40 Years of Reform and Opening-up:China’s Participation in International Affairs Increasingly Enhanced at a Higher Level and with Greater Capabilities

By Huo Jianguo 

China’s participation in international affairs has been an important part of China’s opening-up over the past forty years. It is a practice in which reform and opening-up have mutually reinforced each other thanks to an increasingly stronger Chinese economy. Since the 18th National Congress of the Communist Party of China, under the strong leadership of the CPC Central Committee with Xi Jinping at the core, China has kept reviewing and improving its theory and practice and made new breakthroughs in its participation in international, multilateral and regional activities as well as in global governance. China’s participation in international affairs has fully testified to the fact that China has all along played its part in promoting world peace and development and upholding the international order. It has demonstrated that the basic theories, paths and policies formed since the third Plenary Session of the 11th CPC Central Committee have been fully correct. It has been pointed out in the report of the 19th CPC National Congress that in international affairs, China will continue to play its role as a responsible major country and take an active part in the reform and building of the global governance system, contributing China’s wisdom and strength. As this year marks the 40th anniversary of China’s reform and opening-up, it is necessary to analyze and review the role that China has played in international affairs at different stages. 

I. Four Major Stages of China’s Reform and Opening-up.

The first stage features exploratory efforts of reform and opening-up. In the 1980s, China was still in an exploratory stage of participating in international affairs. In early days of reform and opening-up in 1980, China restored its relations with the World Bank and the International Monetary Fund. Through frequent contacts with international organizations, China gained more understanding and knowledge about the external market, which played a positive role in facilitating reform and opening-up in its initial stage. However, in terms of market-oriented reform, China did not fully accept the advice from international organizations on drastic market reform. Instead, China firmly adhered to reform principles with Chinese characteristics and gradually expanded the range of opening-up from special economic zones to 14 coastal cities. What happened proves that the exploratory stage in the 1980s in which China started its reform in the rural areas then launched reform and opening-up of enterprises in cities has been successful and fully necessary as it conforms to China’s national realities.

The second stage features the acceleration of reform and opening-up. After the 14th CPC National Congress in 1992 put forward the requirements of building a socialist market economy at a preliminary level, reform and opening-up in all fields throughout the country entered an accelerating stage. Greater efforts were made to attract foreign investment and domestic market-oriented reform was introduced. In addition, the 1990s had been a crucial period for China’s negotiations on its accession to the WTO. The negotiations played a positive role in promoting China’s market-oriented reform as most of the reform measures were in conformity with the basic requirements on the WTO entry. For instance, China made sweeping reforms in separating the government from enterprises, ensuring the independence of enterprises, decentralizing the operating right of foreign trade, developing private sectors, carrying out planning and administration and unifying market policies. This had laid a solid foundation for building the basic framework of market economy in China. These reform measures not only unleashed the vigor of domestic economic development, but also attracted investment of foreign multinationals in China. As a result, SOEs, private companies and foreign investment enjoyed dynamic growth simultaneously in China, advancing its economy to a stage of remarkable development. 

The third stage features the interaction between China and the world economic system. After China joined the WTO, China’s economy was soon integrated into the world economic system, as evidenced by the benefits China enjoyed and the contribution China made to the growth of world economy and trade. While expanding its exports, China’s imports kept widening, offering a vast potential market for major trading nations around the world. By opening its market wider and attracting more foreign investment, China not only brought dynamism to its investment market, but also provided more profitable opportunities to more foreign investors, achieving win-win outcomes. After its entry into the WTO, China rapidly transformed from a country that simply implemented the international trade rules to one that upheld and promoted these rules. In addition, China played a positive role in the new round of WTO negotiations and captured worldwide attention for that.   

The fourth stage features China’s active participation in global governance. After the 18th CPC National Congress, President Xi Jinping , based on his accurate assessment of the situation, made the instructions of ensuring that China more actively move to the international stage, telling its stories well and leveraging its influence. Afterwards, China has made its voice heard on many global issues and put forward quite a number of Chinese proposals. At the APEC Economic Leaders’ Meeting in November 2014, the Beijing Roadmap was adopted, making the Free Trade Area in the Asia-Pacific the ultimate goal of regional economic integration. Under China’s initiative, the G20 Trade Ministers’ Meeting was institutionalized in July 2016, achieving important accomplishments. The G20 Summit in Hangzhou emphasized the innovative growth model and put forward practical and effective solutions to outstanding issues facing the world economy. The BRICS Summit held in Xiamen in September 2017 yielded a series of outcomes on practical economic cooperation and trade as the five countries emphasized that a more efficient global economic governance structure should be built to reflect the current world economic landscape and increase the say and representation of emerging markets and developing countries. All these changes have indicated that China has been gradually moving from the periphery of the world to the center stage, enjoying worldwide attention. 

President Xi Jinping has repeatedly emphasized that China’s development is attributable to the international community and China is ready to offer more public goods to the international community. The new mechanisms and initiatives launched by China have supplemented and improved the existing international mechanisms with a goal of realizing win-win outcomes and common development. 

The launching of the Belt and Road Initiative (BRI) has been a positive exploration for and major contribution to the reform of the global economic governance system. Since its launching, the BRI has captured increasing attention and been increasingly well received around the world. It has started building synergy with development strategies of countries along the route and the relevant regional integration processes. Different from agreement-based compulsory binding rules in the traditional model, the BRI emphasizes the synergy and complementarity of development strategies of various countries as well as infrastructure building and connectivity, creating a new model of international economic and trade cooperation based on extensive voluntary participation and development of partnerships. Extensive consultation, joint contribution and shared benefits have been the guiding principle for cooperation under the BRI and have been included in the report of the 19th CPC National Congress as a part of China’s vision on global governance. The resolution titled “the United Nations in Global Economic Governance” adopted by the 71st Session of the UN General Assembly has incorporated this principle, demonstrating that the vision and wisdom offered by China have gained international consensus.  

II. China’s Main Experience in Participating in Global Economic Governance.

First, a firm commitment to the Chinese characteristics is the basic principle for China to participate in international affairs. 

In choosing a path for reform and opening-up, China has rejected the one of fully copying the Western model. Instead, China has adhered to and maintained a development path with Chinese characteristics. In terms of the development model, China has gone through the transformation from a product economy to a commodity economy and from relying on a planned economy with market economy playing a secondary role to establishing a socialist market economy with Chinese characteristics across the board. Such adjustments have been difficult but each of them has been a great leap forward. In terms of the development practice, China started its reform and opening-up from four special economic zones and later expanded to 14 coastal cities, from relying on processing trade, the “Three-plus-one” trading-mix (manufacturing with meterials, designs or samples supplied and compensation trade) to attracting foreign investment on a massive scale, and from developing township enterprises to supporting the growth of private companies. Each step has been a liberation of productive forces and unleashed new growth drivers. As China has remained committed to maintaining the Chinese characteristics, reform in different stages has positively adjusted productive relations and forces in line with the rules of historical development. The secret for China’s success lies in the fact that every major decision has been made on the basis of respecting its national conditions, complying with the realities and serving the liberation of productive forces.

Second, a firm commitment to market-oriented reform is an important factor for playing a better role in the world.

China’s firm commitment to the major goal of market-oriented reform is in full compliance with the rules of global economic development. In the early days of reform and opening-up, China effectively learned from some policy advice from the IMF and the World Bank as many of them have been proven useful in promoting both the development of private sectors and building a business environment based on rule of law. China’s economic reform and opening-up has been actually a process of continuously developing and improving its market system, and a process in which people’s awareness of the concept of market has evolved and been raised. China has been successful in its economic development because, in its systems and institutions, it has completed the building of a socialist market economy with Chinese characteristics. In advancing the building of a market economy, China has accumulated valuable experience in three major aspects:

First, China’s market-oriented reform has been a process advanced in a step-by-step manner, and a process of keeping deepening reform in line with the basic requirements of international institutions on market-oriented reform. What particularly merits attention is that the process of negotiation for China’s entry into the WTO has just reflected the process that China kept advancing its reform into greater depth. Second, it has been a gradual process for China to realize the role of market in resource allocation. China has transformed from focusing on planned economy while the market played a secondary role to proposing at the third Plenary Session of the 18th CPC Central Committee that the market be allowed to play a decisive role in allocating resources. It spans a period of 25 years in which five CPC national congresses were held. Third, China has been increasingly determined in its adherence to the vision of pursuing development through opening-up as it has been changed by its reform and opening-up and its development would have been impossible otherwise. Therefore, today’s China views the world in a more open and inclusive approach.

Third, a firm commitment to fully participating in the division of labor in the global value chain is the foundation of development. 

China’s reform and opening-up coincided with the general trend of globalization. The early days of China’s opening-up happened to be an important development stage of the adjustment of the international industrial structure. China made full uses of the opportunities brought by accelerated adjustment of such a structure and uplifted its domestic export processing capacity through the “Three-plus-one” trading-mix and exports processing trade. Along with the deepening of reform and opening-up, more foreign investment has been involved at an increasing scale in China’s industrial sector, playing a positive role in production, job creation and taxation, and an irreplaceable role in facilitating China’s economic transformation and upgrading as well as advancing the development of industrialization. 

In particular, China’s foreign trade has been fully integrated into the international value chain and has gained tremendous benefits from the spillover effects after its accession to the WTO. By fully following and implementing relevant WTO rules, China has not only added more internationalized features to its economic development, but also given firm support to the rule-based international trading system. China’s development has benefited from the institutional protection from international rules on economic development. Therefore, it is fair to say that while China has benefitted from the international multilateral system, it has also staunchly upheld and supported the international multilateral trading system. 

Fourth, a high level opening-up is the effective way to enlarge China’s influence.

The 19th CPC National Congress has put forward that efforts be made to speed up the building of a new landscape of comprehensive opening-up, and advance China’s economy into a new stage of a high-level opening-up and development. The overall size of China’s economy, after 40 years of reform and opening-up, has ranked the second in the world with many indicators leading or standing among the top in the world. However, an apparent gap still exists in many fields. For instance, the discrepancy between China and the world is quite obvious in the industrial structure and product competitiveness, in capabilities of major technological innovation and core technologies, in the development level of the service sector and fostering of capital market, and in social governance and public administration. China still needs to work hard to narrow such a gap. The precondition for that is to remain committed to opening-up for development and implement more proactive opening policies. China should open up its own market, introduce competition mechanisms and improve its development level through fair competition. In the meantime, China should take an active part in international competition and pursue development through proactive involvement in international competition. This requires China to adapt to the existing rule-based international multilateral system, and more importantly, actively push forward and steer the formulation and improvement of international rules so that China’s economic development will be further internationalized to consolidate and enhance the international influence of its economy.    

Fifth, China has kept contributing its wisdom and strength.

As China’s economy continues to grow stronger, its participation in global economic governance has already become indispensable. China’s importance and influence have been more prominent since it has been involved in international economic activities in greater width and depth and played an increasingly significant role in international multilateral and regional activities. It is necessary for China to take an active part in global economic governance and firmly and effectively safeguard the legitimate rights and interests of Chinese enterprises under international multilateral rules. China’s participation in global governance is a process in which China has kept contributing its wisdom and strength. It needs to seize the following development opportunities: First, to continue its firm support to the multilateral trading system. The existing international multilateral trading system has been challenged by various forces. In particular, certain major country shows no respect to international multilateral systems and follows unilateralism, leading to opposition from the majority of countries around the world. China should take the initiative to uphold the authority of multilateral systems, call for a positive role of the rule-based multilateral trading system, and steadfastly oppose various acts and practices of trade protectionism. Second, to take an active part in G20 and various multilateral and regional mechanisms. China should actively participate in the consultation and coordination of international affairs, play its due role and contribute its wisdom and strength. Third, China will be actively involved in the reform requirements of the WTO. China will proactively push for revisions and improvement of international trading rules. Actually, China’s increasing role and influence in international affairs has been realized in its involvement in reforming and improving specific matters. One must not fail to see that this is a long process as China needs to keep enhancing its capability and competence in its systems and mechanisms,and in particular, in building its soft power, so as to meet the new requirements for China to take part in global economic governance. 

In its future foreign policy, China will take a more active part in global governance. Responding to the call of the times, China has paid greater attention to global economic governance. Objectively speaking, as China’s economy keeps growing, more Chinese enterprises will go global, making increasing investment abroad and participating in international competition. The interests of these enterprises need to be protected by fair international rules, and more importantly, by the Chinese government. Subjectively speaking, China should actively demonstrate that it is a responsible major country. It is a responsibility and an obligation for China to express its views and ideas on a series of major events in the international community. In recent years, President Xi Jinping chaired multiple meetings on regional and global economic governance. President Xi has also placed high importance on regional and global governance mechanisms such as the APEC Economic Leaders’ Meeting, BRICS Summit, Belt and Road Forum for International Cooperation and G20 Summit and hosted in China several meetings on regional and global governance. President Xi Jinping, on many occasions, made important speeches to call for advancing the reform of the global economic governance system. China has entered an era of participating in global economic governance. If it is fair to say that China has been integrated into the global economic governance system through reform and opening-up over the past 40 years, then after the 18th CPC National Congress, China’s reform and opening-up has focused more on participating in global economic governance. China is now under the transformation from merely accepting the rules to participating in and advancing the setting of rules. This demonstrates that China’s achievement of reform and opening-up has been recognized and acclaimed by more countries, and the goal initiated by China of building a community with a shared future for mankind has been agreed and accepted by an increasing number of countries.               

Huo Jianguo is Vice President of China WTO Institute and Former President of the Institute of International Trade
and Economic Cooperation of the Ministry of Commerce of China.