By Cui Weijie, director of Institute of Industry Development and Strategy with Chinese Academy of International Trade and Economic Cooperation
In October 2019, China clearly put forward the goal of building a new system of open economy at a higher level. This is one of the important tasks for China to uphold and improve the basic socialist economic system and promote high-quality economic development. Building a new system of open economy at a higher level requires accurately adapting to the characteristics of opening-up in the current era. Both domestically and internationally, the currently most distinctive characteristic of China's opening-up is opening-up based on institutions. This fully reflects the integration and high degree of unity of China's reform and opening-up at domestic institutional level. From the overall requirement for "opening-up based on institutions" clearly raised for the first time at the central economic work conference at the end of 2018 to the target of "pushing forward opening-up based on rules, regulations, management ,standards and related institutions" further made clear at the end of 2019, China's opening-up has been continuously deepened to the institutional level and expanded from rules to broader areas and deeper levels including rules, regulations, management, standards. In this sense, more attention is paid to systematic and all-round opening-up at domestic institutional level. Therefore, in the next step of opening-up, it's necessary to accurately grasp the latest characteristics of institution-based opening-up, and accordingly make systematic designs of key opening-up areas, opening-up strategies, platform carriers, policies and institutions.
I. Opening-up based on institutions is the characteristic of China's opening-up at the current stage.
Entering the new era, China's reform and opening-up and international economic and trade rules all require us to accelerate the advancement of opening-up based on institutions. While continuously deepening the opening-up based on flows of goods and factors of production, we need to speed up the transition to opening-up based on rules, regulations, management, standards and related institutions, and make institution-based opening-up as important engine for building a new system of open economy at a higher level. We also need to establish a more open and inclusive policy and institutional system that meets the requirements of the new era, and try to foster new institutional advantages for China to engage in international cooperation and competition.
(I) Opening-up based on institutions meets the new needs of China's advantage transformation.
Since the reform and opening-up, China's open economic development was mostly characterized by opening-up based on factors of production. China participated in international competition and cooperation by mainly relying on its advantages in traditional factors, such as population and land. However, from 2014 to 2018, China's working-age population (aged between 15 and 65) fell for five years in a row. The World Bank forecasted that China's total labor force (number of working-age people who are able to work) would start to drop from 2019, and this trend would last till 2050. Affected by the reduction of labor supply and other factors, China's labor costs will continue to rise, and the low-cost advantage will keep weakening. With the weakening of traditional advantages such as the large working-age population, China is in urgent need of rebuilding its new competitiveness in business system, trade regulation system, financial opening and innovation system, operational and post-operational regulation system. At the institutional level, China needs to implement systematic opening-up based on institutions at a higher level, and facilitate the transition of China's economic growth from depending on low-cost factors to relying on innovation factors such as talent, information, data and technology through further advancing the opening-up based on institutions. As such, China could realize the transition from traditional advantages in population and land to institutional advantages, and form and unleash the dividends of opening-up based on institutions.
(II) Opening-up based on institutions meets the new requirements for a higher level of opening-up.
Since the reform and opening-up, especially since China's entry into the World Trade Organization (WTO), the opening-up based on flows of goods and capital has been greatly improved and free flows have been basically achieved with the continuous advancement of free trade facilitation and investment liberalization and facilitation. Especially in recent years, China has continued to remove foreign trade barriers of various kinds, and has proactively lowered tariffs on a number of occasions and substantially improved the opening-up based on flows of goods. Through several times of proactive tax cuts, China's current overall tariff level is close to that of developed countries (or developed markets), and lower than the average of developing countries. Except the opening-up based on flows of goods, the opening-up based on flows of capital has also been improved dramatically. In 2018-2019, China constantly shortened the negative list for foreign investment and further opened related areas. The central economic work conference held at the end of 2019 clearly proposed to "continuously shorten the negative list for foreign investment" and "cut the overall tariff level", which signaled again to the world that China would actively expand imports and promote a higher level of opening-up. Now, China's opening-up based on flows of goods and capital has reached a higher level. To push forward an even higher level of opening-up, it's naturally necessary to press ahead with the opening-up based on rules, regulations, management, standards and related institutions, and extend opening-up from flows of factors towards domestic institutional level.
(III) Opening-up based on institutions adapts to the new characteristic of the opening-up focusing on the service industry.
At present, domestic and international service industries and service trade are entering a new stage of accelerated development, and China has entered a new stage of opening-up focusing on the service industry. Domestically, in 2001-2018, China's total imports and exports of service trade increased by about 9 times, and maintained a double-digit growth rate. It's expected that, by the end of the "13th Five-year Plan" period (2016-2020), the annual growth rate of foreign trade in services would remain above 10 percent, much higher than that of trade in goods. Currently, over 70 percent of China's actually unitized foreign investment is concentrated in the service industry. Globally, the global trade in services is growing rapidly, with an average annual growth rate far exceeding that of trade in goods, and two-thirds of the global FDI flow to the service industry. Besides, in view of the national top-level design and actual appeal for local open development, such service sectors as education, healthcare, telecommunications, finance and culture will also be the focus as China promotes opening-up to a higher level. In this sense, China has entered a new stage of opening-up emphasizing the service industry. Service-based opening-up and manufacturing-based opening-up are totally different. Manufacturing products are all tangible and physically existent and have their fixed forms. The service industry is rather different as service products vary in form of expression, carrier, way of trading, so different service sectors are subject to different policy and institutional systems, different priorities for opening-up advancement, and different rules, management and standards. Furthermore, the service industry involves many regulatory departments, so a lot of intra-departmental and inter-departmental issues need to be addressed in a coordinated manner. In this connection, there is an urgent need to establish a policy and institutional system to keep up with a higher level of opening-up. Therefore, at the new stage of service-based opening-up, it's necessary to expedite the building of a new system of open economy at a higher level as the support, take into full consideration different characteristics of different sectors, and establish and improve an open industry management system and supporting policies and institutions.
(IV) Opening-up based on institutions adapts to the new trend of rebuilding international economic and trade rules.
In recent years, global bilateral or regional free trade agreements (FTAs) are rebuilding rules for international economic and trade. New rules and issues keep emerging in high-standard investment trade represented by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), The United States-Mexico-Canada Agreement (USMCA), Japan-EU Economic Partnership Agreement (EPA), Transatlantic Trade and Investment Partnership (TTIP) and Trade in Services Agreement (TISA). These new economic and trade rules showcase the characteristic and trend of extending from border measures to intra-border ones, namely from border policies for import and export tariffs and foreign investment access to domestic institutional systems involving competition policies, labor rights, IPRs, cross-border service trade, temporary entry of business personnel, financial services, telecommunications, and e-commerce. In order to adapt to the changing international economic and trade rules and strive for the initiative in rebuilding international economic and trade rules, it's imperative for China to open by following the trend, and carry out systematic reforms and innovations at domestic institutional level, and vigorously advance opening-up based on institutions.
II. Accurately grasp the main characteristics of opening-up based on institutions
Opening-up based on institutions reflects a high degree of unity of reform and opening-up. Opening-up based on institutions has a higher systematic requirement for the policies and institutions. The design of policies and institutions for platform carriers and industrial fields tends to be more non-standardized but obviously more customized. Moreover, the sense of gains from policies and institutions is not as obvious as that from the past policy-based opening-up.
(I) Open policies and institutions extend from border to intra-border.
Opening-up based on institutions is a concept that corresponds to the opening-up based on flows of goods and related factors, and reflects a change in the focus of China's opening-up. It's the specific manifestation of adapting to domestic and international situations and accurately defining the current and next-step focus of opening-up. The policies and institutions for opening-up based on flows are typically reflected in border measures, while those for opening-up based on institutions are mainly manifested in intra-border measures. The transition from opening-up based on flows to opening-up based on institutions is mainly demonstrated by the extension from border measures to intra-border measures. In other words, at the new stage of opening-up based on institutions, the mutually reinforcing relationship between reform and opening-up has been further embodied, and a high degree of unity of reform and opening-up has realized in rules, regulations, management, standards, and related fields. In this sense, opening-up is reform while reform means opening-up.
(II) Open policies and institutions are more systematic.
The focus of opening-up extends to domestic institutional level, while fundamental characteristics of system are the wholeness and systematicness. The establishment and implementation of a system must take into consideration the overall development process from a holistic and systematic perspective. For example, Hong Kong SAR's highly open policies and institutions just reflect the high systematicness. As a typical representative with a high-level opening-up policy system, China’s Hong Kong SAR is a typical region with a "small government and large market" and "simple tax system and low tax rates". It implements very low tax rates and the fiscal system of "determining revenue by expenditures". Tax rates are cut down annually in key industries and areas as needed. Superficially, "small government and large market" and "simple tax system and low tax rates" are highly correlated, but an in-depth analysis showed that this is closely related to the existence of a large number of statutory bodies. According to statistics provided by the Home Affairs Bureau, Hong Kong SAR has 242 statutory agencies. These agencies use very little fiscal funds and enjoy diversified funding sources, but they undertake numerous government functions and have flexible working mechanisms. Therefore, Hong Kong SAR's "small government and large market", "low tax rates and simple tax system", statutory agencies, among other policies and institutions are mutually supported, demonstrating a highly systematic policy system. Going forward, China also needs to attach great importance to systematic and holistic system design in advancing opening-up based on institutions and building a new system of open economy at a higher level.
(III) Open policies and institutions change from standardization to customization.
The extension of opening-up focus to domestic institutional level signifies the need of designing different open policies and institutions based on different characteristics of different industries and areas. For industries, as the emphasis of opening-up extends from access links such as factors and capital to all links of the entire production process such as access approval and post access approval, a new open management system needs to be established in different industries, especially the service industry, in line with the industrial characteristics. For regions, different regions have different industrial systems, which means open policies and institutions are different in design, and there is a necessity to customize differentiated policies and institutions in developing local or regional opening-up strategies. Therefore, in designing opening-up strategies and local opening-up platforms and carriers for industries, the policies and institutions need to be tailored to the industry characteristics. Taking FTA as an example, the customized characteristic of opening-up based on institutions determines that FATs have different strategic positioning and pilot tasks, which are all policies and institutions customized in the light of local reality and serving national strategic requirements and the needs of local high-quality economic development. They are non-standard pilot tasks and measures. This is different from opening platforms of the opening-up based on flows of goods and factors of production since the reform and opening-up. For examples, bonded areas, bonded logistics areas, export processing areas, bonded port areas, integrated bonded areas are different areas under special supervisions of the customs, but their policy systems are basically the same so long as they have the same name (such as integrated bonded area), and comparatively speaking, they are standard policies and institutions. FTAs are new platforms for China's opening-up based on institutions in the new era, and whether they can achieve good experimental results depends on their policy systems to a certain extent, which means whether their pilot tasks and measures match local reality. This mostly depends on the results of local active efforts and customization (Cui Weijie, 2019). Therefore, when it comes to opening industries and designing opening-up platforms and carriers at the new stage of opening-up based on institutions, it's necessary to change the traditional thinking, make innovations boldly, customize new opening-up development strategies and policy systems, tailor make new opening-up platforms and carriers and their policy systems, and actively strive for a higher level of opening-up.
(IV) The sense of gain from open policies and institutions is indirect.
Different from the results of the past policy-based opening-up, opening-up based on institutions doesn't give enterprises a strong sense of gain, and produces slow and indirect results. Since the reform and opening-up, China has implemented a large number of preferential land and tax policies, and these policies paid off quickly and gave enterprises a strong sense of gain. But enterprises had no direct sense of gain from institutional innovations and opening-up based on institutions. Taking the reform for simplifying administration and delegating powers to lower levels in some areas as an example, delegating some approval-related powers to grassroots administrative departments may not generate practical results in the short term, and may not necessarily give enterprises a strong sense of convenience, and may even weaken their sense of gain. In addition, for frontier opening-up platforms and carriers represented by FTZs and integrated pilot areas for wider opening of the service industry, the well-experimented policies and institutions may be replicated and popularized rapidly in a larger range, and may give no sense of difference to enterprises within and outside the areas, and no obvious sense of superiority to enterprises within the areas. The opening-up based on institutions produces no direct results or little sense of gain, but gives very good indirect results or final results (Cui Weijie, 2019). For instance, with the constantly deepening reform for "delegating power, streamlining administration and optimizing government services" in recent years, the CPC Central Committee and the State Council have introduced a number of effective measures for opening-up based on institutions by firmly centering on the actual needs of market entities and aiming at creating a market-oriented, law-based and internationalized business environment. This has facilitated China's opening-up based on institutions and obviously improved the business environment in China. "The Doing Business 2020" report continuously listed China as one of the world's top economies that improved the environment of doing business most, drastically raised China's ranking to the 31st, the leading position among developing countries. Therefore, at the new stage of opening-up based on institutions, it's necessary to correctly look at whether enterprises have a clear sense of gain. At the time of evaluating the results of opening-up policies and institutions in the new era, such indicator as sense of gain should be used prudently to avoid only focusing on short-term results but neglecting long-term strategic considerations. It's necessary to build the patience of all departments in fostering new advantages of opening-up based on institutions, and build an evaluation index system that adapts to the new system of open economy at a higher level and reflects the characteristics of opening-up based on institutions.
III. Policy suggestions for further advancing opening-up based on institutions
To meet the overall requirement for deepening reform and opening up in new era, adapt to the characteristics of opening-up based on institutions, and promote the building of a new system of open economy at a higher level, there is a need to adopt more targeted strategies and measures adapting to the characteristics of the era in setting priorities, strategies, platforms and carriers, policies and institutions for opening-up based on institutions.
(I) Further advancing opening-up based on institutions and strive for new advantages of opening-up based on institutions
In October 2019, China further clarified the priorities of opening-up based on institutions, that is opening-up based on rules, regulations, management, standards and related institutions. The priorities include but not limited to rules, regulations, management and standards. In the future, China should further revolve around the demand of market entities, and benchmark the international advanced level in addressing the pain points, difficulties and blocking issues with strong reactions from market entities, and press ahead with opening-up based on institutions in key areas, such as business, investment, trade, operational and post-operational regulation, industry administration systems.
1. Further boost the integrated reform of the business system
In recent years, China has gained a lot of successful experiences in reforming the business system. Down the road, China needs to further promote enterprises to carry out integrated, systematic and full-chain reforms from registration to deregistration. China needs to address issues faced by enterprises in market access and business permit. For example, China needs to explore the implementation of a market access automatic licensing system and permit measures for items included in the negative list for market access. After establishment and before getting the license, enterprises should be allowed to directly engage in related business activities as long as they commit to apply for license in accordance with relevant provisions within the required period of time and engage in production and business activities in accordance with relevant provisions permitted in the license before going through formalities for license application.
2. Further improve the investment management system
It's necessary to fully implement the management system of pre-establishment national treatment plus a negative list for foreign investment, and further improve the foreign investment access management system. It's necessary to facilitate and implement opening-up in key areas, such as finance, healthcare, education and culture, further relax the market access, and shorten the negative list. The filling management system needs to be implemented across the board for the access of foreign-funded enterprises excluded from those prohibited in the negative list. At the same time, there is a need to deepen the reform of investment project approval procedures from site selection to review (filing), design review, construction licensing and completion acceptance, and form the whole-process formatted approval. There is also a need to gradually simplify the approval procedures, and promote the transition of some approval items to filing, notification, commitment, or exemption from approval.
3. Further improve trade facilitation
China needs to benchmark the international advanced level, continue to advance and improve the system of "single window" for international trade so as to gradually realize the full coverage of the entire process of international trade businesses. In terms of the foreign trade link, China needs to facilitate the expansion from cargo and ship declaration to applying for trade license, acquiring trade enterprise qualification, applying for certificate of origin, tax payment, foreign exchange settlement and payment, export rebate, and all other links of foreign trade. In terms of the mode of foreign trade, it's necessary to promote the expansion of goods from general mode of trade to all modes of trade, including postal items, cross-border e-commerce, sea express, etc., and explore to gradually expand to certain areas of trade in services. When it comes to foreign trade carriers, it's necessary to promote the expansion from the entry and exit of ships to that of planes and trains. As for information services, it's necessary to integrate and classify data and information of port departments and enterprises to realize data exchange and sharing between regulatory information systems and logistics information systems and build a public information service platform. Regarding interconnection, it's necessary to propel local interconnections with national ministries, commissions, and neighboring provinces and cities, and promote cross-regional and cross-border customs clearance cooperation, data exchange and coordinated supervision.
4. Further strengthen operational and post-operational regulation
According to the national requirement for advancing the modernization of governance system and governance capacity, government regulation has gradually changed from pre-operational approval to operational and post-operational regulation. This requires gradual reduction and delegation of approval items, and well regulate the items removed through strengthening operational and post-operational regulation to preventing the occurrence of major systematic risks. Therefore, it's necessary to further change the regulatory thinking and concepts, and center on further strengthening operational and post-operational regulation to boost the reform and innovation of credit platforms, regulatory platforms, institutional integration and process optimization.
5. Further build an open industry management system
Currently, in some industries, especially the service industry which is the focus of opening-up in the next step, many clauses of administrative provisions, rules and regulations no longer meet the requirement for high-quality development in the new era. For examples, in cultural field, the currently available administrative provisions, rules and regulations include Regulation on the Administration of Commercial Performances (Revised in 2016), Measures for the Administration of Landing of Overseas Satellite Television Channels, Regulations on the Administration of the Introduction and Broadcasting of Overseas Television Programs, Regulations on the Administration of Movies, Administrative Measures of the Ministry of Culture for Centralized Management of Cultural Exchanges with Foreign Countries. These regulations were issued by different departments, and many provisions have become outdated and fail to meet the requirement for high-quality and open development of industries with the institutional reform and changes in domestic and international situations. In this connection, the suggestion is to systematically recap the administrative provisions, rules and regulations in some key industries such as the service industry, and carry out systematic policy and system designs based on the industry characteristics and in line with the new situation and new requirement in the new era. Then, constantly improve the administrative provisions of key industries, and accelerate the improvement of industry regulations that are conducive to high-quality and open development.
(II) Customize industry opening-up strategies and boost high-quality economic development
With the further advancement of opening-up based on institutions, systematically designing open policies and institutions and implementing customized strategies for different industries can effectively serve the real economy and promote high-quality economic development. To design targeted policies and institutions for a specific industry, the focus can be put on addressing deep-seated issues affecting high-quality development of the industry, removing various institutional barriers and accurately identifying and making up for the weakness in industrial development. This can effectively stimulate the vitality of market entities, and better gather all kinds of high-quality factors of production across the world, and promote high-quality economic development. For that matter, there is a need to adapt to the systematic and differentiated characteristics of opening-up based on institutions, change the thinking on opening-up development, focus more on industrial development, customize opening-up policies and institutions based on the opening-up characteristics of different industries, and implement more targeted industry opening strategies.
1. Well-targeted policy implementation
At the new stage of opening-up based on institutions, the opening priorities are different in different industries, requiring systematic designs and accurate understandings. At the new stage of opening-up focusing on the service industry, fewer industries have not yet opened or need to be opened wider. Yet, it's obviously more difficult and complex to push forward the opening-up, with risks and uncertainties increasing, and different industries have different emphases in opening-up. Taking the Special Administrative Measures (Negative List) for Foreign Investment Access (2019) as an example, only 40 items of 13 categories are under special administrative measures. The areas remained on the negative list are those more sensitive and at a greater risk of opening-up. Citing performance economy as an example, FTZs have relaxed restrictions on foreign investment access in recent years, but still have restrictive regulations on the content and scope of performances and fail to take all kinds of the industrial development into systematic consideration. The access link has been relaxed, but there are still many other restrictions, and there have been no effective opening-up risk and pressure tests. Another example, some regions have eased restrictions on the share ratio of foreign investment in aircraft maintenance, but the businesses introduced from foreign-funded aircraft maintenance companies are similar. Although this helps promote industry competition, there is still a gap in some high-end fields such as central control and electronics. It's also necessary to strengthen the weak links of the industry chain and accurately position the industry development appeals in the whole aircraft maintenance industrial chain. So, at the stage of opening-up based on institutions, the opening-up if specific to a particular industry involves not only some specific link of foreign investment access but also industry management regulations, industry cultivation and security. We need to accurately understand the development demands and specific issues in these fields from an industrial perspective, and then implement well-targeted policies.
2. Differentiated policies
At the new stage of opening-up based on institutions, the service industry or the service link in the industrial chain become increasingly important. The focus of industrial development should not be limited to a certain link such as investment promotion, but should pay attention to the whole chain of industrial development and change to build a sound industrial ecology. For instance, the new stage of opening-up based on institutions is also the new stage of opening-up focusing on the service industry. However, the opening characteristics of the service industry is different from that of the manufacturing industry and requires a differentiated open strategy. The opening of the manufacturing industry generally relies on land, tax and other traditional preferential policies to bring in large industrial projects and product lines. Then, it's to gather relevant supporting enterprises and gradually improve the industrial system after the product lines are established and projects are put into operation. Therefore, it's difficult to withdraw industrial projects in the short term even the preferential policies are withdrawn and more preferential policies are offered in other regions. It's totally different for the service industry. Taking financial leasing as an example, many regions attract financial leasing projects by offering a lot of subsidies and other preferential policies, but they fail to take local demands into consideration. As such, once other regions offer more preferential policies or local preferential policies are withdrawn, financial leasing enterprises may relocate to other regions. Therefore, it's necessary to take into full consideration the characteristics of "asset-light operation" and "easy relocation" of most service industry projects while attracting service projects with preferential policies. It's also necessary to pay attention to the business demand of service projects, and speed up the fostering of local market demands. We should not just focus on the link of investment promotion as we did in the past. Instead, we need to adapt to the new trend and new characteristics of opening-up based on institutions and opening-up based on services, and change to build a good and systematic industry development ecology.
3. Forward-looking policy implementation
As new industries and new business forms and models keep propping up, industrial chain owners may shift their focus from the manufacturing link to the service link, or there might be other forms of greater changes. Accordingly, the industry ecology may undergo radical changes, so it's necessary to prepare forward-looking opening-up policies for the new industrial ecology. As China's economy is now shifting from high-speed development to high-quality development, it's necessary to focus more on high-end factors such as talent, technology and data information and roll out visionary policy measures for high-end industries to adapt to the new needs in the new era. Citing the auto industry as an example, the most critical core technologies of traditional cars are engine, gearbox and chassis. Foreign auto giants have long monopolized these core technologies and controlled the technology spillover. Engine manufacturers dominate the industrial chain. However, core technologies of the electric vehicle industry include R&D technologies for batteries, motors, electric motor drives and other core components, and common technologies for intelligent platform development, vehicle design, overall matching and system management. Vehicle manufacturers are unable to fully control these technologies, and most core technologies are owned by numerous small and medium-sized companies across the world. Down the line, electric vehicles are likely to be dominated by the travel link (such as car-sharing platform enterprises) or service link. Stimulating more innovations in business model by travel is different from the traditional auto industry dominated by the manufacturing link but similar to the relationship between Mobike and Flying Pigeon. The customization and standardization characteristics of electric vehicle manufacturing will be more evident and will thoroughly change the model of EV application and open development. Accordingly, the focus of opening-up of the auto industry needs to be shifted from valuing the introduction of EV motor manufacturers to building technological innovation platforms, introducing in key technologies and human resources, and other high-end links and factors of the industrial chain. This requires working out whole-new and forward-looking strategies for opening the industry.
(III) Build new platforms for opening-up and lead a new pattern of all-round opening-up
At the new stage of emphasizing opening-up based on institutions, many localities have actively preparing and applying for the establishment of new platforms and carriers for opening-up based on local requirements and positioning in the national strategy and in line with local reality and development needs. Apart from pilot FTZ, there are also other areas that have direct focus on industries without limit on the scope of industries, such as, Beijing comprehensive pilot project of opening-up of the service industry; the China (Shanghai) Pilot Free Trade Zone Lingang Special Area; Hainan actively facilitates the construction of a free trade port, and explores to establish an international offshore innovation and entrepreneurship demonstration zone; Yantai, Yancheng, etc. have been approved for the establishment of China-ROK innovation industrial parks; Ningbo of Zhejiang has actively built the China-CEEC "16+1" trade and economic cooperation demonstration zone, which was fully manifested in the Budapest Guidelines for Cooperation between China and Central and Eastern European Countries; Xinjiang Bayingol Mongolian Autonomous Prefecture ("Bayingol Prefecture" for short) is taking the initiative to prepare and apply for establishing a national trade and economic cooperation demonstration zone of China-Pakistan Economic Corridor (CPEC). These new platforms and carriers of opening-up are different, and obviously diversified, differentiated and customized. They are all new platforms customized and actively applied for opening-up in line with local actuality. In the future, it's necessary to meet the requirement for further advancing the opening-up based on institutions and building a new system of open economy at a higher level on the basis of the strong work foundation at the early stage. It's also necessary to proactively build new platforms for further opening to the outside world, and promote the formation of a new pattern of all-round opening-up.
1. Steadily push forward high-quality FTZ development
Currently, China has 18 FTZs, forming a new pattern of reform, opening-up and innovation that covers eastern, western, southern, northern, central, coastal, riverside, border and inland areas of China. Going forward, while steadily pressing ahead with the implementation of the pilot reform tasks of the 18 FTZs and summarizing, replicating and popularizing the reform and innovation experiences, it's necessary to do a good job in the following aspects. First, it's to further grant greater autonomy to FTZs in reform. Some measures for wider opening-up and innovative development of FTZs should be introduced in due time; legislative procedures for FTZs at the national level should be studied and boosted; and greater autonomy for FTZs in reform should be clarified and guaranteed by law. Second, emphasis should be laid on differentiated explorations. According to the actual conditions of FTZs, differentiated explorations should be conducted continuously in strategic positioning, construction model, and pilot tasks. Third, it's to make an overall plan to resolve major issues facing the development of each FTZ. Third, it's to promote the resolution of practical issues in such aspects as institutional setting, institutional adjustment, regional integration and adjustment, etc. and ensure effective implementation of all pilot tasks and measures. It's also necessary to take into full consideration and advance the resolution of the actual demands of FTZs for adding and expanding new areas, and give due consideration to setting up new pilot FTZs in eligible provinces (municipalities and autonomous regions). Fourth, it's to expedite the advancement of free trade port construction. That's to boost the implementation of FTZ 2.0 in Hainan, or roll out relevant measures for building a free trade port in Hainan as soon as possible.
2. Expand the comprehensive pilot area for opening the service industry wider to the outside world
The comprehensive pilot project of opening up the service industry in Beijing, and FTZs are all platforms and carriers of China's independent opening-up, but they directly start from key industries to promote the strategy of comprehensively deepening the reform and opening wider to the outside world, without limit on the scope of region. Going forward, the priority needs to be given to works in the following aspects on the basis of systematically summarizing and evaluating Beijing's experience in the comprehensive pilot project of further opening the service industry. First, it's to explore a new model of independent opening-up combining opening industries and opening parks, and promote to achieve greater results in the comprehensive pilot project of further opening the service industry. Beijing Tianzhu Comprehensive Bonded Zone and National Cultural Innovation Zone in Chaoyang District of Beijing have been selected for studying the establishment of platforms and carriers for opening-up, such as global offshore technological and cultural innovation demonstration zone, or special supervision area for service trade, etc. Second, it's to accelerate the introduction of a new edition of Beijing implementation plan for comprehensive pilot project of further opening the service industry, deeply explore new paths and new experiences for further opening the service industry, and play a demonstration and leading role for opening China's service industry wider to the outside world. Third, it's to duly expand the coverage of the pilot project, and seize the right opportunity to select some conditional provinces and cities for differentiated explorations of implementing the comprehensive pilot project of opening-up in a wider range.
3. Explore to establish bilateral international cooperation industrial parks under FTA
Bilateral international cooperation industrial parks under the Free Trade Agreement (TFA) are different from traditional country cooperation industrial parks. Under the FTA framework, bilateral international cooperation industrial parks can strive for point-to-point opening-up policies and institutional breakthroughs targeting specific countries or regions. Currently, some preliminary explorations have been carried out under China-ROK and China-Australia FTAs, and more breakthroughs should be made in policies, systems and the number of parks in the future. First, it's to implement breakthrough opening-up policies and institutions. Bilateral international cooperation industrial parks under the FTA such as China-ROK Weihai Regional Economic Cooperation Demonstration Zone and China-ROK (Yantai, Yancheng, Huizhou) industrial parks should be facilitated for trial implementation of policies and measures for opening wider to specific countries (or regions) through independently signing a bilateral park cooperation agreement or directly under the FTA framework. Or, they could be directly granted the opening-up policies and measures that have been carried out in FTZ and the comprehensive pilot project of further opening the service industry. Second, it's to boost the building of more bilateral international cooperation industrial parks under the FTA. The 17 FTAs already signed by China could be taken as the focus to appropriately expand to the FTAs that are under negotiations or in the stage of joint studies, encourage localities to build more bilateral international cooperation industrial parks, give full play to the initiative of all localities in participating in FTA construction, and help all localities realize high-quality development of open economy.
4. Promote the building of demonstration zones for trade and economic cooperation with countries along the "Belt and Road" routes
The demonstration zones for trade and economic cooperation with countries along the " Belt and Road" routes are new opening-up platforms for some domestic regions to comprehensively undertake trade and economic cooperation projects and present in concentration results of trade and economic cooperation with "Belt and Road" characteristics targeting specific countries and regions along the "Belt and Road" routes. The demonstration zones are the specific manifestation that localities actively serve the construction of "Belt and Road" and fulfill their responsibilities. In the future, the first step is to seek national support and approval for the establishment of demonstration zones for trade and economic cooperation with countries along the "Belt and Road" routes. As for the demonstration zones that are under active construction and enjoy good development foundations, such as China-CEEC Demonstration Zone for Economic Cooperation and Trade in Ningbo, China-CEEC Demonstration Zone for Economic Cooperation and Trade in Liaoning, and the trade and Economic Cooperation Demonstration Zone of CPEC in Xinjiang Bayingol Prefecture, it's to seek for the national support and approval for formulating specific implementation plans. By formulating the implementation plan that can not only serve the national strategy but also meet the local reality and by building some platforms for concentrated undertaking of the trade and economic cooperation projects and demonstrating the results of trade and economic cooperation projects with countries along the "Belt and Road" routes, these demonstration zones can play a demonstration role for other regions of China to undertake local responsibilities and engage in trade and economic cooperation in building "Belt and Road". Second, more regions should be supported for establishing such demonstration zones. The experiences of Zhejiang (Ningbo), Liaoning and Xinjiang (Bayingol Prefecture) can be taken examples for establishing some demonstration zones for trade and economic cooperation with distinctive characteristics by centering on the six major economic corridors and key countries and regions along the "Belt and Road" routes, such as East Asia, ASEAN, West Asia, South Asia, Central Asia, CIS, Central and Eastern Europe. Third, the demonstration zones for trade and economic cooperation should be endowed with more open policies and measures. On the one hand, for FTZs, areas implementing the comprehensive pilot project of further opening the service industry and national pilot and experimental areas, the policies and measures that meet the needs of the demonstration zones can be implemented first. On the other hand, more open policies and measures should be implemented in demonstration zones targeting specific countries and regions by signing cooperation agreements.
(VI) Improve open policies and institutions for a high level of opening-up
At the new stage of opening-up based on institutions, building a new system of open economy at a higher level requires the support of high-level open policies and institutions and high-level economic and trade rules. This is also the inherent requirement for serving high-quality economic development. So, in the future, it's necessary to be guided by establishing a new economic system of open economy at a higher level and target at serving high-quality economic development to constantly implement high-level open policies and institutions, promote the formation of high-standard economic and trade rules, and boost China's opening-up to a higher level.
1. Implement high-level open policies and institutions
To meet the new requirement for high-quality economic development in the new era, it's necessary to quicken researches and facilitate the introduction of open and inclusive policies and institutions that can help free flows of quality factors of production such as high-end or urgently-needed talents, advanced technologies, information and data. For example, in terms of high-end talents, it's necessary to study the reduction of personal income tax for high-end talents by benchmarking international practices and referring to the average tax rates in major European and American countries. Or, appropriate subsidies could be offered to high-end or urgently-needed talents in China’s Hong Kong SAR, Macao SAR and China’s Taiwan and overseas with personal income tax exempted by referring to similar personal income tax preferential policies in Guangdong-Hong Kong-Macao Greater Bay Area. Another example, in the field of information, it's necessary to study open direct network access for specific regions or specific populations, such as opening direct network access to researchers engaged in specific research areas, so as to gradually realize high-speed access to overseas economy-oriented websites, facilitate access to scientific and technological information resources from across the world, and bring convenience to domestic researchers for international coordination and production.
2. Advance the formation of high-standard economic and trade rules
Firstly, actively benchmark international economic and trade rules. In terms of new rules and subjects such as IPRs, e-commerce, government procurement, state-owned enterprises, competition policies, it's necessary to follow international common practices or the trend of international advanced rules to further strengthen the opening-up based on institutions, and thus lay a good foundation for China to participate in and even guide the formulation of new international economic and trade rules. Secondly, pay attention to formulating and even guiding the formulation of new international economic and trade rules. While proactively benchmarking new international economic and trade rules, there should be more focus on formulating and even guiding the formulation of new international economic and trade rules, especially in the fields of cross-border e-commerce, e-commerce, sharing economy and mobile payment where China has numerous practice experiences and the advantage as a first-mover. More actively participation in the formulation of global economic and trade rules and the building of a global governance system shall be implemented. Thirdly, international frontier open policies and institutions should be grasped. At present, the global open policies and institutions present a trend of subjective policies. For instance, the EU no longer has FTZ, but it retains the bonded and delayed tax payment policies and institutions. Such policies and institutions are to grant the qualification for applying for doing relevant business not to enterprises of a specific region or specific industry but to enterprises that have become qualified for doing such business Therefore, the suggestion is to shift from policies and institutions targeting specific regions or specific industries (such as strategic emerging industries, Made in China 2025) to subjective policies and institutions. A case in point is to select some regions for pilot implementation of subjective policies, extend bonded policies and institutions of areas under customs special regulation beyond the areas, and shift key industrial policies for strategic emerging industries and Made in China 2025 to eligible business entities (such as innovative SMEs, and technology-based enterprises).
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