China's effort to build a new development dynamic has the world wondering: Will China slow down foreign trade? Will it refuse foreign investments? Will it refrain from investing abroad? In a nutshell: Will China water down its opening up?
As a cornerstone of the global supply chain, China's decisions can sway the overarching global economic tendency. In this sense, the world's question marks regarding the country's policies are understandable. Yet any worries caused by a lack of understanding of the new development paradigm are unnecessary, as it is designed to sharpen China's competitiveness against the backdrop of a volatile international landscape, rather than push the country to turn inward.
The new development dynamic is composed of two parts: One is taking the domestic economy as the mainstay and the other is domestic economic development and international engagement providing mutual reinforcement. With its super scale, the domestic market will be the major force driving forward economic growth while international markets and resources can also be brought into effective use.
Therefore, instead of looking merely inward, the new development paradigm is open and calls for balancing self-sufficiency and international engagement, a goal that is challenging for any economy.
So why is China giving prominence to this new development dynamic right now? This stems from the country's real-time economic and social development.
China's economic takeoff is marked by two milestones: One is the country's reform and opening up launched in 1978 when it began actively involving itself in the global economy; the other is China's accession into the World Trade Organization in 2001, which pushed the country further into the world economy. And for quite a long time, China managed to realize rapid economic growth by relying on its comparative advantages like the low costs of labor and raw materials, or favorable tax and land policies.
However, these advantages are slowly but surely dissolving due to factors such as stricter regulations on environmental protection and rising labor costs. China also faces the risk of being forced to go through deglobalization. The reindustrialization of some developed economies, a new round of global sci-tech competition, trade protectionism and geopolitical tensions—all these have led to a need to reduce China's reliance on external markets. The concept of large-scale imports and exports with both ends of the economic process—markets and resources—located abroad has become outdated.
With its new development dynamic, the domestic market will receive more attention, but international trade and investment, too, will keep evolving. By adhering to this vision, China can further unleash its domestic potential, in turn providing more business opportunities to the rest of the world and helping stabilize world economic growth.
Historically, major economies have always made sure to remain attractive to global investors after achieving higher levels of self-sufficiency. Openness to foreign participation in the Chinese economy is a necessary balance for Chinese outbound investment, especially considering growing cooperation under the Belt and Road Initiative, a China-proposed initiative that aims to boost connectivity along and beyond the ancient Silk Road routes. China must remain an attractive destination for foreign direct investment.
Also, China intends to continue opening up to the outside world as the Chinese people's pursuit of a better life can be better satisfied by products and services of higher quality from the world over. It must further strengthen its cooperation with the rest of the world in terms of regulations, management and standards of goods and services.
For instance, by late 2022, China had signed 106 bilateral plus multilateral cooperation documents with 63 national and regional standardization institutions and international organizations. That same year, 752 members from foreign-funded enterprises joined China's national professional standardization technical committees.
As a result of this interaction, the rest of the world can dig deeper into the Chinese market. This combination of internal and external resources are expected to make economic growth more robust and sustainable.
Copyedited by Elsbeth van Paridon
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