Editorial: World Watches Whether China Will Fulfill Promise of Further Opening
Increasing openness to the rest of the world was the strongest signal sent by the recently concluded 2018 Boao Forum for Asia Annual Conference.
In his April 10 keynote speech, President Xi Jinping put forward multiple practical moves to substantially increase access to markets, create a more attractive investment environment, strengthen intellectual property rights protections, and actively expand imports.
Shortly after, central bank chief Yi Gang announced 11 measures to further open up the country’s financial industry. Many other officials and academics have also declared their positions on opening up, both during and outside of the Boao forum. This year’s forum has received a positive evaluation and enthusiastic response from both within China and abroad.
While popular sentiment is stimulated by policy declarations, business sense emphasizes results. Xi said that China will turn the important measures of opening up to the rest of the world into reality as soon as possible, and that this should come sooner rather than later, and quickly rather than slowly.
To increase openness in the future, it will be crucial for China to properly implement the already announced and soon-to-be-announced opening-up policies. This is the task called for by policymakers, and is also a commitment made by the country. The various local governments and departments should be drawing up plans to fulfill this task.
In the past 40 years, China’s economy has developed rapidly, thanks in large part to the information, capital, technology, and management experience brought in through opening up to the rest of the world. In the future, if China wishes to achieve high-quality economic development, it should open up more and more. Only by continuing to implement the fundamental national policies of opening-up will China’s economy adapt its development methods, optimize its structure, and transform its drivers of growth. This in turn will help the country overcome institutional obstacles and achieve strong, mutually effective cooperation with the rest of the world.
In the past, “opening up in order to hasten reform” was the cornerstone of China’s massive achievements. Today, it is increasingly difficult to distinguish between opening up and reform. Opening up usually entails reform.
With a sense of urgency, policymakers have emphasized that the implementation of major opening-up measures has extremely strong practical relevance. Opening up to the rest of the world has continually expanded in an all-around, multilevel and wide-ranging manner.
However, in recent years, the policy has not met the people’s expectations completely. There have been gaps between the level of opening up that has been promised and what has actually been achieved, and between the direction of policy and regulation and the perceptions of domestic and foreign businesses and residents. In many places, risk-averse officials have said a lot about opening up but done very little, obstructing the implementation of national policy.
China’s level of openness can be considered ahead of most other developing countries. This is especially embodied in the country’s significant drop in tariffs after it joined the World Trade Organization (WTO).
However, even though tariffs, quotas and other traditional trade barriers have been lowered greatly, opaque, discriminatory regulations can act as an intangible barrier increasing the costs of trade. This is especially clear in the service industry. The focus of international economic and trade integration has thus shifted from merely crossing borders to deeper regulatory cooperation and coordination among countries. This is clearly highly consistent with the Chinese government’s promotion of “streamlined administration, delegated power, strengthened regulation and improved service.”
The implementation of opening-up policies, from the central government down to local authorities, is actually the process of building up the country’s governance system and governance ability.
To use strengthening intellectual property rights protections as an example, as Xi said, “This is the most important aspect of improving the property rights protection system and the greatest incentive for increasing China’s economic competitiveness.” Even before China joined the WTO, intellectual property rights have long been a flashpoint for economic disputes between China and other countries. They are also a major theme in the ongoing trade conflict between China and the U.S.
At the level of central government, protecting intellectual property rights is already a task of international importance. However, there remains doubt over whether it can take priority on local governments’ agendas. As everyone knows, the key to protecting intellectual property rights is to increase the power of law enforcement, significantly raise the costs of breaking the law, and fully develop deterrents against breaking it in the first place. This is exactly why local governments must play a leading role. The difficulty lies in how to correctly give local governments the incentive to do so.
Xi said during his Boao speech that China should become more aligned with international economic and trade rules, increase transparency, strengthen the protection of property rights, continue to handle affairs according to law, encourage competition, and oppose monopolies. Out of these, aligning with international rules is a lesson China can learn from other countries in order to encourage domestic reform and development. The entire country, especially government officials at all levels, should strengthen its “rule consciousness.” Ever since China joined the WTO, the waxing and waning of “rule consciousness” has coincided with the country’s learning curve. The existing international economic and trade rules, of course, reflect the history of international politics and trade, and include aspects that are unfair to developing countries. However, on the whole, they are the result of valuable experience regarding developing and managing a market economy, and a latecomer like the Chinese economy would do well to learn from them.
As the world reshapes the global economy in the wake of the most recent financial crisis, China will undoubtedly be vocal as the world’s largest developing economy. However, China should also be the best-acquainted and the most compliant with the existing rules and regulations. As China’s international status increases and as its economic dependence on other countries decreases, the importance of “rule consciousness” will grow rather than shrink.
As China’s economic and national strength increase significantly, the international community’s expectations for China’s openness to the rest of the world will also grow.
Opening up should not be simply a self-congratulatory exercise by government departments related to trade. Rather, the rewards of opening up must be enjoyed by the businesses and people of China and the rest of the world, so they must naturally be the judges of whether opening-up policies are strong enough, and whether the results are good enough. Although the rest of the world is indeed asking for more and more from China, in terms of opening up, these demands are not without reason. China has the massive strength needed to open up, and the Chinese people should have confidence.
It is worth noting that opening up to the outside world complements “loosening up” internally. It has long been a requirement that domestic private capital should also be allowed to freely enter areas that have been opened up to foreign capital. Domestic and foreign capital should receive the same treatment. However, the reality of implementation has been less than ideal. As some recent incidents have shown, domestic businesses have especially strong opinions on unfavorable business environments. Their appeals deserve the attention of government on various levels. Only when China develops a robust private sector will it have a stronger ability to open up.
On the 40th anniversary of China’s opening up, as the world’s second-largest economy the country must take its openness to new, greater heights. China must make breakthroughs in the breadth and depth of its opening up. In addition to the policies being launched according to already formulated industry plans, people are hoping the Chinese government will unveil more measures that exceed international expectations.
Translated by Teng Jing Xuan (email@example.com)
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