The 14th Five-Year Plan: China Advances High-Level Opening-Up and Brings New Opportunities for the World

By Gu Xueming

The world today is undergoing profound changes unseen in a century. Economic globalization has encountered setbacks. Protectionism and unilateralism are on the rise. The world economy is in the doldrums. Global industrial and supply chains are experiencing shockwaves sent by non-economic disruptors. A profound adjustment is taking place in the international economic, scientific and technological, cultural, security and political landscapes. The world is in a phase of fluidity and transformation. Notwithstanding the international community’s major concerns about the prospects of economic globalization, international economic connectivity and exchanges remain the objective requirement for the growth of the world economy. According to the 14th Five-Year Plan, China aims to “pursue high-level opening-upand break new ground for win-win cooperation.” It is an important measure for China to navigate the complex and volatile international landscape and essential for the country as it embarks on a new development stage. A higher level of opening-up in China will not only benefit its own economy, but also bring tremendous opportunities for global development.

I. Essential elements of high-level opening-up in the 14th Five-Year Plan

With the developments in international and domestic circumstances, China’s high-level opening-up in the 14th Five-Year Plan period will be marked by four characteristics: “more self-directed, systematic and integrated, inclusive, secure and stable.”

(1) A more self-directed opening-up

Autonomy is the basic requirement for opening-up at a higher level. In the past, China opened to the wider world in a relatively passive manner as a performing party to established international rules; during the 14th Five-Year Plan period, it will open up in a more proactive and self-directed way, which will better serve the practical needs of China’s economic growth.On the one hand, China will be more proactive in opening wider to the rest of the world. It will take pilot measures through relevant platforms such as its free trade zones (ports) as well as comprehensive trials on service sector opening.On the other hand, the progress and magnitude of China’s opening-up will be mapped out in line with its economic needs, including the need of improving the quality of its economic growth and the betterment of the lives of the Chinese people.

(2) A systematic and integrated opening-up

Systematic integration is the essential requirement for high- levelopening-up. During the 14th Five-Year Plan period, China will promote high-quality development through more systematic and integrated opening-up and effective synergy.First, China will seek integrated opening-up across all sectors,with emphasis on expanding and deepening the opening-up of the service sector while promoting comprehensive opening-up of the manufacturing industry.Second, China will seek integrated opening-up across all links,strengthening the collaborative opening-up of all upstream and downstream of the industrial chains such as research and development, production, logistics and marketing.Third, China will seek integrated opening-up across all regions, deepening the opening-up of its coastal provinces while pushing the inland and border areas to shift from opening-up lowland to opening-up highland.Fourth, China will seek integrated opening-up across the domestic and international markets. It will promote better connectivity between the two markets to facilitate the integrated development of domestic and foreign trade as well as the coordinated development of inbound and outbound investment.

(3) An inclusive opening-up

Inclusiveness is the requirement of the times for high-levelopening-up. During the 14th Five-Year Plan period, China will keep improving and innovating its model for opening-up to deliver win-win cooperation with other countries.It will employ a cooperation model that ensures mutual benefits.Under this model, China and its partners will be empowered to give full play to their comparative advantages and take their rightful places in the global industrial and value chains as they work together, thereby pushing the economic globalization to be more open, inclusive, balanced and beneficial for all.At the same time, China will actively contribute its wisdom and solutions in response to key global issues.It will strengthen research on global issues such as carbon emissions, and create a new model of sustainable opening-up through a shift from an economic-oriented opening-up to one that seeks both prosperity as well as environmental benefits and justice. In areas where consensus has not yet been reached on international rules, such as digital trade, China will take the initiative to engage in negotiations on emerging issues and propose cooperation programs that reflects reasonable demands of the broader international community.

(4) A secure and stable opening-up

Security and stability are necessary requirements for high- levelopening-up. During the 14th Five-Year Plan period, China will pursue a holistic approach to national security, ensuring security as it opens wider to the rest of the world.On the one hand,as China continues to open up, it is important to identify and understand emerging issues and challenges, strengthen interim and ex post regulation, and improve its national security and anti-monopoly reviews of foreign investment as well as other relevant measures, so as to prevent and mitigate major risks and build on the security system for China’s open economy.On the other hand,efforts will be made to focus on creating an open, transparent and predictable business environment, and continue to deepen the reforms to streamline administration and delegate power, improve regulation, and upgrade services, in order to improve the stability, transparency and predictability of the opening-up policy so that foreign enterprises can enjoy a good and stable investment environment in China.

II. China’s contributions through high-level opening-up during the 14th Five-Year Plan period

By advancing its opening-up to a higher level, China will contribute to the sharing of its development opportunities globally and promote common prosperity of the world in four aspects.

(1) “China’s strong market” driving global economy and trade

Today, with a huge middle income group counting over 400 million people, China holds a strong purchasing power. In 2020, the total retail sales of consumer goods in China amounted to 39.2 trillion yuan. Online shopping and other emerging consumption patterns grew rapidly, with an annual online retail sales of physical goods of 9.8 trillion yuan, an increase of 14.8%. According to the 14th Five-Year Plan, China will “continue to liberalize and facilitate trade and investment,” “step up efforts to promote coordinated development between regions,” and “build a high-standard market system.” In this way, China will be able to maximize its advantages as a strong consumer market and improve its market environment to drive trade and investment and create market opportunities for countries worldwide.

First, China will expand the opening-up of various sectors to enrich the investment market. During the 14th Five-Year Plan period, China will further reduce the negative list of market access for foreign investors, take gradual steps to ease restrictions on foreign investment in agriculture, manufacturing and service sectors, encouraging foreign enterprises to invest and operate in more areas. In addition, as China’s service sector has lagged behind in opening-up compared with its manufacturing industry, it will seek to foster an orderly process of opening up its education, culture, healthcare and other services, and liberalize foreign investment access to services such as childcare and eldercare, architectural design, accounting and auditing, trade and logistics, and e-commerce during the 14th Five-Year Plan period, which means more investment opportunities for foreign investors.

Second, China will advance trade upgrading and widen import market. During the 14th Five-Year Plan period, China will improve its integrated regulation regime for domestic and foreign trade by promoting the alignment of domestic and foreign trade laws and regulations, supervision systems, business licenses, quality standards, inspection and quarantine, and certification and accreditation. China will also implement measures to facilitate high-level trade, including increasing imports of quality goods and expanding market access to the service sector. China will fully translate the transformation and upgrading of Chinese people’s consumption structure into effective demand for unique and quality overseas products and services.

Third, China will push for the opening-up of its central and western regions as well as inland and border areas to expand market space. During the 14th Five-Year Plan period, as China deepens the opening-up of its coastal regions, it will also advance the opening-up of the central, western and border regions by improving infrastructure such as ports and cross-border transportation, supporting the opening-up and development of local sectors with distinctive features. In addition, China will implement more flexible policies to accelerate the opening-up of its inland and border areas. Foreign investors will see a greater market space in China as these regions open up to a higher level.

Fourth, China will continue to deepen reforms to provide a world-class market environment. During the 14th Five-Year Plan period, China will move faster in implementing the Foreign Investment Law of the People’s Republic of China, the Regulation on Implementing the Foreign Investment Law of the People’s Republic of China, and the Regulation on Optimizing the Business Environment. It will work to create a fair and impartial market environment where domestic and foreign investments are treated as equals by reinforcing the management system of pre-establishment national treatment and negative list and strengthening the protection of intellectual property rights, so that enterprises from around the world can enjoy a sound business environment in China.

(2) “China’s quality resources” driving global economic upgrading

As a latecomer and an emerging economy, China has actualized its own growth by making maximum use of the world markets and global resources. Not only that, in recent years, China has also been reinvesting all kinds of quality resources in other countries so that they would also harvest the economic benefits. China is sharing its resources with the rest of the world in many ways: in 2020, its outward direct investment was US$132.94 billion, up 3.3% year-on-year; 301,000 Chinese workers were dispatched overseas for contracted cooperation projects; and the completed turnover of its offshore services outsourcing exceeded US$100 billion for the first time. According to the 14th Five-Year Plan, China will pursue “innovation-driven development” and “accelerating modernization of the industrial system,” which will enable it to share more resources with other countries and drive global economic upgrading in the following two ways.

On the one hand, China willexpand the opening-up of high-quality factors of production and provide resources such as capital, information, and talents. During the 14th Five-Year Plan period, China will actively explore new mechanisms for resource allocation, ensure steady progress in opening its capital markets, and continue to improve and innovate the product line-up in those markets. Furthermore, China will take a prudent approach to promoting Renminbi internationalization and establish relevant global scientific research funds. To promote cross-border data flows, Hainan Free Trade Port and other platforms will be at the forefront of the pilot programs regarding security management of cross-border data transfers. At the same time, China aims to cultivate more talents with innovative and practical skills. It will bring greater openness to its talent policies to enrich its talent pool, thereby providing quality resources for the economic development of the broader international community.

On the other hand, China will promote the opening-up of the emerging industry and provide resources to advance the growth of frontier industries. During the 14th Five-Year Plan period, digitalization will be sped up. China will both develop digital industry and transform traditional industries with digital technologies, which will bolster the development of digital application scenarios such as mass customized design, intelligent manufacturing, optimized and faster flows in supply chains, collaborative innovation in R&D, precise marketing, as well as service operation, maintenance and prediction. In this way, enterprises engaged in digital businesses will enjoy a greater variety of scenarios for their product application. At the same time, China will advance offshore testing, global repair and remanufacturing and other high-tech industries with high added value. It will also explore the development of offshore finance, trade, scientific research and other offshore industries. In this way, China will be able to optimize the allocation of resources for the development of emerging industries.

(3) “China’s solutions” contributing to global economic governance

As COVID-19 rages on around the world, China has proposed its solution on various occasions, including at the United Nations, G20, APEC and BRICS. The solution calls for international cooperation, experience sharing on fighting COVID-19, safeguarding the multilateral trade system, and stabilizing trade and investment. It has won extensive recognition from the international community by offering China’s solution and wisdom regarding economic globalization and global economic governance. According to the 14th Five-Year Plan, China will “proactively engage in the reforms of the global economic governance system,” which will accentuate China’s role as an important participant and contributor to global economic governance.

First, China will work to energize its systematic opening-up at a faster pace so that it can better integrate into and advance globalization. During the 14th Five-Year Plan period, China will, following standard international practices, make full use of its platforms dedicated to self-directed opening-up, such as free trade zones and ports and comprehensive pilot programs which aim to further open up the service sector. In addition, it will speed up the trial runs of high-level international rules in such areas as foreign capital’s market access, movement of people, fair competition, regulatory transparency and discriminatory measures. Furthermore, China will deepen the systematic opening-up of commerce, investment, trade, ongoing and ex post regulation, industry management systems and other key areas, in order to better integrate into and advance economic globalization.

Second, China will continue to engage in major international issues and provide constructive solutions. During the 14th Five-Year Plan period, China will continue to uphold the multilateral trading system and actively participate in the reforms of the World Trade Organization to promote a more equitable and reasonable system for global economic governance. China will take the initiative to respond to global climate change by moving faster to draw up long-term low-carbon development strategies at the national, sectoral and local levels, and by taking preemptive actions in carbon finance, access to carbon emission markets, and relevant energy standard systems, so as to step up to its responsibilities as a major country with its solutions to global climate change.

Third, China will promote the formulation of rules in emerging areas to better facilitate international cooperation. During the 14th Five-Year Plan period, China will build on its strengths in the digital economy and cross-border e-commerce to accelerate standard-setting in cross-border data flows, paperless management, mobile payment and other areas. In this way, China offers the world its wisdom on the formulation of rules in the digital realm.

(4 )“China’s global engagement” driving win-win cooperation worldwide

In recent years, China has been sharing the fruits of its development with the rest of the world by expanding its network of partnerships. It has always adhered to the principles of “extensive consultation, joint contribution and shared benefits” in advancing the Belt and Road Initiative (BRI). As of April 2021, China has signed 19 free trade agreements with 26 countries and regions. According to the 14th Five-Year Plan, China aims to “promote the high-quality developmentof the BRI” and “build a globally oriented network of high-standard free trade zones.” Through win-win cooperation with more countries, it will advance its regional opening-up and cooperation to a higher level.

First, China will promote the high-quality development of the BRI. During the 14th Five-Year Plan period, China will stay committed to the principles of “extensive consultation, joint contribution and shared benefits” and the philosophy of green, open and clean cooperation. It will deepen practical cooperation to promote common development while strengthening security. Furthermore, China will continue to optimize and upgrade its trade and investment cooperation with countries of the BRIby deepening international cooperation on production capacity and expanding third-market cooperation, so as to expand two-way trade and investment and build a cooperation system across the industrial and supply chains that will bring benefits to all participants. China will build an innovative financing cooperation framework through cooperation within the Belt and Road Special Lending Scheme, the Silk Road Fund, etc. In addition, we will deepen cooperation in public health, digital economy, green development, science and technology, education, culture and art, to weave a tapestry of multi-faceted people-to-people exchanges.

Second, China will move faster in implementing the free trade zone upgrading strategy. During the 14th Five-Year Plan period, China will build a high-standard network of free trade zones that focuses on its neighbors, radiates out through the Belt and Road, and opens to the world. It will strive to implement the outcomes of the RCEP negotiations and actively consider joining the CPTPP. Furthermore, China will advance the opening-up of its free trade zones and manufacturing industry to a higher level. Under such modes as overseas consumption, cross-border provision and movement of natural persons, it will liberalize the market access of foreign service providers to commercial, distribution, environmental, financial, transportation, and tourism and related services, among others. By doing so, China will be able to deepen its economic and trade relations with more partners and thus promote common development.

Gu Xueming is President of Chinese Academy of International Trade and Economic Cooperation, Ministry of Commerce.