ZHANG YANSHENG: THREE ANALYSES ON THE CHINESE ECONOMY IN 2O19

The annual Central Economic Conference, a weathervane for China’s macro economy, set the tone for China’s economic development in 2019. I believe that the following three macroscopic analyses merit attention.

1. China is still and will remain in an important period of strategic development opportunity for a long time.

There has been a lot of recent debate at home and abroad about whether the period of strategic opportunity still exists. President Xi Jinping once noted that historically,periods of prosperity and periods of opening often coincided with each other. A country can enter the fast lane of world economic growth if it can seize opportunities fostered by opening-up. In this spirit, China joined the WTO to participate in economic globalization.

However, today, the world is witnessing growing instabilities and uncertainties, with unilateralism,protectionism and de-globalization on the rise. Is the important period of strategic opportunity for China’s development still happening? The latest conference provided certain answers. To seize and leverage this important period, China must continue to promote globalization and oppose protectionism and unilateralism, maintain a peaceful international environment and a stable international order and oppose attempts to overturn the existing economic system, deepen all-around international cooperation and avoid treating each other as imaginary enemies, and promote a new technological and industrial revolution and oppose zero-sum game and bullying.

2. China will properly address Sino-U.S. economic and trade friction.

The world is facing unprecedented changes in time as short as a century.The way that China and the United States deal with their differences in the three major areas of economics,politics and ideology, and security and strategy will have an impact on the future of the world. The trade war provoked by the U.S. in the 1930s eventually led to a decline of global trade by 66 percent. It was a historical lesson that should not be forgotten.

Today, China is the largest trading partner of more than 120 countries.The United States maintains a trade de ficit with 102 countries in the world.A shutdown of Sino-U.S. trade would have a negative impact on the world economy. China’s development has enough resilience and great potential.The economic fundamentals sustaining sound development remain unchanged. It can withstand challenges from any major country thanks to the diversity of its economy,its advantages fostered by a complete industrial chain and the room to maneuver in the large domestic market. To properly address trade friction with the United States, China has taken measures of deepening reform, opening wider to the outside world and building a Sino-U.S.relationship that transcends the zerosum game. At the same time, as major powers, China and the United States should shoulder more international responsibility. Cooperation is the only bene ficial choice for the two countries.

3. China will promote institutional opening-up.

The conference stated that we should advance all-round openingup, from the free flow of commodities and factors of production to opening to systems such as rules. One of the objectives for China to join the WTO was to promote the integration of its institutional mechanisms with internationally accepted rules.

The opening to systems such as rules should embrace the following characteristics:

First, learn from the international advanced rules, standards and management practices such as easing market access, enforcing a regulatory system to comprehensively cover foreign capital based on preestablishment national treatment with a negative list, protecting the legitimate rights and interests of foreign business in China, especially intellectual property rights, and allowing wholly foreign-funded enterprises to operate in more areas.

Second, modernize China’s system and capacity for governance with opening-up. The government must perform all functions and duties prescribed to them by law while refraining from performing functions and duties that are not authorized by law.

Third, carry out international cooperation in capacity-building,institution-building, cross-border networking, and in promoting the reform of global governance framework such as the WTO reform.

China will work with other countries to further improve the trade dispute settlement mechanism,enhance the efficiency of the WTO,promote the research and formulation of new fields and new rules of the WTO, and oppose any attempts to overturn the existing economic system.