Optimizing International Trade and Promoting Institutional Openness to Foster Global Economic Development

At the Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) in July 2024, opening up was identified as a defining feature of Chinese modernization.

“We must remain committed to the basic state policy of opening to the outside world and continue to promote reform through opening up. Leveraging the strengths of China’s enormous market, we will enhance our capacity for opening up while expanding cooperation with other countries and develop new institutions for a higher-standard open economy,” the Resolution of the CPC Central Committee on Further Deepening Reform Comprehensively to Advance Chinese Modernization, adopted at the session, states.

China’s evolution over the past decades shows that the more the country has developed, the more open it has become. This process is set to continue as China pursues its goals for development and modernization.

Trade upgrade

In 2024, China’s foreign trade grew steadily, making a significant contribution to stabilizing the economy. The total value of goods imports and exports reached 43.8 trillion yuan ($6.2 trillion), a 5-percent year-on-year increase, while the total value of services imports and exports reached 7.5 trillion yuan ($1.1 trillion), up 14.4 percent year on year.

China’s foreign trade structure has been continuously optimized, providing the world with an increasing array of high-quality goods and services. For example, China’s introduction of visa-free entry and transit policies has achieved its goal of boosting a rebound in visitor numbers, accompanied by increasing popularity of China travel-related content online. Additionally, Chinese digital cultural content and platforms have made impressive strides overseas, one example being the video game Black Myth: Wukong, based on the ancient classic Journey to the West, which swiftly topped sales charts on multiple gaming platforms including Steam and WeGame, and earned numerous industry awards.

Yet, in the context of rising protectionism in some countries, China faces challenges in stabilizing its foreign trade.

Regarding trade in goods, Minister of Commerce Wang Wentao said in an article published on the People’s Daily website in January that efforts would be made to further enhance the resilience of development. These efforts include increasing financial support, expanding the scale and coverage of export credit insurance, intensifying support for the development of cross-border e-commerce by further enlarging comprehensive pilot zones, and encouraging participation by Chinese enterprises in overseas exhibitions.

The development of trade in services requires an innovation-driven approach and enhanced cooperation, according to experts. Li Jun, Director of the Services Trade Institute at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told Xinhua News Agency that, on the innovation front, it is essential to tap into the potential of industrial digitalization and digital transformation to cultivate new growth drivers.

At the same time, innovative regulatory models can be explored to leverage China’s manufacturing strengths and promote the integration of trade in both services and goods, Li said, adding that efforts should also be accelerated to unleash the momentum of green services development and to innovate in green technology trade.

He also emphasized the need to further expand bilateral, multilateral and regional cooperation in trade in services and digital trade while continuing to leverage major exhibition platforms such as the China International Fair for Trade in Services.

China has made solid progress in developing high-quality digital trade. Zhou Nianli, a researcher at the China Institute for World Trade Organization (WTO) Studies at the University of International Business and Economics (UIBE), told Beijing Review that China has been promoting digital trade by investing in infrastructure, encouraging research, development and innovation, and improving the institutional environment. Additionally, the government has established regulatory systems for the exit of “important data” and “personal data,” thus providing clear pathways for such data to cross borders.

Wang stressed that it is imperative to effectively implement reform and innovation policies in the digital trade sector, accelerate the formulation of industry standards and align them with international norms, establish and improve a statistical monitoring system, build robust platforms and support related enterprises.

Institutional opening-up

The Resolution of the CPC Central Committee on Further Deepening Reform Comprehensively to Advance Chinese Modernization underscores the importance of steadily enhancing institutional opening up, which is a main driver of China’s high-quality development.

“Institutional opening up requires aligning rules, regulations, management practices and standards in a two-way manner. This means not only benchmarking against high-standard international economic and trade rules but also preserving and leveraging our own institutional advantages,” said Cui Fan, a professor at the School of International Trade and Economics, UIBE, told Beijing Review. “It involves two objectives: building a high-level institutional framework for opening up and promoting the construction of an open world economy.”

According to Cui, the current multilateral system and certain high-standard regional trade agreements do not conflict with China’s socialist economic system. The emphasis on fair competition in these systems is consistent with the country’s market reform goals.

Global economic and trade rules rarely address ownership systems and wealth distribution mechanisms explicitly, according to Cui. The WTO upholds the principle of ownership neutrality, ensuring that state-owned enterprises (SOEs) are not treated unfairly because of their public ownership. The principle of non-discrimination toward SOEs is accompanied by another requirement, namely that SOEs should not gain additional competitive advantages due to their association with the government, which is the essence of the principle of competitive neutrality.

“Ownership neutrality and competitive neutrality are two complementary concepts. Together, these principles create a fair economic and trade environment. Only by balancing both can the socialist market economy effectively harmonize with other market economies—a fundamental requirement for achieving two-way alignment,” Cui said.

For example, the principle of non-discrimination is reflected in the Announcement No.10 of 2023 jointly issued by the Ministry of Finance, the State Taxation Administration and the Ministry of Industry and Information Technology regarding purchase tax exemptions for new-energy vehicles. The policy applies to both domestic manufacturers and foreign brands, meaning that imported vehicles are also eligible for tax exemptions.

In an article published in Qiushi, a theoretical journal of the CPC Central Committee, in August 2024, Wang said there is still room for improvement in institutional opening up.

Advancing high-level opening up means leveraging opportunities such as joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (a free trade agreement covering 11 Asia-Pacific economies and Britain, which is widely considered to have the highest standards for trade rules and market access—Ed.) and the Digital Economy Partnership Agreement (an international trade partnership agreement that aims to establish digital trade rules and digital economy collaborations—Ed.) to promote the alignment of domestic rules, regulations, management practices and standards in key areas with international norms, thereby creating a new competitive advantage for an open economy of a higher standard, according to Wang.

“Overall, institutional opening up must be accompanied by deep-seated reforms,” Cui said. “China should devote itself to exploring institutional opening up and undertaking profound reforms in order to align with high-standard international economic and trade rules and clarify the boundaries between the market and the government. This approach will not only lead to even greater achievements in China’s reform and opening up, but also contribute to constructing a more comprehensive and just international economic and trade rules system.”