China further expands development space through institutional opening up

Estimated reading time: 5 minutes

By Li Bin, Sun Haitian, People's Daily

At the plant of Sinopec Hainan Petrochemical Co., Ltd., imported crude oil is processed into  new materials, as well as petroleum and chemicals.

Hainan Xiangliang Fodder Co., Ltd. has benefited from a "reception first, inspection later" policy for its imported grains. The grains, after going through deep processing, are then transported and sold to Chinese inland regions. This approach saves time and warehousing costs for the company, and allows it to enjoy tax exemptions on value-added sales of processed imported goods in China.

Besides, a near-zero carbon demonstration zone has been launched in Boao within the Hainan FTP, and the ocean space resource is being developed and utilized in a multi-dimensional way.

So far, Hainan has released 146 cases of innovation of institutional integration in 17 batches. It is steadily expanding institutional opening up to build itself into a high-standard and high-quality FTP.

Promoting reform and development though opening up is an important means for China to make continuous achievements in modernization.

From the establishment of 22 pilot free trade zones (FTZs) to the emergence of the Hainan FTP, and from the release of the Foreign Investment Law to the implementation of the Regional Comprehensive Economic Partnership (RCEP), the alignment with high-standard international economic and trade rules and steady expansion of institutional openness have opened up greater space for China's development.

The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) outlined plans for refining the institutions and mechanisms for high-standard opening up, which involve steadily expanding institutional opening up and a globally-oriented network of high-standard free trade areas.

Steadily expanding institutional opening up is key to high-standard opening up. It helps build new drivers of opening up, and new momentum and advantages of China's development.

Compared to opening up based on flows of goods and factors of production, institutional opening up is on a higher level. It embodies China's pursuit of a more proactive strategy of opening up.

China's negative list for foreign investment, which was initially launched at pilot FTZs, has been promoted nationwide. From the initial 190 items to the current 31 items in the national version and 27 items in the pilot FTZ version, the shortened negative list for foreign investment has further widened market access, making China's opening-up more attractive to foreign investors.

The China (Shanghai) Pilot FTZ has launched a single window for international trade and a copyright service center to better protect intellectual property rights. The Hainan FTP has built a business service system that is "responsive to all requests, non-intrusive when unnecessary, and faithful to all promises." These approaches have enhanced policy offerings and service quality while reducing burdens on businesses and vitalizing the market.

These measures aim at fostering a business environment that is more solidly based on market and rule of law and is up to international standards, and creating an institutional environment that is transparent, stable and predictable, which will make the Chinese market more attractive to global resources and production factors.

When it comes to steadily expanding institutional opening up, expansion is the goal while the key lies in maintaining a steady approach.

In expanding institutional opening up in the financial sector, it is important for China to align with high-standard international economic and trade rules, streamline restrictive measures, and strengthen risk prevention and control throughout the entire process to better safeguard national financial security.

In furthering opening up the services sector, China attaches equal importance to science-based planning at the top level and the replicable experiences gained from the active exploration in 28 pilot regions.

Earlier this year, the General Office of China's State Council issued an action plan to steadily promote high-level opening up and make greater efforts to attract and utilize foreign investment. In the first seven months of 2024, the number of newly established foreign-invested businesses in China hit 31,654, a year-on-year increase of 11.4 percent, with continuously improved foreign investment structure.

At the Global Free Ports Development Forum during the Boao Forum for Asia Annual Conference 2023, an initiative calling for more partnership between free trade zones (FTZ) across the globe was proposed and launched by Hainan and other 25 free trade zones and ports across the world. So far, 32 free trade zones and ports have joined the initiative.

By both bringing in high-standard international economic and trade rules and attracting foreign investment, China has promoted mutual learning and integration of its domestic and international rules, amplifying the interplay between its domestic and international markets and resources.

It is believed that as long as China pursues a mutually beneficial strategy of opening up and steadily expands institutional opening up, it will continuously create new opportunities for the world with its own development.