简体中文
By APD writer Mei Xinyu
Translated by Deng Xianlai
The familiarity of Liu He, who led the Chinese delegation at this year’s World Economic Forum in Davos, Switzerland, to China watchers in the West, coupled with the large proportion China has contributed to global economic growth over the years, has gained Liu’s speech at the annual international gathering worldwide reverberations, with his mentioning of China further expanding its economic openness being heatedly discussed in particular.
A member of the Political Bureau of the Communist Party of China (CPC) Central Committee, Liu, a Harvard-educated technocrat, also serves as the director of the General Office of the Central Leading Group for Financial and Economic Affairs.
The group is tasked with leading and supervising the economic work of both the CPC Central Committee and the State Council, China’s cabinet. Though not a state leader, Liu was given the same status as the most important guests at the forum.
Judging from the report of the 19th Congress of the CPC and Liu’s speech in Davos, it is the writer’s view that China is telling the world its economic development featuring openness is entering the third phase.
The essence of socialist economy entails an intrinsic request for openness. Whether the external markets and resources have been made the full use of will see China, which is not blessed with a rich natural resource endowment, either burdened by its large population or cash in on and gain strength from it.
As the aging population has become a hot-spot topic in today’s society, it is necessary to bear in mind that had it not been for the sustainable development of an open economy, the Chinese people would have been nowhere near the possibility of discussing labor shortages brought about by China’s single-child policy. Instead, they would have ended up preoccupied with other problems like unemployment.
Over the past decade, mainstream experts both inside and outside China have held the opinion that the country should abandon a growth model that is overly dependent on external demands, a call that has seemingly become more urgent in the face of the 2008 sub-prime mortgage crisis in the United States, as well as the rise of anti-globalization sentiment in more recent years.
However, China must not let its policy shift go off track, nor should it simply equate the notion of relying more on the domestic market to an overdependence on domestic resources. A low-level of external dependence in value form plus a high-level of external dependence in material form ought to be the combination it strives for.
Given its past as a backward agrarian country with a semi-colonial and semi-feudal society, China as a newly-born socialist country was, during the early stages of its opening-up, forced to face a situation where it barely had its fair share in the global market, and where it is not treated equally by others.
As such, the goal in the first phase of China’s development of open economy was to gain both the access to and the equal status in the global market, especially the mainstream market.
That phase was followed by a second one aimed at seeking development in the global market, which during four decades of reform and opening-up has witnessed the country’s achievement of a miraculous continuation of economic growth, the only one of its kind in modern history.
Today China has become the world’s largest manufacturer and largest exporter, having at the meantime the amount of foreign reserves that is second to none. In addition, its proportion in global export trade has reached a level on par with that of the United States after the end of World War II.
Entering what the 19th CPC Congress has called a “New Era,” China’s open economy will inevitably sail into a third phase, one that will see the country assume the leadership role in the global market.
To that end, China must further open up its domestic market. The reasons for that are three-fold:
First and foremost, China, through the previous two phases, has finished the task of a “Friedrich List-style” industrialization in the sense that most of the industrial sectors are no longer the so-called “infant industries” that need a high-degree of state protection. Rather, more competitive pressures should be added to the industries so as to maintain their vigor. The automobile industry, for example, is one of them.
**Secondly, further opening up the domestic market will not only meet China’s increasing need for cheap whilst high-quality resource and energy from abroad, but also keep the domestic manufacturing as well as other sectors cost-competitive. **The foundation of the Chinese economy lies in the manufacturing and other sectors in the lower stage of the industrial chain, but these industries appear to be losing their competitive edges amid the rising costs of resource, energy, labor and land -- a typical side-effect developing countries like China should make effort to avoid in the process of industrialization.
Last but not least, further opening up the domestic market will eventually make the Chinese market so attractive for multinational corporations that they all vie for entrance. Other countries won’t have to adapt to Chinese norms if there is no interest to gain in the Chinese market. Similarly, multinationals won’t listen to Chinese arbitration if leaving the Chinese market doesn’t pose enough risk to their profit anyhow.
The business community in China should be aware that when European and Japanese multinationals knee down to punishments by the United States worth hundreds of millions of dollars, they do so in fear of being expelled from the U.S. market.
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The author is a researcher at the Chinese Academy of International Trade and Economic Cooperation, an institution affiliated to the Chinese Ministry of Commerce. The opinions expressed above are his own and don’t necessarily reflect the view of APD.
(ASIA PACIFIC DAILY)
