A Major Power's Responsibility Demonstrated in Win-win Cooperation, with Remarkable Results Achieved in High-level Opening-up

A Major Power's Responsibility Demonstrated in Win-win Cooperation, with Remarkable Results Achieved in High-level Opening-up 

—Series Report XVI on the Economic and Social Development Achievements since the 18th CPC National Congress 

Since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping at its core has set the development direction with careful planning, and with in-depth insight of the general trend of China and the world in the new era, it strives to promote innovations in theory and practice of opening-up. China's opening-up has reached unprecedented level. The scale of foreign trade has grown steadily, the structure has been continuously optimized, and the status of a major trading country has been further consolidated. The coordinated development of two-way investment has gradually improved, the quality and efficiency has been enhanced, and China's international influence has been significantly enhanced. 

I. Steady improvement in quality, and further high-quality development of the trade in goods 

Since the 18th CPC National Congress, the overall scale of China's foreign trade has continued to expand, and the quality of trade has steadily improved. In the face of a complex international environment beyond expectation, China's foreign trade has shown strong resilience and vitality, a display of solid foundation for long-term development. In 2021, China's import and export grew rapidly, and its share in the international market further increased, which fully reflects that China not only provides abundant commodities to the global market, but also offers countries with broader development opportunities in the Chinese market. 

(I) The scaled-up trade volume 

From 2013 to 2021, China's cumulative import and export of goods trade reached RMB 262.3 trillion, with an average annual growth rate of 5.4%.  Among them, exports were RMB 144.7 trillion, with an average annual growth rate of 5.9%; imports were RMB 117.6 trillion, with an average annual growth rate of 4.7%. After China's import and export of goods reached USD 4 trillion for the first time in 2013, it successively surpassed USD 5 trillion and USD 6 trillion in 2021, reaching historical highs. The share of China's import and export of goods in the international market increased from 10.4% in 2012 to 13.5% in 2021. From 2017 to 2021, it remained as the largest country in global goods trade for five consecutive years. 

(II) Steady improvement in trade quality and efficiency 

With the advancement of structural adjustment, transformation and upgrading of China's trade in goods, the proportion of imports and exports of general trade has continued to increase. From 2013 to 2021, China's total import and export of general trade reached RMB 149.8 trillion, accounting for 57.1% of the total value of import and export of goods during the same period; the cumulative import and export of processing trade was RMB 72.6 trillion, accounting for 27.7% of the total value of import and export of goods during the same period. In 2021, China's imports and exports of general trade reached RMB 24.1 trillion, accounting for 61.6% of total imports and exports, an increase of 9.6 percentage points from 2012; processing trade imports and exports reached RMB 8.5 trillion, accounting for 21.7%, a decrease of 13.1 percentage points from 2012. 

Market procurement, cross-border e-commerce and other new formats of foreign trade have emerged in China, and they have become new drivers of foreign trade growth with very fast speed and huge potential. China has set up 31 pilot projects for national market procurement and trade, 132 cross-border e-commerce comprehensive experimental areas, and the "experimental field" of new foreign trade formats keeps enlarging. In 2021, China's market procurement and export reached RMB 930.39 billion, and cross-border e-commerce import and export reached RMB 1.98 trillion. 

(III) The increasing vitality of trade entities 

Since the 18th CPC National Congress, the enthusiasm of Chinese enterprises' participation in international market competition has been further enhanced. In 2021, the number of foreign trade companies with import and export performance in China reached 567,000, an increase of 1.7 times compared to 2012. In particular, private enterprises with more flexible production and operation have become an important "engine" to drive the development of China's foreign trade. In 2019, the proportion of imports and exports of private enterprises in the total value of foreign trade exceeded that of foreign-funded enterprises for the first time, becoming China's largest foreign trade entity. In 2021, the import and export volume of China's private enterprises reached USD 3 trillion, an increase of 1.4 times over 2012, with an average annual growth rate of 10.3%; it accounted for 48.9% of the total foreign trade value, an increase of 7.3 percentage points over 2012. Moreover, China's foreign trade enterprises strive to transform and upgrade from "Made in China" to "Intelligent Manufacturing in China", continuously enhance their innovation capabilities, brand building, and marketing capabilities, and the proportion of export commodities with independent brands, independent intellectual property rights, independent marketing channels, high technology, high added-value, and high efficiency continue to increase. 

(IV) Better coordinated development of regional trade 

Since the 18th CPC National Congress, foreign trade in Eastern China has maintained steady growth, and the opening-up of Central and Western China has accelerated. Calculated in US dollars, in 2021, the foreign trade import and export of Eastern China reached USD 4.8 trillion, an increase of 46.9% over 2012, and an average annual growth rate of 4.4%. During the same period, Central and Western China imported and exported USD 1.1 trillion, 2.5 times that of 2012, with an average annual growth rate of 10.7%, 5.6 percentage points higher than the average annual growth rate of China's foreign trade in the same period, accounting for 17.7% of the total value of China's foreign trade imports and exports during the same period, and an increase of 6.6 percentage points compared with 2012. 

From the perspective of province difference, from 2013 to 2021, Zhejiang was the province with the fastest growth in foreign trade import and export in Eastern China, with an average annual growth rate of 8.3%, followed by Shandong, Fujian, and Hebei, with average annual growth rates of 7.1%, 7.0% and 5.6% respectively. During the same period, Shaanxi's foreign trade import and export grew the fastest in Central and Western China, with an average annual growth rate of 19.5%, followed by Hunan, Guangxi, and Anhui, with average annual growth rates of 17.4%, 13.4%, and 11.8% respectively. 

(V) Balanced development of international market 

From 2013 to 2021, ASEAN, the European Union, and the United States stayed as China's top three trading partners. In 2021, China's import and export volume with the top three trading partners reached RMB 15.9 trillion, accounting for 40.7% of the total import and export volume, which was about the same proportion in 2012. At the same time, China's imports and exports to countries along the "Belt and Road" have grown rapidly. From 2013 to 2021, the total value of imports and exports between China and countries along the "Belt and Road" increased from RMB 6.5 trillion to RMB 11.6 trillion, with an average annual growth rate of 7.5%, and its accounting for the proportion of China's total foreign trade value in the same period increased from 25.0% to 29.7%. The bilateral trade between China and ASEAN has maintained a virtuous momentum. After surpassing the United States to become China's second largest trading partner in 2019, it again surpassed the European Union to become China's largest trading partner in 2020.

II. Trade in Services to Provide New Momentum to Opening-up through Innovation 

Since the 18th CPC National Congress, China has continued to deepen the reform and opening-up of the service industry, accelerated its supply-side structural reform of the service industry, continuously improved the system and mechanism of service trade, and continuously enhanced the development of service trade. Negative list of cross-border service trade started in Hainan Free Trade Port and was later expanded to a national version; national service trade innovation development pilots were developed into national service trade innovation development demonstration zones through exploration. The contribution of service trade to foreign trade growth has gradually increased, becoming an important support for the transformation and upgrading of foreign trade. 

(I) Rapid expansion of the total volume of service trade 

The scale of China's service import and export continues to expand, ranking second in the world for eight consecutive years from 2014 to 2021. From 2013 to 2021, China's cumulative service import and export volume reached RMB 41.1 trillion, with an average annual growth rate of 6.4%, which is one percentage point higher than the average annual growth rate of trade in goods. Among them, service exports were RMB 15.1 trillion, with an average annual growth rate of 8%; imports were RMB 25.9 trillion, with an average annual growth rate of 5%. The growing competitiveness of service exports led to a substantial narrowing of the service trade deficit. In 2021, service exports grew 26.6 percentage points faster than imports, and the service trade deficit dropped by 69.5% on a year-on-year basis, hitting a new low since 2011. 

(II) Gradual optimization of service trade structure 

With the expansion of the opening-up of China's service industry, knowledge-intensive and other emerging service trade has displayed strong momentum. From 2013 to 2021, China's cumulative imports and exports of knowledge-intensive services [1] reached USD 2.1 trillion, with an average annual growth rate of 9.3%, and its proportion in the total imports and exports of service trade increased from 33.6% in 2012 to 43.9% in 2021. Among them, the exports of knowledge-intensive services reached USD 1.1 trillion, with an average annual growth rate of 11.5%; sectors with rapid export growth were personal culture and entertainment services, intellectual property rights usage payment, and telecommunications, computer and information services, with an average annual growth rate of 34.7%, 31% and 19.3% respectively. Imports of knowledge-intensive services amounted to USD 1.1 trillion, with an average annual growth rate of 7.1%; the fastest-growing sector of imports were telecommunications, computer and information services, and financial services, with average annual growth rates of 24.7% and 12% respectively. 

III. More Foreign Investment Attracted to Releases New Economic Vitality 

The 18th CPC National Congress proposed to "improve the comprehensive advantages and overall benefits in utilizing foreign capital, and promote the sound introduction of capital, technology, and intelligence", and the 19th CPC National Congress further proposed "to implement high-level trade and investment liberalization and facilitation policies, fully implement the pre-establishment national treatment plus negative list management system, significantly relax market access, expand the opening-up of the service industry, and protect the legitimate rights and interests of foreign investment.” China’s use of foreign capital attaches more importance to structural upgrading and coordinated development, and its institutional opening-up in benchmarking international advanced economic and trade rules has become an important advantage in attracting foreign investment.

(I) Utilizing foreign investment to consolidate the role as a major country 

From 2013 to 2021, China's non-financial sector accumulatively utilized foreign direct investment of USD 1.2 trillion, and the amount of foreign capital utilized in 2021 increased by 55.3% compared with 2012, with an average annual growth rate of 5%. China's scale of utilization of foreign capital has ranked first among developing countries for many years in a row. The number of foreign-invested enterprises has increased rapidly, and the vitality of market players has continued to increase. In 2021, the number of newly established foreign-invested enterprises in China reached 48,000, nearly double that of 2012. 

(II) Optimizing the industrial pattern of foreign investment 

Since the 18th CPC National Congress, China has attached more importance to structural optimization in attracting foreign investment, and has continuously guided investment with more inclination to high-tech industries, emerging strategic industries, and modern service industries. From 2017 to 2020, the negative list of foreign investment in China and the pilot free trade zone has been reduced for four consecutive years, from 93 items and 122 items to 33 items and 30 items respectively, and the condition for access of foreign investment to financial services, high-end manufacturing, electronic information and other fields has been further relaxed. In 2021, the actual use of foreign capital in the service industry reached RMB 906.5 billion, accounting for 78.9% of the total foreign capital utilized in the year, an increase of 30.7 percentage points over 2012. 

(III) Keeping enhancing the capability of attracting foreign investment 

Since the 18th CPC National Congress, China has introduced a series of high-level investment liberalization and facilitation policies to protect the legitimate rights and interests of foreign investment and create a world-class business environment ruled by law. In 2020, China promulgated and implemented the Foreign Investment Law of the People's Republic of China, which innovated the legal system for foreign investment, and implemented the pre-establishment national treatment plus negative list management system for foreign investment, which has become an important legal assurance for high-level opening-up. According to the ranking of the World Bank, China has been among the top ten economies with the fastest improving business environment in the world for two consecutive years. 

IV. Intensive and Targeted Measures for In-depth Foreign Investment and Cooperation Promotion 

Since the 18th CPC National Congress, China has implemented a more proactive strategy of opening-up focusing on the establishment of a new system of open economy. The foreign direct investment management model has shifted from the approval system to the filing system, and international economic cooperation has steadily advanced towards "bilateral and multilateral free trade agreements". Project cooperation with countries along the “Belt and Road” has continued to expand, and the number of multinational companies has continued to increase. In the past 10 years, both the quality and quantity of China's foreign investment and cooperation has been improved, which has played a significant role in promoting mutual benefit and enhancing international competitiveness. 

(I) Continuous growth in foreign investment 

From 2013 to 2021, China's foreign investment flow ranked among the top in the world, with a total of USD 1.4 trillion of foreign direct investment flow and an average annual growth rate of 8.2%. Since the outbreak of the COVID-19 pandemic, China has made overall plans for the epidemic prevention and control of overseas enterprise project personnel and the development of foreign investment. In 2021, China's foreign direct investment flow reached USD 178.8 billion, a year-on-year increase of 16.3%, accounting for 10.5% of the current global foreign direct investment flow and ranking second in the world. As of the end of 2021, China's foreign direct investment stock reached US 2.7851 trillion, accounting for 6.7% of the current global stock, an increase of 4.4 percentage points from 2012, and its ranking rose from 13th to 3rd. 

(II) The expanding channels for external cooperation 

China's foreign investment covers 189 countries (regions) around the world, more than 45,000 foreign direct investment enterprises have been established, and especially the investment in countries along the "Belt and Road" has grown rapidly. As of the end of 2021, China had established more than 11,000 overseas companies in countries along the "Belt and Road", contributing non-financial direct investment of USD 20.3 billion, a year-on-year increase of 14.1%. From 2013 to 2021, China's direct investment in countries along the "Belt and Road" totaled USD 161.3 billion, making great contributions to promoting the economic development of host countries. 

At the same time, China's foreign investment is becoming more and more extensive, and the investment structure is constantly optimized. China's foreign direct investment covers 18 major industries in the national economy. In 2021, investment in leasing and business services, manufacturing, wholesale and retail all exceeded USD 10 billion, among which the leasing and business services industry ranked top and the manufacturing industry ranked second. 

V. Benefits from Free Trade Zones, and New Achievements in Multilateral Economic and Trade Cooperation 

Since the 18th CPC National Congress, China's pilot free trade zones have given full play to the role of pioneering and experimenting, formulating and implementing high-level economic and trade rules. China's free trade's "circle of friends" continues to expand, the contents of free trade agreements become increasingly abundant, and the level of opening-up in many fields has exceeded China's commitments when it joined the WTO. 

(I) Abundant innovative achievements made in free trade zone 

In 2013, China established the first free trade pilot zone in Shanghai, which has now expanded to 21. Each of the 21 free trade pilot zones has given full play to its location advantages, continuously promoted institutional opening-up, and played an ever-increasing leading role in innovation demonstration. As of 2021, 278 institutional innovation achievements have been replicated and promoted nationwide. The pilot zones' total import and export volume accounted for 17.3% of China's total, and their introduction of foreign investment accounted for 18.5% of China's total. In 2018, the construction of the Hainan Free Trade Port was launched, and more than 120 institutional innovations have been launched so far. In 2021, China issued the Special Management Measures for Cross-border Service Trade in Hainan Free Trade Port (Negative List) (2021 Edition), which is the first negative list in cross-border service trade in China and represents the highest level of opening-up in the corresponding fields. 

(II) Higher-standard free trade agreements concluded 

Since the 18th CPC National Congress, China has initiated a high-standard free trade zone network facing the world based on its surrounding regions and extending to the "Belt and Road". In the past 10 years, the number of free trade agreements signed by China has increased from 10 to 19, and the proportion of trade volume with free trade partners has increased from 17% in 2012 to 35% in China's total trade volume in 2021. With further improvement of level of free trade agreements, on January 1, 2022, the Regional Comprehensive Economic Partnership Agreement (RCEP) came into effect, and the free trade zone with the largest population and largest economic and trade scale in the world was officially established. China also actively participates in free trade negotiations on new topics such as the digital economy and environmental protection, and promotes its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economic Partnership Agreement (DEPA), taking a new step towards the goal of high-standard free trade agreements. 

Looking ahead, the COVID-19 pandemic has accelerated the evolution of the world's major changes unseen in the past century. The world economy is still faced with complicated and severe challenges, and the recovery is unstable and imbalanced. Various derivative risks caused by the epidemic cannot be ignored. Facing the challenges brought about by a more unstable and uncertain external environment, we should promote all-round and high-level opening-up with a broader vision, higher goals, a more open mind, and stronger measures, speed up the construction of an new open economy system, and accelerate the pace of international economic cooperation so as to coordinate domestic and international development on a larger scale and at a higher level, make use of two markets and two types of resources, promote the mutual supplementation of reform and opening-up, and contribute lasting momentum to sustained economic recovery and high-quality development. 

Note: 

[1] Knowledge-intensive service include insurance services, financial services, telecommunications, computer and information services, intellectual property rights royalties, personal cultural and entertainment services, and other commercial services.