Globally aligned rules yardstick in opening-up

（来源：《China Daily》 2024-01-15）

CAI MENG/CHINA DAILY

The annual tone-setting Central Economic Work Conference held in December listed high-standard opening-up as one of the nine priorities in economic work in 2024.

According to the meeting, efforts must be made to foster new drivers of foreign trade, consolidate the overall performance of foreign trade as well as capital, and expand intermediate goods trade, services trade, digital trade and cross-border e-commerce exports.

In fact, China has been shifting the focus of openness from trading of goods and freeing the movement of resources toward institutional opening-up.

The key task for opening-up in the next stage is to continuously expand high-level openness, like accelerating the cultivation of green trade to boost the real economy, expediting the development of green trade to make "green" the underlying factor across the entire trade chain, and actively aligning with international high-standard economic and trade rules to steadily expand high-level institutional opening-up.

China has said it will remove all restrictions on foreign investment in the manufacturing sector, but the degree of openness in the services sector remains relatively insufficient.

Particularly, there is room for increased openness in areas such as telecommunications, healthcare and financial services.

Trade rules

The country still has potential for enhancement in the governance of, and alignment with, global high-level economic and trade rules, especially the exploration of digital trade rules. There are several ways to further this.

First, increasing openness in telecommunications and financial sectors. For instance, the State Council, or China's Cabinet, recently approved a working plan to accelerate the development of Beijing's national comprehensive demonstration zone for expanding opening-up in the services sector, which proposes further opening-up in areas such as information services and internet access services. These measures should be promoted nationwide, and continuous exploration is needed to increase the scope and depth of opening-up in value-added telecommunications services.

Second, continuously improving the negative list-based management system for services trade. Various provincial-level regions, pilot free trade zones and the Hainan free trade port should ensure that opening-up in digital trade and trade in services continue to advance, through leveraging the effect produced by pilot projects based on their different openness levels and development status.

That will lead to a continuous enhancement of investment liberalization and facilitation in services trade. However, for certain services sectors (for instance, those related to national security), such as financial and cultural services, we should adopt a classification-based tiered management approach.

Third, in digital trade rules, comprehensive alignment with high-level global economic and trade rules should be explored based on pilot work in the Shanghai pilot free trade zone, to steadily expand institutional opening-up.

Some enterprises and individuals, due to business needs, may need to provide data to overseas entities. If this action aligns with the national requirements on cross-border data transmission security, it may be permissible. Additionally, it is also appropriate to support the trustworthy, safe and responsible use of digital technologies, including artificial intelligence.

Institutional thrust

The key to furthering opening-up is institutional opening-up, or to improve the socialist market economy and strengthen ties and compatibility between the Chinese and other economies through aligning with international rules, regulations, management and standards.

To attract foreign investors, it is important to truly incorporate foreign companies in China's industrial development and enhance their national treatment.

It is necessary to eliminate discriminatory provisions in laws and regulations, and firmly establish and clarify national treatment for foreign investors through legal means, thereby improving policy predictability and stability in China.

Additionally, the government's decision-making consultation processes should further engage participation from foreign companies, and fully consider the potential impact of policy changes on foreign businesses.

To expand opening-up in the services sector, China should strive to minimize market access restrictions for foreign businesses, as well as eliminate differential treatment and hidden market barriers.

In terms of industry supervision and regulation, transparency and the rule of law should be further promoted, providing foreign suppliers with full, fair and transparent opportunities for market participation.

In digital trade, it is essential to learn from international practices, and boldly experiment and explore, including significantly relaxing cross-border flow of commercial data. While ensuring national security, it is also crucial to vigorously enhance the integration of China's digital society and digital economy into that of the world.

The Central Economic Work Conference said that market access for the telecommunications, medical and other service industries will be eased, while efforts should be made to align with high-standard global economic and trade rules, resolve issues such as cross-border data flows and equal participation in government procurement, and make "Invest in China" a more popular choice.

Digital trade has become a crucial form of international trade, with many goods and services transactions relying on cross-border data movement. Promoting liberalization and facilitation of cross-border data flow is essential for the development of international trade and attracting foreign investment.

Regarding government procurement, the conference stressed the importance of equal participation, signifying that State-owned enterprises, private enterprises and foreign companies should be treated equally while participating in government procurement. This aligns with international high-standard economic and trade rules and also supports China's swift accession to the WTO Agreement on Government Procurement.

Aligning with international high-standard economic and trade rules holds significant importance for promoting China's reform and opening-up, as they represent a crucial direction for future global economic governance and serve as a "yardstick "defining the direction of China's efforts toward increasing openness.

The obstacles to China's accession into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership primarily exist in two aspects: the gap between China's current level of openness and that required by the CPTPP, and the potential disruption from geopolitical issues.

The first aspect does not present a big problem. Most of the CPTPP provisions will not create accession obstacles for China. Even if there are some obstacles, we can negotiate to extend transition periods or have exception clauses. Vietnam has taken a similar approach.

The real obstacle for China in joining CPTPP lies in geopolitical interference. Regarding the difficulty of specific provisions, that for labor standards, State-owned enterprises, and e-commerce are the most challenging, but all are negotiable.

Compared to the CPTPP, joining the Digital Economy Partnership Agreement is somewhat easier. The DEPA is divided into 16 specific modules, including business and trade facilitation, treatment of digital products and related issues, business and consumer trust, and digital identities. One unique feature of the DEPA's institutional design is that applicant countries can selectively participate in specific modules. This flexible approach reduces the complexity of negotiations.

We need to further promote rule of law and policy consistency to enhance business climate and boost confidence of foreign investors. We also need to strike a better balance between pursuing development and addressing security concerns, to boost compatibility and ties between domestic and external markets.

The Central Economic Work Conference stressed that China will focus on promoting high-quality development in 2024, give prominence to key areas, grasp key points and carry out economic work in a down-to-earth manner.

That means economic development remains essential to the country, and there is no security without development.

The writer is president of the University of International Business and Economics.

The views do not necessarily reflect those of China Daily.

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