China is continuing to deepen reform and expand opening-up amid downward economic pressure and the novel coronavirus pneumonia, or COVID-19. Chinese governments at all levels and in all regions have rolled out favorable policies to expand opening-up in virous aspects, offering strong support to stabilize the Chinese and global economy.
The People’s Bank of China and Shanghai municipal government on Feb. 14 issued a guideline together with other three departments to further build Shanghai into an international financial center and boost the integrated development of the Yangtze River Delta.
The guideline, consisting of 30 measures, outlines support for such areas as science and technology enterprises, financial management subsidiaries, new directions of investment by insurance funds, foreign exchange derivatives from the interest rate options for yuan, establishment of fintech companies in the Lingang area of the Shanghai pilot free trade zone, and investment and trade liberalization and facilitation.
The guideline fully indicates that expanding opening-up of the financial sector is a long-held policy of China, and its force and pace will not be affected by the epidemic.
To minimize the impacts from the epidemic on commerce, the Ministry of Commerce on Feb. 18 issued the Circular on Responding to Novel Coronavirus Pneumonia, Stabilizing Foreign Trade and Foreign Investment and Promoting Consumption.
The circular requires that enterprises in foreign trade, foreign investment, commercial circulation and e-commerce should be supported to resume work and production in an orderly manner, and the joint construction of major projects along the “Belt and Road” should be promoted in a stable and orderly manner.
It also urged that foreign trade management procedures should be simplified and enterprises should be guided to apply for and receive paperless import and export licenses. The circular pointed out that supportive policies should be given to strengthen export credit insurance, to actively respond to overseas restrictions on trade, to stabilize confidence of foreign companies in China, and to guide pilot free trade zones to speed up the establishment of trial zones for reform and opening-up and innovation.
The government has also unveiled a package of policies to reduce or exempt taxes for enterprises, increase fiscal expenditure, inject liquidity into the financial system, and reduce government approval items and processes.
Although the epidemic has brought some pressure to the Chinese economy, many foreign companies believe that the impact is short-term and remain confident in the Chinese market.
In mid-February, Oaktree Capital Management, an American private equity company, became the first foreign company to set up a wholly owned unit in Beijing during the epidemic. The move showed the strong appeal of the domestic financial market to foreign investment, as well as the optimism of foreign companies about China's economy and capital market in the long run.
Such optimism is also reflected by the practices of other foreign-funded companies in China. Tesla’s gigafactory in Shanghai is currently expanding capacity, attracting many foreign enterprises on the industrial chain to invest in China. U.S. multinational food, snack, and beverage corporation PepsiCo has also upped the ante in its investment in China, bringing over $700 million to the Chinese market.
The epidemic cannot stop China from expanding opening-up. China has proactively followed the trend of economic globalization, pursued development with its doors open and succeeded in the historic transformation from a closed and semi-closed economy into a fully open one. Openness has become a trademark of China. The country has grown by embracing the world, and the world has also benefited from China’s opening-up. Standing at a new starting point of the history, China will will only make its door to the world more and more open.
Greater openness leads to better development. Looking ahead, China’s important position in the global supply and industry chains will not be changed by the impact of the epidemic. China will adhere to the basic state policy of opening-up, advance opening-up to promote reform, development, and innovation, and continue to promote a higher level of opening-up.
As China adjusts its industrial structure, new economic development models are taking shape in the country. There are still many opportunities in the development of the Internet economy, big data, cloud computing, 5G, new energy, high-end manufacturing, telemedicine, and online education.
Seizing the current opportunities and turning crises into new opportunities, China will continue to achieve common development with the world while opening itself wider.
(Gao Jie is an associate professor with the School of Banking and Finance, the University of International Business and Economics)