China announces further opening up and economic reforms at Boao Forum
——New opportunities for countries along the Belt and Road Initiative
President Xi Jinping of People’s Republic of China delivered a keynote speech at the opening ceremony of the Boao Forum for Asia Annual Conference 2018 on April 10. The conference runs from April 8 to 11 in Boao, a town of Hainan Province in South China and is themed “An Open and Innovative Asia for a World of Greater Prosperity”.
The 2018 Boao Forum for Asia marks the 40th anniversary of reform and opening up in China and the beginning of the implementation of the decisions made at China’s 19th National Congress. Over the past 40 years, China’s rapid economic development was made possible due to the incremental opening up including establishing special economic zones, entering the WTO, launching the Belt and Road Initiative, etc. China’s GDP has witnessed a huge increase from 367.87 billion RMB in 1978 to 74,358.55 billion RMB in 2016 ever since the implementation of the reform and opening up in 1978. Now China will enter a new phase with the profound changes of the global situation. Similarly, in the future, the high-quality development of China’s economy will still base on a more open environment. As a result, President Xi stated a number of key reform measures while noting that China has strong attention of increasing the pace of implementation and translating these reforms into reality sooner rather than later.
(Source: National Bureau of Statistics of the People’s Republic of China)
- Significantly broaden market access
In 2018, China will launch several landmark initiatives to further open up the economy, including relaxing the restrictions on the establishment of foreign-invested financial institutions, broadening the scope of their business activities in China and broadening the cooperation between Chinese and foreign financial market. In this respect, China has already announced major measures to ease foreign investment restrictions in the banking, securities and insurance sectors.
This is a win-win policy which will benefit both China and other countries around the world. In terms of China, it will reduce the uncertainty that foreign enterprises are facing, which will help to encourage the investment and innovation of foreign enterprises. As a result, the demand of domestic consumers for diversified products can be satisfied while the tax revenue and domestic employment can be driven. Meanwhile, it provides tons of investment opportunities and huge market for foreign enterprises in order to optimize their layout of the global industrial chain. So far a large number of multinational enterprises have gained a super expected return by focusing on Chinese market, which shows a positive prospect for foreign enterprises with a better policy.
- Create a more attractive environment for foreign investments
Besides broadening market access, China will take measures to create a more attractive environment for foreign investments, including becoming more aligned with international economic and trade principles, increasing transparency encouraging competition while opposing monopolies, etc. In the past, the attraction of foreign capital mainly depends on the preferential policies but now it is time for China to transform into business environment-biased.
These measures clearly respond to the concerns of international investors. In the global background of the apparent rise of trade protectionism, it shows China’s commitment to defending the free trade system. The opening of China will bring much convenience to foreign companies that are located in China, and will play a crucial role in promoting the development of the world economy.
- Strengthen intellectual property rights protection
Strengthening IP protection is the most important aspect of enhancing property rights protection in China since it will in turn increase China’s competitiveness. Therefore, China will encourage Chinese and foreign companies to carry out technology-related exchanges and cooperation as well as protect the legitimate intellectual property rights of foreign enterprises which are located in China. In addition, in 2018, China will also reorganize the State Intellectual Property Office to enhance law enforcement, increase the penalties imposed on illegal activities and fully release the deterrence effect of the law.
In recent years, China has shown a rapid development in technology innovation. According to WIPO (World Intellectual Property Organization), China’s State Intellectual Property Office has received more than 1.3 million patent applications, which exceeds the sum of the United States, Japan, Korea and Europe. A large number of innovative enterprises have been established in China, including the “Four Great New Inventions” which shock the whole world. The measures launched this time will undoubtedly reduce the risk that foreign enterprises are worried about and make Chinese and foreign entrepreneurs more confident of Chinese business environment.
- Expand import
The domestic demand is the fundamental driving force of China’s economic development and is essential for meeting the Chinese people’s ever-growing needs for a better life. China hopes to expand imports and promote current account balances rather than aiming at a trade surplus. In 2018, China will considerably reduce import tariffs on automobiles and certain other products. China will also accelerate the process of joining the World Trade Organization’s “Government Procurement Agreement”. In November 2018, China will hold the first China International Import Expo in Shanghai, which is not a general exhibition but a major policy announcement and an initiative action that China will take to open up the market.
As a fundamental driving force of China’s economic development, domestic demand is increasingly becoming more and more important. As is mentioned in The Report on the Work of the Government 2018, in the past five years, the contribution to GDP of consumption has increased from 54.9% to 58.8%. Consumption contributes much more than investment plus net export. At the same time, the consumption structure upgrading is accelerating. The demand for high quality goods and famous brands is constantly increasing, especially imported goods. These measures which are launched this time will provide the biggest market in the world for foreign companies to sell their products, especially those with high technology. This will undoubtedly let more countries make full use of China’s reform and opening up and the dividends of economic development.
Five years ago, China launched the policy of the Belt and Road Initiative, which is aimed at achieving policy, infrastructure, trade, financial and people-to-people connectivity, building a new platform for international cooperation, and creating new drivers of shared development to benefit more countries and people. The Belt and Road Initiative is neither the Marshall Plan after World War II nor an intrigue of China, as alleged by someone overseas, but aimed at a new era of peace and prosperity for all human beings. What China upholds is seeking shared growth through discussion and collaboration. In the past five years, China has built cooperation with 87 countries and international organizations. The total amount of goods trade between China and the countries along the Belt and Road Initiative has been over 5 trillion USD with a foreign direct investment of over 70 billion USD. Chinese enterprises have promoted the construction of 75 trade cooperation zones in the countries along the Belt and Road Initiative, contributing more and more tax and jobs. A large number of cooperation projects have been successfully promoted with the formation of the mutually beneficial network centered the Eurasian continent and radiating internationally. We believe the future of the Belt and Road Initiative will be much brighter with China’s further opening up and economic reforms.