China counters protectionism amid efforts to expand its opening-up

Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

Over the past year or so, international business news has been rife with reports about grey clouds on the economic horizon. Apple lowered its performance expectations. Slipping market expectations are putting downward pressure on American stock markets. The IMF cut its projections for global economic growth. The European Union adjusted its economic growth and inflation expectations downwards. The Bank of Japan lowered its expectations for GDP growth.

The venue of the G20 summit in Osaka, Japan, from 28 to 29 of June, 2019 [Photo: China Plus/Tu Yun]

The global economy, which has just climbed from the mud of the international financial crisis a decade ago, is facing a huge new risk to its slow recovery. The risk is that trade protectionism will drag the world economy back into a recession. The world is looking to the leaders gathered at the G20 summit in Osaka to take a strong stance against protectionism and bring the world economy back onto the track towards growth.

China is already doing its part to support global growth. In March, the National People’s Congress passed the Foreign Investment Law, which provides greater surety to foreign investors in China’s market. The law comes as multinational companies are increasing their investments in China. According to the Ministry of Commerce, the actual use of foreign capital in China totalled 369.06 billion yuan in real terms in the first five months of this year, which is a 6.8 percent increase over the previous year. Against the backdrop of a significant slowdown in global foreign direct investment, this shows the confidence that foreign companies have in China’s market and their belief in China’s determination to continue to drive forward its policy of opening up.

This further opening-up has not only been welcomed by multinational companies; the benefit it brings to the world’s underdeveloped regions has also been recognized. Hannah Ryder, the CEO of the Kenya-based organization Development Reimagined, said "Back in 2000, China imported 44 times more from non-African destinations than from Africa. Now that's 22 times more. That's an improvement. The United States, on the other hand, was importing 43 times more from non-African countries than from Africa. Now it's importing 70 times more. It's worsening. It's closed [to Africa]." She hopes that developed economies can follow China's example, break through trade barriers, and help underdeveloped regions in Africa to integrate into the global economy.

According to a report in The New York Times on Tuesday, in order to sidestep the Trump administration's ban on exports to Huawei, some American tech companies have scrambled to come up with work-arounds, while others are contemplating shifting manufacturing and service delivery for some of their products overseas. This is because Huawei, and China more generally, is a huge market and they are reluctant to surrender their share in it. The irony is that the Trump administration launched its trade war with China with the goal of boosting domestic manufacturing, and the outcome could be the opposite of what Washington had hoped to see happen.

As world leaders gather for the G20, they should focus on finding ways to support proven multilateral approaches that promote global economic development. This is why Japanese scholars have called on Japan to strengthen its cooperation with China and promote regional integration. And it’s why the leaders of many G20 countries, including China’s president, will be holding bilateral or multilateral meetings on the sidelines of the summit, because they clearly value regional integration and cooperation. At a time when the United States is pushing forward a unilateralist and protectionist approach to its foreign policy, it is important for other world leaders to safeguard multilateral mechanisms and promote an open world economy.

"If you want to go fast, go alone; but if you want to go far, go together," says a well-known African proverb. The pursuit of unilateralism may allow a country to develop rapidly for a limited period of time, but it will cause the country long-term harm, and limit the development of other countries. At all previous G20 summits, China has been a proponent of multilateralism, and the summit in Osaka will be no exception. It is a duty that China is assuming as a responsible world power, and it is what the world expects of China.