, China will become an indispensable engine or partner for the growth of these economies. Based on this, we must vigorously promote opening-up and cooperation, commit ourselves to build an open world economy and ensure that the economic globalization will be more open, inclusive, balanced, and beneficial to all.