One year of greater openness, with more on the way

By Wang Shanshan

Looking back at the changes that China has experienced during the past 40 years of reform and opening up, most people here would tell you that these changes have taken place at a pace unseen anywhere else in the world. And the pace of change has accelerated even more over the past year.

At the Boao Forum for Asia in Hainan last April, President Xi Jinping announced a set of new measures to significantly broaden market access, create a more attractive investment environment, strengthen the protection of intellectual property rights, and expand imports. The announcements were a clear signal that the government would pay tribute to the 40th anniversary of reform and opening up by giving a boost to its progress.

The Haiwen Bridge opens to traffic in Hainan Province on March 8, 2019. [Photo: Xinhua]

One year on, the government has kept its word.

The China International Import Expo, the world's first national-level import expo, was held for the first time in Shanghai. Deals worth 57.83 billion U.S. dollars were inked at this massive event.

A major new law on foreign investment was approved by the National People's Congress in March and will come into effect on January 1 next year. It will substantially improve the protections of the legitimate rights and interests of foreign investors in China.

Tariffs were cut for a wide array of products such as automobiles, consumer goods, and medicines. These cuts lowered the overall import tariff from 9.8 percent to 7.5 percent.

These measures to improve the business environment saw China rise 32 places in the World Bank country rankings of the global business environment. And they triggered a swift response from foreign investors. The government work report released by Premier Li Keqiang during the annual meeting of the national legislature says that the number of newly-established foreign-invested enterprises jumped by 70 percent in 2018 compared to the previous year. And data from the United Nations Conference on Trade and Development shows that foreign direct investment (FDI) totaling 142 billion U.S. dollars flowed into China in 2018. This is a 3 percent increase on the previous year, a remarkable achievement given the 19 percent fall in global FDI last year – the third consecutive year of declines, putting global FDI at its lowest level in 10 years.

Perhaps the most high-profile new foreign enterprise was the American electric car maker Tesla, which broke ground on a new factory in Shanghai in January. It is the company's first factory outside the United States, and the first totally foreign-owned new energy vehicle manufacturer to set up shop in China.

Some commentators said these measures were taken in an attempt to reach a trade deal with the United States. They neglected the fact that the measures were rolled out long before the trade spat. For instance, the import expo was announced in May 2017 and the draft law on foreign investment was first unveiled in 2013. And despite the increasingly complicated world economic climate and mix of internal and external factors putting downward pressure on growth, the government is unwavering in its support for reform and opening-up. This can be seen in the announcements made by Premier Li Keqiang at this year's Boao Forum.

Premier Li Keqiang makes a speech at the opening plenary of the Boao Forum for Asia (BFA) annual conference in Boao, a coastal town in China’s southern island province of Hainan on March 28, 2019. [Photo: Xinhua]

Premier Li said that concrete laws and regulations will be drafted to ensure the smooth implementation of the new foreign investment law, and that existing rules that conflict with the new law will be abolished or amended. By the end of June, the government will again revise and release the negative list for foreign investment in order to further relax controls on market access. Forced transfers of technology are explicitly prohibited by the new foreign investment law and intellectual property rights protections will be strengthened. And the financial market is being pushed towards greater openness.

Although protectionism and isolationism are on the rise worldwide, most countries still uphold the universal rules of cooperation and openness, which have proven effective in reducing poverty and fostering the pursuit of shared growth. And it's the consensus of the attendees at this year's Boao Forum, which is being held under the theme "Shared Future, Concerted Action, Common Development."

Just this week, Italy became the first member of the G7 to sign onto the Belt and Road Initiative. Michele Geraci, the undersecretary of state with Italy's Ministry of Economic Development, who is attending the Boao Forum, said that more countries will join the initiative, because they can see the benefits. This is as strong an indicator as any of the direction in which the world wants to go.

Note: The author is a current affairs commentator with China Media Group.