Opening-up to pave the way for global economic development
China's determination to further reform and open up its economy will bring important opportunities for the continued improvement of the world economy and globalization.
Since last year, the world economy has continued to show good momentum, and specifically the growth of major developed economies has been relatively strong. But the foundation is not solid, and the global economy has not yet emerged from the adjustment period of sub-health and weak growth. The monetary policy of the major reserve currency issuing countries continues to tighten, implying a large spillover risk. The rise of trade and investment protectionism has also brought new pressure on the world economy.
Under this situation, it is imperative for the world economy to stimulate new impetus from both the demand and supply side, and to achieve smoother and more inclusive growth to withstand the risks of a new crisis and recession.
The country's open-up policy will have a tremendous influence on the world economy and the international market. Deepening the opening will inject new momentum for world economic growth.
First, the country could provide effective demand for the export of products and services with distinctive advantages for various countries. In the next five years, the scale of China's imports of goods and services will reach $10 trillion. In particular, as China moves toward a high-income country, and sees resident consumption transformation and upgrading, the import structure will increasingly focus on advanced and applicable technologies, clean energy, high-quality consumer goods and modern services, which will greatly benefit developed economies' exports.
Second, the "going global" trend of Chinese companies will provide more investment to other countries. Last year, global foreign direct investment dropped by 16 percent, becoming an important drag on world economic growth. For the next five years, foreign investments by Chinese companies are expected to reach $750 billion, which will provide more investment power for the host country's economic growth. In particular, China will cooperate with developed economies in developing third-party market cooperation.
Third, China's opening-up and innovation could accelerate the advancement of global science and technology. The country has responded positively to the concerns of major developed economies and multinational corporations, effectively strengthening the protection of intellectual property rights, further improving the business environment, and promoting innovation and opening-up cooperation. This will help to promote global collaborative innovation in key areas such as big data, cloud computing, and artificial intelligence. It will help to speed up a new round of scientific and technological revolutions and industrial changes to achieve breakthroughs, and help to drive the world economy into a new cycle of long-term growth.
At a time when globalization is experiencing twists and turns, China's opening-up is an important motivation for the healthy development of economic globalization. Anti-globalization has its deep economic, political and social motives. However, artificially blocking trade and investment does not meet the common interests of all countries in the world and does not conform to the development direction of world civilization.
Opening-up the market could help hedge against risks from the adverse effects of protectionism. Some developed economies recently initiated unilateral trade protection measures, which aggravated the risks of economic and trade conflicts, increased the international community's doubts about the prospects for free trade, and added many uncertainties to the recovering world economy.
China's leadership has announced a series of measures to expand opening-up and has moved ahead to lower the import tariffs on vehicles and auto parts, anti-cancer drugs, and daily consumption goods, and to eliminate specific measures such as restrictions on the proportion of foreign ownership of banks and financial asset management companies. The country's initiatives in opening up the market have greatly reduced or even eliminated the doubts of the international community regarding the prospects of economic globalization, and have also injected new dynamism into the recovery of the world economy.
Meanwhile, promoting the establishment of pilot free trade zones will also add new vigor to the economic globalization. The latest example is China's announcement it will develop Hainan island into a pilot free trade zone, and to gradually explore and steadily promote the establishment of a free trade port on the island.
Pilot free trade zones and ports are the main platforms for China to align with high international standards of trade and investment rules. It is also a major platform for China to participate in globalization, which will provide China's solutions and ideas for the healthy and continuing development of globalization.
The authors are from Institute of International Economic Research, National Development and Reform Commission.