Wang Xiaohong: Aligning with High-Standard International Economic and Trade Rules to Promote High-Level Opening Up
Benchmarking against high-standard international economic and trade rules is conducive to creating a market-oriented, law-based, and internationalized first-class business environment. High-standard international economic and trade rules, represented by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA), encompass not only "at-the-border" rules for free and open trade but also a series of "behind-the-border" rules [1]. These involve competitive neutrality, state-owned enterprises (SOEs), intellectual property protection, labor and environmental protection, subsidies, government procurement, regulatory coherence, transparency, and anti-corruption. Benchmarking against these rules to promote reforms of relevant domestic systems and mechanisms will help create a business environment that aligns with international standards. This will further promote the liberalization and facilitation of trade and investment, forming an institutional environment for the smooth flow of commodities and factors [2], a market environment for fair competition among business entities, and a stable, transparent, and predictable policy environment.
The alignment of rules and standards serves as the foundational support for connecting domestic and international markets and the deep integration of industrial and supply chains; it is also an inevitable requirement for promoting high-level opening up. High-standard international economic and trade rules involve a series of high-level opening-up measures. For instance, over 99% of trade in goods achieves zero tariffs; trade in services adopts a negative list [3] model and establishes a ratchet mechanism [4] to ensure that the degree of openness "only advances and never retreats"; and foreign investors are granted freedom of market access and national treatment. Aligning with these rules to orderly expand the opening of China's commodity, service, capital, and labor markets will provide institutional support for high-quality "bringing in" and high-level "going out" [5]. This, in turn, will provide developmental space for China to expand into international markets on a broader scale, integrate more comprehensively and deeply into global supply chain systems, and participate in the global value chain division of labor at a higher level.
Accelerating the construction of a new development pattern [6]—with the domestic macro-circulation as the mainstay and the domestic and international dual circulations promoting each other—requires, as an important aspect, the realization of efficient connections between domestic and international markets and the matching of supply and demand for resources and factors. This aims to better utilize the international circulation to enhance the quality and level of the domestic circulation. The requirements and principles of high-standard international economic and trade rules aim to maximize the elimination of various restrictive barriers and obstacles in the fields of trade and investment, promoting the cross-border flow and efficient allocation of factors such as capital, personnel, and data. This conforms to the objective trend of economic globalization and is consistent with the internal requirements of China’s effort to build a new development pattern. For example, raising the standards for rules of origin is conducive to enhancing the level of regional supply chain collaboration. Rules concerning the safe and smooth cross-border flow of data, as well as the elimination of obstacles in electronic authentication and signatures, paperless trade, and access to and use of the internet for e-commerce, reflect the developmental requirements of a digital economy supported by digital technology and centered on data as a core factor. These rules provide institutional guarantees for the smooth cross-border flow of goods, services, and various innovation factors. This is beneficial for improving the allocation efficiency of high-quality productive factors, which can not only enhance the quality of China’s products and services and realize the upgrading of consumption structures to meet the needs of China’s industries as they move toward the middle and high-end segments of the global value chain, but also help China respond to the trends of "onshoring," "near-shoring," and "friend-shoring" in global supply chains. It helps maintain supply chain security and opens broader international markets for China’s competitive production capacity, technologies, services, and standards to "go out."
Overall, aligning with high-standard international economic and trade rules is conducive both to constructing a new model of inclusive and beneficial development cooperation between China and developing economies, and to building a new type of mutually beneficial and win-win cooperative relationship with developed economies. This will create more favorable conditions for deepening reform, improving the global governance system, and participating in the construction of regional governance platforms. We must proactively benchmark against relevant rules, regulations, management, and standards to promote institutional and mechanistic reforms in relevant domestic fields, creating a first-class business environment through high-level opening up and promoting the open economy to reach a new level.
First, elevate the level of openness in service trade. We should establish and improve the negative list management system for cross-border service trade and expand the opening of service trade in sectors such as telecommunications, medical care, education, culture, the internet, finance, professional services, and modern logistics. For example, we should expand the business scope of foreign-funded financial institutions in the banking and insurance sectors. In key cities, Free Trade Zones (FTZs), and pilot platforms for the innovative development of service trade, we should continue to explore opening-up measures in cultural fields such as film, television, and performance, while continuously improving visa facilitation measures for foreign nationals coming to China.
Second, promote openness in digital trade. We should facilitate the safe and free flow of cross-border data, accelerate the improvement of systems for key industry data lists, data classification and hierarchical management, and security assessments, and enhance the efficiency of cross-border commercial data flows. We must strengthen cross-border data management, promote the safe and orderly flow of R&D data, and improve the construction of laws and regulations for data intellectual property protection—such as source code, data assets, and digital copyright—as well as personal privacy and consumer rights protection. We should promote the establishment of international cooperation mechanisms in the digital field and strengthen international cooperation in areas such as artificial intelligence, big data, cross-border settlement, and mobile payments.
Third, increase the intensity of opening up in goods trade. We should reduce import tariffs on certain daily consumer goods, industrial products, luxury goods, and medicines. We should innovate trade supervision methods, continuously promote trade facilitation for goods, improve the international trade "single window" [7], optimize inspection, testing, and quarantine processes to improve customs clearance efficiency, and promote the development of green trade.
Fourth, deepen the reform of the foreign investment management system. We should continue to shorten the negative list for foreign investment access, expand access for foreign capital in the service industry, and reduce restrictive measures such as joint venture requirements and shareholding ratios. We must strengthen the protection of the rights and interests of foreign investors, improve complaint mechanisms for foreign-funded enterprises and international dispute resolution mechanisms, and build "one-stop" resolution platforms for foreign-related commercial disputes. We should improve the system for "in-process and ex-post" supervision [8] and strengthen the security review mechanisms and credit systems for foreign investment.
Fifth, create a market environment of fair competition. We should strengthen the review of corporate mergers and acquisitions and administrative monopolies, and increase enforcement against the abuse of dominant market positions to ensure that all types of business entities use various productive factors on an equal basis and participate in market competition fairly. We should enhance the transparency of policy formulation and law enforcement, and properly implement national treatment for foreign-funded enterprises in areas such as government procurement, industrial subsidies, and standard-setting.
Sixth, deepen the reform of state-owned enterprises. Benchmarking against requirements in rules like the CPTPP regarding commercial considerations, competitive neutrality, and transparency for SOEs, we must continue to deepen the classified reform of SOEs and improve market-oriented operating mechanisms. We should deepen market-oriented reforms of competitive links in key sectors such as telecommunications and railways and strengthen effective supervision of monopolistic behavior. We should steadily promote the mixed-ownership reform [9] of SOEs to further stimulate their endogenous vitality.
(The author is a specially invited researcher at the Beijing Research Center for Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and a researcher at the China Center for International Economic Exchanges)
Source: Guangming Daily (January 15, 2024) Web Editor: Huihui