China's further reform to foster global growth, trade

Four decades after its reform and opening-up, populous China retains its allure as a huge, growing market and an investment destination while becoming a big source of investment.

These are expected to enable the world’s second largest economy to remain a power engine of global growth as well as contribute more to globalization and free trade.

Such an outlook has found support in China’s economic and trade data in the first quarter, on top of its steps this year to broaden market access in efforts to further open up in a shift towards a high-quality growth.

Increased investors’ confidence indicates more of the impact of China’s further reform and opening-up.

The investors’ confidence in China’s economic performance was showcased by the JP Morgan Chase’s China summit held in Beijing on May 8-9, which was attended by 2,200 investors and corporate executives from 50 countries and regions.

“Investors from around the world are moving to add investment here in preparation for opportunities to emerge in the future,” said Jing Ulrich, managing director and vice chair of Asia Pacific of the New York-based bank.

For example, an investment facilitation policy adopted in late April, which licenses foreign investors to set up securities trading firms with holding status, has triggered swift market reactions.

JP Morgan Broking (Hong Kong) Limited has made such an application, planning to hold 51 percent of the stakes.

Japan’s largest securities trader Nomura has released a plan to set up a holding firm in China.

Considered as a milestone in the internationalization of China’s capital market, global index provider MSCI will list a number of China A-shares in its market indices beginning June.

Share in the cake

The measures provide new channels for global investors to share in the big cake of China’s strong growth.

Manufacturing is another key sector to reduce restrictions on foreign investment. Regarding trade, China called off import tariffs on anticancer drugs from May and will significantly lower that on vehicles and other goods.

They are among the concrete measures outlined by Chinese President Xi Jinping at the annual conference of Boao Forum for Asia (BFA) held in April in southern China’s island province of Hainan.

“We have a genuine desire to increase imports and achieve greater balance of international payments under the current account,” Xi said in a keynote speech.

The first China International Import Expo scheduled for November in Shanghai is expected to well serve this purpose.

In addition, the Hainan island will become a pilot free trade zone, and eventually, a free trade port, Xi said during an inspection tour there after attending the BFA gathering.

The moves reaffirmed a strong political will and a roadmap to deepen China’s reform and opening-up from the 19th National Congress of the Communist Party of China held in last October.

China reported a year-on-year growth of 6.8 percent in the first quarter, the 11th quarter in a row with a growth rate between 6.7 percent and 6.9 percent.

Consumption contributed 77.8 percent, more than last year’s average 58.8 percent, continuing an uptrend since five years ago.

In 2018, China’s total retail sales of consumer goods are estimated to reach some US$6.4 trillion, replacing the United States as the world’s largest retail market, said Wang Changlin, an economic expert with China’s State Development and Reform Commission.

Services accounted for 61.6 percent of the first quarter growth, consolidating a leading role that marks an economic structural transformation, the National Bureau of Statistics said while attributing this partly to changes in China’s consumption structure.

Today, China is the major trading partner of over 120 countries and regions. In the first quarter, customs data recorded a 21.8 percent drop in China’s trade surplus, with imports rising 11.7 percent and exports 7.4 percent.

According to data from the World Bank, China has maintained an annual growth of 7.1 percent over the past five years, contributing over 30 percent of global economic growth.

Xi voiced China’s staunch support for free and inclusive trade at the BFA annual conference, saying globalization is in line with the common interests of all countries.

“We will continue to safeguard the international order and rules, and support free trade and the liberalization and facilitation of trade and investment,” Xi said at the four-day meeting.

To make globalization more inclusive so that its benefits can be shared more extensively, Beijing has proposed the Belt and Road Initiative, and is asking others to join it.

“China’s pledge to continue to deepen reform and opening-up by liberalizing market access and reducing trade barriers sends a clear signal that it wishes to not only improve itself, but to inclusively share the benefits derived from China’s development model,” Jon R. Taylor, a US political science professor at University of St. Thomas in Houston, told Xinhua in an interview in mid-April.