Home Economy CPC CENTENARY SERIES: How an open China benefits global economy

CPC CENTENARY SERIES: How an open China benefits global economy

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By CGTN Insight

A shopping feast in China made headlines in May.

Some 1,300 global brands including Swatch of Switzerland, Swarovski of Austria, Shiseido of Japan, and America’s Dell and Tesla, among others gathered during the month at the first China International Consumer Products Expo in Haikou, capital of south China’s Hainan Province.

With a long history of business, trade, invention and innovation expos and fairs, easy access to foreign products to the Chinese at home or to foreigners of Chinese brands is nothing special in China.

For instance, the five major cities of China collectively host about 140 such expos every year, according to Japan External Trade Organisation (jetro.go.jp) The breakdown is: Beijing 11, Guangzhou 16, Shanghai 67, Hong Kong 36, Shenzhen 10.

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But decades ago, it was a completely different story. Before the 1970s, many were struggling to fill their bellies, let alone pampering themselves at an expo shopping spree.

China’s reform and opening-up policy is what positively altered the country’s course of development.

Since the initiation of this policy, China has gone through three major waves of opening-up. The first began in 1978 and continued through the 1980s and 1990s. It saw an influx of foreign direct investment for infrastructure building and industrial projects across the country. In the vanguard of this wave of opening-up was China’s first Special Economic Zone in Shenzhen, which proved an early magnet for foreign investors and testbed for policy innovation.

The second wave began in 2001 with China’s accession to the WTO, which spurred another burst of foreign investment and much greater integration with the global economy.

Regarding the benefits of that accession, the WTO DG in 2010, Pascal Lamy affirmed that: ”From 2001 to 2010, China’s exports rose nearly six times to roughly $1.57 trillion, while imports rose by nearly the same order of magnitude to $1.39 trillion.

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Surely, the market access that China received as a result of its accession to the WTO contributed to its trade performance.

Membership in the WTO also provided foreign investors with assurances that China was part of a system of international rules and disciplines.”

He explained further that: “Just as the WTO has had a significant impact on the development of China’s economy, China’s accession has made the organization stronger.”

Today, as a result of that, “China wields the third-largest voting share of 6.09 percent after the US 16.52% and Japan’s 6.15% in the IMF.”

“Driven in part by tariff reductions, China’s trade in goods jumped from $516.4 billion in 2001 to $4.1 trillion in 2017,16 years after joining the WTO.

China’s growth after joining the WTO is from her harvest of the benefits of larger global market that facilitated her rise to the second largest global economy and largest exporter of consumer goods.

Now, as China embarks on a fresh chapter of development under its 14th Five-Year Plan, the nation is on the cusps of a new wave of opening-up marked by proactive initiatives to deepen the integration even further.

The vehicles include the development of new free trade zones (FTZ) and the Hainan free trade port, the integration of the Guangdong-Hong Kong-Macau Greater Bay Area, and new international trade and investment agreements such as the Regional Comprehensive Economic Agreement (RCEP).

This policy approach has proven extremely beneficial to China’s development. It has driven reforms and expanded the market, enabling a more specialized division of labor. In addition, intense competition stimulated by trade liberalization and import tariff cuts enabled domestic businesses to be more efficient. It has also led to the optimization of the allocation of resources and industrial upgrading.

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More than 40 years of reform and opening-up have seen China’s total imports and exports soar from $20.6 billion to more than $4.5 trillion, making the country the world’s top trading nation.

Opening-up is not merely about “bringing in” resources; it also paves the way for China to contribute to the global economy. Reform and opening-up has become an internal driving force for China to embrace globalization, both economically and in terms of people-to-people ties.

Today, China is both an engine for global economic growth and a contributor to global order. While pursuing its own development, China has never sought head-on confrontation with other countries and has remained consistently committed to world peace and development.

China also takes the lead as an active participant in the Paris Agreement in addressing climate-related issues through various efforts. This reflects the nation’s positive attitude towards – and competence in – participating in multilateral cooperation and global governance. It also demonstrates a sense of mission and responsibility towards joining hands with other countries to tackle challenges to human survival and development.

In the meantime, China has also proposed several approaches for global governance and development, including the Asian Infrastructure Investment Bank (AIIB), the Belt and Road Initiative (BRI) and building a community with a shared future for humankind.

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Progress on these fronts highlights the need for institutional opening-up at a deeper level and on a broader scale. The 2021 Report on the Work of the Government also proposes the development of new systems for a higher-standard open economy in China, the promotion of high-quality development of the BRI, and the building of a globally-oriented network of high-standard free trade zones.

This not only taps into China’s own economic potential, but also drives the growth of the world economy. Having moved the nation from times of scarcity to today’s shopping spree experience, reform and opening-up is not only a recipe for China’s success, but arguably has become an indispensable driving force towards a more prosperous world.

The author, Wang Huiyao, is president of the Center for China and Globalization (CCG). You can contact him directly at [email protected]

The article is part of the special series of the China Global Television Network (CGTN) and international media partners for the 100 years anniversary of the Communist Party of China (CPC)

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