By Dr. Selçuk Çolakoğlu
At the Boao Forum for Asia (BFA) in China’s southernmost province of Hainan last year, Chinese President Xi Jinping announced that China will roll out broader and bolder reforms and further open up China’s economy.
Over the past year, China has kept its promises on further reform and opening-up with concrete deeds.
FURTHER REFORMS & OPENING-UP
In a keynote speech delivered at the opening ceremony of the annual BFA conference last April, Xi pledged a new round of reform and opening up measures.
He promised that China will significantly broaden market access, create a more attractive investment environment, strengthen the protection of intellectual property rights, and take the initiative to expand imports.
In the following months, China hosted a series of diplomatic and economic events including the Shanghai Cooperation Organization Qingdao summit, the Beijing summit of the Forum on China-Africa Cooperation, and the first China International Import Expo (CIIE).
The CIIE was attended by 172 countries, regions and international organizations and more than 3,600 enterprises. China’s Ministry of Commerce said the second expo to be held later this year will feature larger exhibition area and be attended by more countries and enterprises.
Besides, during the just concluded “Two Sessions,” a key annual event in China’s political calendar, China adopted its first unified foreign investment law which will become effective on Jan. 1, 2020.
Beijing will introduce a series of regulations and documents in accordance with the foreign investment law to better protect the legitimate rights and interests of foreign investors, Chinese Premier Li Keqiang told a press conference after the conclusion of the legislative session.
Calling the new law a “sensible” set of policies, David Dollar, a senior fellow in the John L. Thornton China Center at the Brookings Institution, said it is “definitely a step forward” in the country’s continued reform and opening up.
Dollar said opening up more sectors would allow the entry of high-quality imports and also increase competition so that Chinese companies could improve, which would ultimately benefit China’s economic growth.
Selcuk Colakoglu, director of Turkish Center for Asia Pacific Studies, said that the law “enhances the protection of intellectual property rights (IPR) of foreign investors and makes international companies to invest more in China confidently.”
DELIVERING PROMISES
By holding the first CIIE and opening up more sectors to foreign investment, China has proved it will always honor what it has promised.
About 960,000 foreign-invested enterprises had been set up in China, with the accumulated FDI exceeding 2.1 trillion U.S. dollars by the end of 2018, according to China’s Ministry of Commerce.
Colakoglu, also a professor of international relations, said the new law will allow foreign investors “enjoy treatment no less favorable than that afforded to Chinese investors at the stage of investment access.”
According to the World Bank, China ranked 46th globally for ease of doing business in 2018, up from 78 in 2017. Within this framework, Colakoglu noted that the foreign investment law will be “a landmark arrangement that will open China’s door wider to the outside world.”
The Belt and Road Initiative (BRI), proposed by Xi in 2013 to boost economic growth by improving the trade and infrastructure network connecting Asia with Europe, Africa and beyond, is another manifestation of China’s resolve to further open up.
Over the past year, more friends have joined in the initiative, with an additional 50-plus countries and international organizations signing the cooperation documents, raising the total number of such documents to over 150. During Xi’s recent state visit to Italy, the European country signed with China a memorandum of understanding (MoU) on BRI cooperation, becoming the first Group of Seven nation to join the initiative.
“I believe the initiative has great potential in terms of economic development and international cooperation. It is a very interesting concept and a framework for a new type of multilateralism spurred by China,” said Carola Ramon-Berjano, a member of Argentina’s Council on International Relations.
For countries like Argentina that lacks the needed infrastructure to boost trade, the BRI is an attractive and relevant proposal, said Ramon-Berjano, stressing that it will help the country “achieve inclusive and sustainable development” in the long run.
GLOBAL BENEFITS
As China gradually advances the opening-up in various sectors in accordance with the timetable announced at the BFA last year, the world’s second largest economy, with its GDP now exceeding 90 trillion yuan (about 13.4 trillion U.S. dollars), continues to contribute to global growth.
Though China faced a complicated and challenging environment rarely seen in many years with the economy under new downward pressure, the nation managed to accomplish main targets for economic and social development in 2018, Li said in his government work report.
“China is still in an important period of strategic opportunity for development and has ample resilience, enormous potential and great creativity to unleash,” Li noted.
According to data from the UN Conference on Trade and Development, foreign direct investment (FDI) inflow to China has ranked first among developing countries for 27 consecutive years.
“China did a great job to attract FDI to the country since 1979. Gradual opening of the Chinese domestic market has provided a sustainable development within a stable environment,” Colakoglu said.
China’s last four decades of transformation has attracted global attention and China is greatly sought by most nations for building engagements, said Swaran Singh, a professor at the School of International Studies of the Delhi-based Jawaharlal Nehru University, India.
“There is increasingly acceptability today in China taking the lead in several regional and global initiatives,” he noted.
Duncan Freeman, a research fellow at the College of Europe in Bruges, Belgium, said “China’s opening up and reforms have been extremely important for the global economy for the past 40 years. And it is even more so today when China has a very big economy.”
When commenting on the global economic trend, the expert said there are a certain number of challenges, including those faced by the international economic system and the global growth.
“For this reason China’s commitment to ongoing reforms, openness and sustaining its domestic growth is extremely important as a contribution not just to the maintenance of an open global economic system but to global growth,” he said.