New development paradigm means policy has changed characteristics and different tasks

As China is accelerating the establishment of a new development paradigm with domestic circulation as the mainstay and domestic and international circulation reinforcing each other, China's opening-up has entered a new stage with several prominent new features.

First, its trade policy has shifted from being predominantly export-oriented during the past few decades to encouraging both exports and imports. It is no longer pursuing a trade surplus but aims to promote balanced two-way trade.

For example, the China International Import Expo, the world's only expo dedicated to promoting imports, reflects the policy shift. In addition, China's general tariff rate has dropped to around 7 percent and is anticipated to fall below 5 percent by 2025, reaching the World Trade Organization average.

Second, the opening-up policy has extended from the coastal and border areas to inland regions, forming a coordinated, holistic and parallel opening pattern.

Before 2000, all national-level opening-up measures in China began in coastal cities. In the decade after the 18th National Congress of the Communist Party of China in November 2012, new opening-up measures took an integrated approach to cover all regions across the country: new districts were built in central and western regions, bonded zones expanded from coastal to central and western regions, and free trade pilot zones were approved in batches nationwide. Currently, half of China's 150 bonded zones are located inland. Essentially, opening-up is an idea, a system and a way of working, rather than specific locations.

Third, promoting overseas investment is seen as equally important as attracting foreign investment. Despite severe disruptions in the global supply chains, foreign investment in China has actually increased. Over the past decade, China has attracted an average of $140 billion in foreign capital each year, with the actual use rising to nearly $190 billion in 2022. China's outbound direct investment hit $153.71 billion in 2020, ranking first in the world for the first time. The trend of two-way investment is evident.

Fourth, while the trade in goods under the framework of the General Agreement on Tariffs and Trade and World Trade Organization used to account for the lion's share of China's trade, policies now encourage trade in both goods and services.

For example, in the financial sector, restrictions on foreign ownership of securities companies, fund management companies, futures companies and life insurance companies have been lifted. In manufacturing, restrictions on foreign ownership of commercial vehicle manufacturers have been relaxed. In agriculture, the requirement for Chinese control of the breeding of new wheat varieties and seed production has been relaxed to a minimum Chinese ownership of 34 percent.

The 20th National Congress of the Communist Party of China in October last year once again emphasized high-level opening-up and outlined five tasks.

First, expanding institutional opening-up to facilitate both domestic and international circulation. While China used to largely participate in international economic circulation by opening-up its production resources and outputs, it has now moved to a new stage where domestic circulation takes the lead, steadily opening-up its regulations, rules, management and standards.

In order to turn China's massive single-market into a magnet for global resources through high-level opening-up, it is essential to create a market-oriented, law-based and internationalized business environment, effectively connecting domestic and international circulations.

Second, building China into a trader of quality by prioritizing the trade of services and digital trade. In recent years, the volume of China's trade in services has remained second in the world. However, compared to the high value-added services trade in developed economies and the tremendous growth of China's trade in goods over the past 40 years, China's trade in services is facing challenges such as a large deficit and low structural efficiency. The enormous volume of the goods trade has not played the expected role in driving the development of the service trade.

The top leadership attaches great importance to this issue. The China International Fair for Trade in Services has been held for many years. President Xi Jinping has delivered important speeches on multiple occasions. Relevant departments have introduced a pilot program of deepening comprehensive innovation-driven development of the trade in services.

It is foreseeable that trade in services will take up a rising share in China's total trade volume and digital trade will grow its share in the trade in services. The service trade and digital trade will become additional pillars to support China's transformation into a trader of quality.

Third, driving comprehensive opening-up through high-quality development of the Belt and Road Initiative. While the BRI reshuffles the world economy, it is also profoundly influencing and shaping China's opening-to the outside world.

The launch and operation of the China-Europe Railway Express is an outstanding example. The railway lines have fueled the rapid development of routes, ports and hubs, expanding new opportunities for the opening-up of inland cities.

Moving forward, it is necessary to continue breaking through bottlenecks and barriers, accelerate the formation of an international economic and trade cooperation mega-corridor supported by the railway, key hubs along the lines, and deeply-integrated industry and supply chains. In particular, transport capacity should be optimized in order to make greater contributions to driving comprehensive opening-up.

Fourth, implementing the strategy of "free trade port + pilot free trade zone +network of high-standard free trade zones".As the highest-level platform for opening-up, the Hainan Free Trade Port has started construction and is expected to launch independent customs clearance in 2025, according to the master plan.

In general, international economic and trade rules are evolving toward zero tariffs, zero barriers and zero subsidies, transitioning from border control to behind-the-border opening and underlining the convergence of business environments.

Efforts should focus on aligning with high-level economic and trade rules including pre-establishment national treatment, negative lists, intellectual property protection and environmental protection. It is also important to gain new experiences and set new examples for China to engage in international economic and trade rule negotiations and global economic governance.

Fifth, participating in global cooperation by internationalizing the renminbi and implementing a high-quality going-global strategy. The report to the 20th Communist Party of China National Congress proposed the internationalization of the renminbi "in an orderly way", different from "a steady and prudent way" stated in earlier reports.

Over the next 15 years, with the gradual implementation of renminbi settlement in cross-border trade, bulk commodity imports and Chinese outbound investments, the internationalization of the renminbi is expected to see major progress. It has been forecast that the proportion of renminbi in payment settlements will increase by one percentage point each year, reaching around 17 percent by 2035.

The author is researcher and academic advisor to the China Finance 40 Forum, executive vice chairman of the academic committee of the National Institute for Innovation and Development Strategy, and former Mayor of Chongqing. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn