Embrace the World with an Open Mind

President Xi Jinping delivered a keynote speech at the opening of the 2018 Boao Forum for Asia (BFA) annual conference on April 10, shoring up the U.S. and Asian stock markets and the U.S. dollar. The Dow Jones Industrial Average rose 1.5 percent and the Standard & Poor 500 Index rose 1.3 percent. In sharp contrast, after U.S. President Donald Trump announced the introduction of annual tariffs on Chinese products worth US $60 billion two weeks earlier, the global stock market fell immediately.

Since China began to pursue high-quality economic development, the method of utilizing foreign investment has shifted from processing trade to high-end service and manufacturing industries. President Xi’s speech highlighted the need to speed up the opening up of sectors such as finance, automobiles, and insurance.

With the introduction of pilot Free Trade Zones, China’s financial industry has continued to open up. Last year Fidelity’s wholly-owned subsidiary in Shanghai became the first wholly foreign-owned private equity institution to raise capital and invest in the A-share market in China. UBS Asset Management and BNY Mellon established exclusively foreign-owned enterprises in the Shanghai Free Trade Zone, which have also been granted private equity investment fund manager licenses. Lujiazui has gradually become an important gathering place for internationally renowned asset management agencies to develop financial businesses in China.

After the BFA, a series of measures to raise foreign equity caps for the banking, securities, and insurance industries will be launched within the year. The Shanghai-London Stock Connect will also be opened later this year. In the next five years, China will basically liberalize investment restrictions in the financial market.

Tesla and other foreign car companies that are negotiating to enter China will be the first beneficiaries of further opening-up of the country’s auto industry, and they may choose to invest solely in the Chinese market. At the same time, the tariffs on imported cars will be lowered to 25 percent.

While pursuing high-quality economic growth, the Chinese people are also pursuing a higher-quality life, which will create a huge consumer market for both domestic and foreign producers. In his speech at the BFA, President Xi mentioned that China will take the initiative to expand imports, not to pursue trade surplus as the goal, and reduce tariffs on certain products. This will not only enable the public to enjoy high-quality foreign products, but also safeguard the basic principles of the multilateral trading system and international law, a counterblow to unilateral trade protectionism. Furthermore, it also shows China’s sincerity to contribute to the world economy.

“We will strengthen protection of intellectual property rights. This is the centerpiece of the system for improving property rights protection, and it would provide the biggest boost to the competitiveness of the Chinese economy.” In his speech, President Xi specifically focused on strengthening intellectual property protection as one of the major measures to expand openness. Once again, it conveyed to the world China’s resolve and clear-cut attitude in strictly protecting intellectual property rights. To this end, China will comprehensively apply authorization review, administrative law enforcement, judicial protection, and arbitration to form a joint force for the protection of intellectual property rights.

Reforms lay the ground for opening-up, and opening-up lends impetus to reforms. After 40 years of reform and opening-up, China has become the world’s second-largest economy, the largest industrial country, the largest cargo-trading nation, and the country with the largest foreign exchange reserve. The driving force for China’s development comes unquestionably from its reform and opening-up. In the future, China will continue to march steadily along the path of reform and opening-up. It will continue to intensify its reform and opening-up, and share development achievements with the world.

China has decided to speed up the construction of an innovative country, develop a higher-level open economy, and promote the development of an open world economy. This is particularly valuable in the context that globalization today is facing an uphill battle.