China's Commerce Minister on building a strong trading nation
Upgrade trade in goods, innovate in trade in services, develop digital trade, strengthen international economic and trade cooperation, and prevent & control risks.
Wentao WANG, China’s Minister for Commerce, wrote about building a strong trading nation in the People’s Daily on December 20, 2022. The Ministry of Commerce, knowns as MOFCOM, republished the piece on its website.
The piece is basically made up of three parts: why building a strong trading nation is significant, the strategies for building a strong trading nation, and the practical steps.
For brevity, here we presented a translation of the two latter parts. If you still don’t have enough time, just read the highlighted parts.
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Accelerate Building a Strong Trading Nation
[Part One is omitted.]
Accurately understand the basic connotation of "accelerating building a strong trading nation"
The report to the 20th National Congress of the Communist Party of China (CPC) made clear instructions on the development of China's trade by stating that we should accelerate the construction of China as a strong trading nation, which has profound implications. We must fully understand the spirit of the 20th National Congress and promote high-quality openness, expedite the building of a strong trading nation, and place greater emphasis on independent innovation and high-quality growth. We should drive domestic and international demand, imports and exports, trade in goods and services, two-way investment, and the coordination of industrial growth. We should firmly grasp the development and security opportunities and forge new ground in international trade through openness, cooperation, inclusiveness, mutual benefits, and win-win outcomes.
[Zichen: This is how you start a section of an article like this. Cite the Party Congress report in the first paragraph. And then expand. Below you will read five major points.]
Reinforce and improve our opening-up policy to lay a solid foundation for building a strong trading nation. Opening up is a fundamental national policy of China and a distinctive symbol of today's China, and it is the inevitable path to achieve the country's prosperous development. Improving the quality of opening-up will enhance our comprehensive trading power. Since the 18th National Congress of the CPC, we have adopted a more active opening-up strategy and taken new steps toward high-quality trade development. China's exports of goods now make up 15.1% of the world's exports, compared to 11.1% previously, and high and new technology products account for 30% of China's foreign trade. However, there is still room for improvement in our opening-up efforts. To accelerate the construction of China as a high-quality trader, we must expand high-quality opening-up, align with high-standard international economic and trade rules, steadily expand institutional opening up, stabilize the size of the trade, optimize the structure, improve quality, and accelerate China's transformation from a large-scale trader to a strong trading nation.
As we have covered in Pekingnology, the readout of China’s Central Economic Work Conference in December said China should actively promote accession to high-standard economic and trade agreements such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA), and take the initiative to deepen reforms in relevant domestic areas in reference with the relevant rules, regulations, management, and standards.
So “align with high-standard international economic and trade rules” apparently refers to that in the readout.]
Promote innovation-driven development and empower the construction of a strong trading nation. Innovation is the primary driving force in constructing a strong trading nation. Since the 18th National Congress of the CPC, China has deeply promoted the innovative development of international trade, actively cultivated new business types and models, and aligned with the new trends of the global digital economy and sustainable development requirements. It has also increased the digital level of trade, made it more environmentally friendly, and opened up new opportunities for high-level openness and high-quality development through innovation. Currently, China needs to improve further its ability to innovate in trade. To speed up the construction of a quality trader, we must focus on innovation-driven development, expand international cooperation, and drive innovation in technology, rules, and business models.
Balance the development and cultivate the advantages of China as a strong trading nation. A country must have trade, investment, industries, and markets advantages to be a strong trading nation. Since the 18th National Congress of the CPC, China has promoted a balanced development of international trade, improving the domestic market and constructing China as a strong trading nation in a coordinated manner. It has also accelerated the creation of a unified domestic market, integrated the development of domestic and international markets, and continually improved its ability to allocate resources globally. However, there still exist problems of unbalanced and insufficient development in areas of trade in China. To hasten the construction of a strong trading nation, we must focus on optimizing trade structure, coordinating imports and exports, giving equal importance to goods trade and service trade, interconnecting trade with industries, achieving a balanced international balance of payments, promoting independent and orderly circulation of factors of production, improving allocation efficiency, and enhancing international competitiveness.
Deepen international cooperation, strive for win-win partnerships, and participate more in international economic and trade rule-making. A strong trading nation should be a key player in international economic and trade cooperation and a significant participant in global economic governance. Since the 18th National Congress of the CPC, China has actively engaged in reforms and building the global economic governance system, promoting genuine multilateralism. It has also collaboratively developed the "Belt and Road Initiative" with high standards and accelerated the construction of high-standard free trade networks. China has over 230 economic and trade partners and is a major trading partner with more than 140 countries and regions. It has signed 19 free trade agreements with 26 countries and regions, and 35% of its total trade is with free trade partners in 2021. Currently, China is increasingly taking center stage in the world and is expected to play a more important role, with generally heightened expectations from other countries. To build a strong trading nation, we must advance our multi-/bilateral and regional cooperation, actively shape international economic and trade rules, and contribute more Chinese initiatives and projects.
Coordinate between development and security to protect China's status as a strong trading nation. General Secretary Xi Jinping stated that security is crucial to the development and that development is the objective of security. Since the 18th National Congress of the CPC, China has emphasized the balance between independence and openness, established a system of export control laws, improved its industrial hazard early-warning systems, and expanded its trade remedy policies. As a result, China's ability to ensure trade security has greatly improved. Currently, numerous security threats exist globally, and many uncertain factors affect international trade. To advance the construction of a strong trading nation, we must adopt a comprehensive view of national security, be bold and skilled in protecting our rights, ensure trade security, actively strive for security in openness, and elevate national economic security to a higher level.
[Zichen: Here we have “security,” which many Western observers said in China has now trumped “development” in a signal of the country’s greater insecurity and defensiveness. But it’s at the bottom of the five points here.]
Major tasks for accelerating the construction of a strong trading nation
We must thoroughly implement the spirit of the 20th National Congress, reinforce comprehensive Party governance for a strong trading nation, improve trade development quality and efficiency, create new trade advantages, drive growth with new forces, actively shape international economic and trade rules, and contribute to overall Party and national efforts.
[Zichen: Starting here, we see more concrete points. Some of them are still vague, though.]
Promote the upgrading and optimization of trade in goods, innovative development of trade, laying a solid industrial foundation for trade development, and enhancing the ability of trade innovations. We must advance the reform of international trade quality, efficiency, and driving-force, and increase the comprehensive competitiveness of international trade.
a. Optimize the structure of trade. Accelerate the development of intelligent manufacturing, gradually move up the value chain to links such as development, design, marketing, service, and brand management, and steadily increase the value of exports. We must strengthen the general trade, enhance brand construction, improve quality and channel development, increase benefits, and expand the scale. We must promote processing trade and upgrade industry chains from labor-intensive to technology- and capital-intensive. We must establish green trade systems, optimize the overall arrangement of international and domestic markets, and integrate domestic and international trade. We must encourage enterprises to invest in technological research and development and create "Chinese products" brands.
b. Actively expand imports, reduce import tariffs and institutional costs, stimulate import potential, and optimize import sources and structure. We must import high-quality consumer goods, new technologies, essential equipment, key components and parts, increase the import of energy resources and agricultural products that are in short supply in China, and balance trade development.
c. Promote coordinated development of trade and investment. Implement the upgrade strategy for the pilot free trade zone and speed up the construction of the Hainan Free Trade Port. Reduce the negative list for foreign investment permissions reasonably, protect foreign investment rights, and create a marketized, legalized, and internationalized business environment of first-rank. Implement the Catalogue of Industries for Encouraged Foreign Investment effectively, attract and utilize foreign capital with greater effort, and encourage investment in areas such as high-end manufacturing, high technology, traditional manufacturing upgrades, and modern services. Innovate foreign investment cooperation methods, construct high-quality overseas trade and economic cooperation zones, and promote mutually beneficial industrial and supply chain cooperation systems.
d. Accelerate the development of new trade forms, promote healthy, continuous, and innovative cross-border e-commerce, build a comprehensive cross-border e-commerce pilot zone, encourage and guide various domains to establish overseas locations, and optimize import supervision for cross-border retail e-commerce. Promote market purchase trade forms, utilize the guidance of comprehensive international trade service enterprises, enhance the development of maintenance bond business, and steadily advance offshore trade.
Promote the innovative development of trade in services by continuously advocating for in-depth reforms, high-level openness, and innovation in all aspects. Additionally, we must support growth in the overall service trade, optimize the structure of the service, increase benefits, and drive high-quality trade development.
a. Optimize the structure of import and export services. This includes expanding imports of R&D, design, energy conservation, carbon reduction, environmental, and medical services, and increasing exports of traditional travel and transport services, knowledge-intensive services, mature industrial technologies, and professional services such as intellectual property and legal services. We must also expand the export base of Chinese-characteristic services, including cultural services and traditional Chinese medical services, and establish a brand for "Chinese services."
b. Accelerate the transformation and upgrade of service outsourcing by promoting innovative development, fostering new forms such as digital outsourcing, crowdsourcing, and platform subcontracting, and actively promoting R&D, design, maintenance, and inspection and detection productive service outsourcing. We must encourage outsourcing and strive to establish stable international industrial and supply chains. Additionally, we should integrate service outsourcing with manufacturing industries and develop digital manufacturing outsourcing through 5G technology. We aim to build high-standard model cities for service outsourcing.
c. Innovate the development mechanisms of trade in services. We must improve the level of openness in trade in services, make good use of the guiding function of pilot free trade zones and the Hainan Free Trade Port, and perfect the management of the cross-border trade in services negative list. We must deepen the innovative development of trade in services pilot zones in all aspects and promote the upgrade of zones that have shown evident effects into national model zones for innovative development of trade in services.
Develop digital trade. We must seize opportunities for digital economy development, speed up digital trade growth, set up and enhance policies for digital trade promotion, take an active role in international rule-making and setting benchmarks, and build "new engines" to reinforce our status as a strong trading nation.
a. Foster new forms of digital trade. We must speed up digital advancement throughout the trade chain and raise the level of digital trade. We must actively back digital product trade, improve digital service trade, and encourage innovative business forms such as professional services and social media. We must steadily advance digital technology trade and bolster our ability to develop and innovate key technologies such as cloud computing and communication services. We must actively pursue digital trade and eventually establish a well-developed pattern.
b. Enhance governance systems for digital trade. We must hasten the formation of crucial regulations and standards for data property rights, trade flow, cross-border transmission, and digital security. Under the framework of the national security regulations for overseas data transmission, we must research and establish pilot areas for cross-border data transmission security governance. We must speed up the growth of digital trade entities, create national-level export hubs for digital services, and establish digital trade demonstration zones. We must strengthen international cooperation in the digital economy and actively push for joining the Digital Economy Partnership Agreement (DEPA).
Strengthen international economic and trade cooperation. We must firmly uphold openness, embrace true multilateralism, and expand cooperation in all aspects of international economics and trade. We must actively participate in the global division of labor and industry cooperation, maintain diversity and stability in the international economy and trade relationships, and create a favorable external environment for building a strong trading nation.
Support high-quality development in the joint building of the "Belt and Road Initiative." We must adhere to the principles of "Consultation, Contribution, and Shared Benefits," enhance trade connectivity, and create a large trade channel that is domestically and internationally interconnected, secure, and efficient. We must back the growth of the CHINA RAILWAY Express and establish new routes for international land and sea trade. We must actively work on the Digital Belt and Road, broaden the global reach of Belt and Road e-commerce, and establish a larger market for "Belt and Road" e-businesses.
Promote multi-area cooperation and bilateral/multilateral cooperation. We must firmly preserve the multilateral trade system, actively participate in the reform of the World Trade Organization (WTO), and deeply engage in the multilateral and regional cooperation mechanisms of the United Nations (UN), Group of 20 (G20), BRICs, and Asia-Pacific Economic Cooperation (APEC), contributing more Chinese wisdom. We must encourage coordination and positive interactions among major powers, deepen economic and trade relationships with neighboring countries, enhance solidarity and cooperation with developing nations, and expand mutually beneficial and win-win cooperation.
Expand the network of high-standard free trade zones facing the world. We must optimize the distribution of free trade zones, negotiate and sign more high-standard free trade agreements, and actively pursue China's entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). We must enhance the construction of free trade zones, actively participate in comprehensive and in-depth negotiations in various areas and subjects, implement the Regional Comprehensive Economic Partnership Agreement (RCEP) with high quality, and fully use the institutional benefits of free trade agreements in all aspects.
Optimize trade promotion platforms. We must continually improve the China International Import Expo, leveraging its four platform functions for international procurement, investment promotion, cultural exchange, and opening-up and cooperation. We must effectively organize exhibitions such as the China Import and Export Fair, China International Fair of Trade in Services, China International Consumer Products Expo, and China International Fair for Investment & Trade. We must establish innovative national-level demonstration zones for import and trade promotion and make better use of online trade platforms.
Improve our ability to prevent and control risks. We must fully implement a comprehensive national security perspective, adopt a mindset of maintaining a secure bottom line, prevent and manage risks in trade areas, and strengthen security measures.
a. Enhance our capacity to handle trade friction. We must build early-warning systems for industrial hazards and actively guide enterprises in risk prevention and management. We must increase our ability to apply trade remedy rules effectively, improve the efficiency of trade remedy policy tools, and enhance the trade adjustment assistance system.
b. Enhance modern export control systems. We must enforce the Export Control Law and its supporting regulations. We must optimize the export licensing system and strengthen the enforcement of export licensing laws. We must deepen international exchange and cooperation, promote trade in normal dual-use items, and address discriminatory practices, such as abuse of export licensing, fairly and lawfully.
c. Ensure the security of food, energy, and resources. We must diversify the import sources of food, energy, and key technologies and components, ensure the import chain's security, improve the resilience and security of industrial and supply chains, and enhance the ability to protect national economic security in an open environment dynamically. (Enditem)
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