China Will Continue to Open Up

Confidence in Opening-up

China will continue to open up to the world because we have confidence in globalization. Though arriving late at the “party,” China quickly grasped the essence of globalization. Learning from a failed closed-door policy in history, China knew that the international trend was unstoppable and could not be reversed.

China witnessed how some emerging nations once prospered but declined because of their conceit and separation from world development. China also saw how WWI, WWII and the Cold War nearly destroyed the world but how the international flow and exchange of economy, people, and culture resumed after each crisis.

If wars could not stop globalization, then what could? Can an economic entity really become autarkic and stop the permeation of information, capital, and technology? Can populism, which is just a transient way for some people to express themselves and for shortsighted elites to please, really change the development of world history? China does not think so. Therefore, China has confidence in its opening-up and also that other countries will return to the road of opening-up.

In a changing world, especially in an environment of anti-globalization, China’s opening-up will take on a different look. This difference can be summarized in one word – rules.

How to Further Open up?

China will continue to open to the world, and participate in and promote globalization with a focus on the establishment of rules and regulations.

China needs to improve its legal system. The country’s recent legislation on strengthening management of the Internet and NGOs incurred suspicion from abroad. Some saw it as signifying foreign investment brakes on China’s opening-up; others complained that the foreign investment environment in China had begun to worsen.

This demonstrated that the outside world was not used to China’s opening-up based on rules. But to open up thoroughly, rules have to be strengthened; otherwise, there will only be chaos, which will not generate benefits but harm both China and the world.

In the last 20 years, many emerging markets, faced with foreign capital speculation and a deformed domestic economic structure, could not find countermeasures, and suffered from financial and social crises that spread throughout the world.

This lesson resonated with us. During the process of China’s reform and opening-up, some cases lacked rules and regulations. For example, some local governments promised foreign investors huge preferential treatment in land, tax, and labor rights, which seemed to attract capital and broaden opening, but had serious consequences. When the world economy slowed down and the trade environment worsened, those seemingly preferential arrangements became unprofitable.

China gradually strengthened regulations, which increased the difficulties of officials who had made promises and investors who held big hopes. This teaches us that opening up cannot go beyond market laws and regulations, and that we will definitely pay the price in the long run if laws are broken.

Internet companies and NGOs arrived in China after ODI. Therefore, it is best to set rules that are acceptable to both China and foreign corporations. In fact, the trend of rule-setting is a world phenomenon. For instance, Internet enterprises in Silicon Valley are negotiating tax affairs with the EU, and NGOs in the West are trying to adapt to new rules set by emerging and developing countries. When the Chinese say “Even brothers should do the accounts” and Americans say “Good fences make good neighbors,” both mean that progress can only be made when rules are followed cooperatively. It is laws and regulations that have enabled the market economy and globalization to come this far.

Some think it is hard to understand the Chinese government’s rules. In fact, they are very simple: The ultimate goal is not only regional and economic development but also overall development, which can be summarized by “building a moderately prosperous society comprehensively.”