Editorial

Reforms Generate Economic Steam

A surging influx of international visitors to the Middle Kingdomis reflected in the prominent “China travel” buzzword on social media.The 72/144-hour visa-free transit policy for foreign nationals from 50-plus countries drew 14.64 million tourists to the country in the first halfof this year – a year-on-year increase of 152.7 percent， according to theNational Immigration Administration （NIA）. Meanwhile， WeChat Pay，one of China’s major mobile payment platforms， now allows users tolink bank cards from six international banks to their WeChat account，so further enhancing foreign travelers’ China experience.

The 72/144-hour visa-free transit policy has played a pivotal role inthe country's high-standard opening-up， by facilitating people-to-peopleexchanges and promoting cooperation between China and other countries，according to an NIA statement.

The Resolution of the Central Committee of the Communist Partyof China on Further Deepening Reform Comprehensively to AdvanceChinese Modernization， adopted at the third plenary session of the 20thCPC Central Committee on July 18， 2024， featured the phrase “openingup” 25 times. This signifies the immense importance that the CPC attachesto this state policy and its determination to integrate the countrywith the rest of the world.

There is， among the reform plans that this document encompasses，a chapter dedicated to “Pursuing High-Standard Opening-up” whichdispels the misgivings of certain international observers about the country’sdevelopment direction. Opening-up is a defining feature of Chinesemodernization. The country will continue to promote reform throughopening-up， according to the Resolution. The document elaborates onsuch aspects as： steadily expanding institutional opening-up; deepeningforeign trade structural reform; further reforming the managementsystems for inward and outward investment; optimizing the layout forregional opening-up; and improving mechanisms for high-quality cooperationunder the Belt and Road Initiative.

With its GDP having expanded by five percent in the first half of thisyear， China continues to be a vital engine for global economic growth.Support from policy incentives， rebound in external demand， and developmentof new quality productive forces have all contributed to theexpansion. Particularly noteworthy is the country’s output of smart andgreen products – such as integrated circuits， service robots， new energyvehicles （NEVs）， and solar panels – which have maintained double-digitgrowth， so underscoring their role as new growth drivers， and showcasingthe huge potential of new quality productive forces in spurringdevelopment. Meanwhile， China’s investment in hi-tech manufacturingincreased by 10.1 percent in the first half of this year – well above theaverage 3.9 percent growth of fixed-asset investment.

New growth drivers and the upgrading of traditional industries enablethe country’s growth momentum to counter both domestic andoverseas headwinds. The newly-released Resolution sets great storeby fostering new quality productive forces. While calling for great"efforts to “pursue innovation in key generic technologies， cuttingedgetechnologies， modern engineering technologies， and disruptivetechnologies，” the Resolution stresses “revolutionary breakthroughsin technology， innovative allocation of production factors， in-depthindustrial transformation and upgrading， and the optimal combinationof laborers， means of labor， and subjects of labor as well as theirrenewal and upgrading.” The Resolution also advocates full integrationof the real economy and the digital economy – through advancingnew industrialization， promoting growth and expansion of advancedmanufacturing clusters， and making the manufacturing sector higherend，smarter， and more eco-friendly.

Head of China for Singapore's state investment company TemasekWu Yibing recently observed， according to Xinhua， that the Chineseeconomy's comparative advantage is largely attributable to researchand innovation. In the first half of the year， the country's hi-techmanufacturing industry registered a strong year-on-year growth of 8.7percent. Fierce competition among manufacturers is speeding up theapplication of humanoid robots in sectors across the board. A Ministryof Industry and Information Technology guideline states China’s aimto establish a preliminary innovation system for humanoid robotsby 2025， and form a secure and reliable industrial and supply chainsystem by 2027. A Bloomberg article published on July 16 noted thatChina's long-term quest for high-quality growth is starting to bear fruit.Meanwhile， The Economist also acknowledged China's role as an Ramp;Dlab for multinational corporations.

The country’s rosy development prospects have， moreover， sustainedforeign investors’ confidence in its market. Spanish manufacturerof metal components Gestamp has established 14 factories andtwo Ramp;D centers in China since beginning operations in the countryin 2007.

\"China boasts a vast， innovative and dynamic auto market，\" said AntonioLopez Arce， CEO of Gestamp's Asia division， according to Xinhua.

The country’s shift towards NEVs has attracted sizable foreign investment.In April 2024， BMW announced an additional RMB 20 billioninvestment in its production base in Shenyang， with a view to localizingthe production of a new generation of BMW models by 2026. Germanauto supplier ZF Group， meanwhile， launched an NEV parts industrialpark in Shenyang in 2023， with an investment of RMB 2.2 billion.

China’s steady recovery has prompted international institutionsto elevate their predictions regarding China’s 2024 economic growth.Both Barclays and Goldman Sachs have raised their forecasts to fivepercent， the former from the previous 4.4 percent and the latter from4.8 percent. The International Monetary Fund also adjusted its forecastof China’s economy to five percent， up 0.4 percentage point from theprevious one. Such buoyant optimism is undoubtedly a shot in thearm to the global economy’s faltering recovery amid challenges anduncertainties.