eform and opening up have been pivotal to modern China’s trajectory, serving as a major driver of the country’s economic and social development. Initially characterized by a cautious approach likened to “crossing the river by feeling the stones,” adopted in 1978, China’s reform and opening up today have entered a new stage.
The challenge lies in advancing the reform to boost economic and social progress.
In this context, the Third Plenary Session of the 20th Central Committee of the Communist Party of China, which concluded on July 18, decided to further the comprehensive deepening of the country’s reform and propel Chinese modernization.
The session outlined more than 300 reform initiatives, with a prevailing emphasis on expanding institutional opening up to create a new system for a higher-level, more open economy. The underlying strategy is to align with international standards in economic and trade practices, harmonizing regulations, management and standards across a range of fields, including property rights protection, industrial subsidies, environmental protocols, labor rights, government procurement, e-commerce and finance. The goal is to foster a transparent, stable and predictable institutional environment, integrating China more deeply into the global economy.
Institutional opening up was first proposed at the 2018 Central Economic Work Conference, a yearly meeting held in December to outline the economic priorities for the 12 months ahead, when it was put forward as a means to “promote the transformation from opening up based on the flow of goods and factors of production to opening up based on rules and related institutions.”
In the past four decades, China’s reform and opening up mainly relied on the flow of goods and factors of production, which played a big part in the country becoming the world’s largest trading nation. However, this form of opening up primarily benefited labor-intensive enterprises and production models.
As China now enters a phase of high-quality development, on the basis of opening up based on flows of goods and factors of production, it is necessary to evolve beyond this traditional approach. The next step involves taking on a bigger role in the global economic system. But doing so requires institutional opening up to enhance the country’s engagement with international economic practices and standards. This new move is also necessary to lift the country’s international competitiveness.
For China, one of the main components of institutional opening up is to study international rules and participate in the formulation of international rules.
Over the past 40 years, China’s reform and opening up have included a series of measures for institutional opening up. At first, China had to revise its systems passively to meet international standards. Now, as a major world economy, the country has assumed the responsibility of sustaining economic globalization. The rise of trade protectionism in some developed countries has seriously undermined this globalization. Therefore, it is China’s obligation to uphold the multilateral trade system centered on the World Trade Organization. This includes participating in the reform of the global economic governance system and contributing to the development of fairer international rules.
This mission necessitates the further comprehensive deepening of reform and the expansion of institutional opening up to maintain economic globalization and uphold international multilateral trade rules.
International competition among institutions and regulatory frameworks is now intensifying. The rapid rise of China and other emerging economies has shifted the global balance of power, triggering structural conflicts between, for instance, China and the United States regarding systems and strategies.
The U.S. seeks to modify the current multilateral trade system to establish trade and investment rules that favor developed countries, in turn potentially disadvantaging enterprises from China and other developing countries.
These conflicts represent a wider rivalry between established and emerging systems, as well as a struggle for influence over global economic governance and international trade rules. Given these dynamics, China must expand and expedite its institutional opening up to better navigate and help shape this evolving landscape. –The Daily Mail-Beijing Review news exchange item
