High-level opening-up will drive recovery, experts say

China is expected to deepen domestic reforms — especially of State-owned enterprises — and improve the environment for competition, as it advances high-level opening-up, according to experts.

The moves will help China enter important international agreements and propel its domestic economic recovery, they said.

The annual Central Economic Work Conference, held in mid-December, said China will make greater efforts to attract and utilize foreign capital, widen market access, promote the opening-up of modern service industries, and implement policies giving foreign-funded enterprises the same treatment as Chinese enterprises.

China will actively seek to join high-standard economic and trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement, the economic work conference, which sets the economic blueprint for next year, announced.

Shu Jueting, a Ministry of Commerce spokeswoman, on Thursday said, "China will negotiate and sign more free trade agreements with its trading partners to expand a globally oriented network of high-standard free trade areas."

The country will increase openness in goods and services trade and the investment market as well as take part in negotiations on emerging issues, including the digital economy and environmental protection. It will also steadily expand institutional opening-up in relation to rules, regulations, management and standards, she said at a news conference.

Shu said the measures aim to help the establishment of the dual-circulation development pattern — a major policy put forward by the central leadership in 2020, which takes the domestic market as the mainstay while letting domestic and foreign markets reinforce each other — and promote high-quality development.

Chen Jianqi, a professor at the Party School of the Central Committee of the Communist Party of China (Chinese Academy of Governance), said it is critically important for China to stabilize existing economic and trade cooperation while seeking to broaden and deepen it. "Advancing high-level opening-up not only involves improving the structure and expanding the scale of China's foreign economic and trade cooperation, but also serves the country's goal of achieving high-level self-reliance in key areas," he said in an interview with China Daily.

China has signed 19 free trade agreements with 26 countries and regions, which cover Asia, Oceania, Latin America, Europe and Africa. It formally applied to join the CPTPP and DEPA last year.

Chen said as long as Chinese enterprises operate under free trade agreement rules, there will be opportunities for them to expand trade and economic cooperation with their foreign counterparts, despite some countries seeking to curb such cooperation.

Rules, laws, and the interests of the parties involved will likely prevail over political factors, he said.

China is expected to deepen domestic reforms in order to join the CPTPP and other high-level free trade agreements, which will propel the country's economic recovery, experts said.

Wei Jianguo, a former vice-minister of commerce and vice-chairman of the China Center for International Economic Exchanges, said: "The Central Economic Work Conference has sent a clear signal that China will advance institutional opening-up, to treat enterprises of all types equally, and ensure the implementation of national treatment for foreign enterprises.

"Foreign enterprises will enjoy equal opportunities and rights, which is what foreign enterprises care about, and this will help unleash their potential to contribute to China's high-quality development," he said.

Lu Zhengwei, chief economist at the Industrial Bank, said in a research note that the meeting showed China will promote domestic reforms through furthering opening-up.

China may deepen reforms of State-owned enterprises to solidly establish competitive neutrality and enhance the transparency of SOE subsidies, he wrote.

Competitive neutrality allows firms to compete on a level playing field, meaning one firm should not benefit from its ownership or nationality.

Chen, of the Party School, said reforming SOEs to establish competitive neutrality will be the most challenging task for China to join the CPTPP.

Yet the experiences of some countries with heavy SOE ownership that have joined the CPTPP, such as Vietnam, indicate the path for China, which is to deepen SOE reforms centered on establishing competitive neutrality, he said.

China's optimization of its industrial policies would also improve the environment for competition.

Lu added it is likely China will strengthen its fair competition review of new industrial policies to prevent the creation of regional market barriers.

Source: China Daily