The editor-in-chief of one of China’s most influential business media outlets has called for the country to use the One Belt One Road as an opportunity to expedite opening of its economy.
The front page editorial by Caixin editor Hu Shuli entitled “Using One Belt One Road as an Opportunity to Expand Opening” (“以一带一路为契机扩大开放”) asserts that the landmark initiative should be used to abet the implementation of much needed liberalisation reforms for the Chinese economy.
Below is an abridged translation of Hu Shuli’s editorial published on 22 May 2017, to coincide with the One Belt One Road Summit.
“Using the opportunity of the establishment of One Belt One Road to expand opening is first of all needed for China’s own development. Research indicates that the Chinese economy’s openness is ranked “middle low” in global terms. Foreign capital is often restricted from entering those sector that suffer from low efficiency due to lack of competition. At present, emerging technologies and industries that support new economic growth are flourishing, and the diversification effects of new data channels and innovation between developed and developing economies are becoming apparent.
“China only needs to expand opening.. in order to be able to continually reduce the gap compared to advanced global economies. The establishment of One Belt One Road can also be tightly integrated into the regional development strategies for the Yangtze River Belt and the JingJinJi region, and create circumstances for comprehensive opening and linked development with between the East, the Centre and the West.
“The integration of ‘expanding abroad’ and ‘drawing inwards’ can exploit the comparative advantages of China’s various regions, and expedite the pace of industry upgrade.
“In recent years there is one refrain that has been in our ears constantly: the golden era for multinational corporations in China has already come to an end. Surveys organisations including the US China Chamber of Commerce and the E.U. China Chamber of Commerce also indicate that a very high percentage of members feel that they are ‘even less welcome’ in China, and that China’s investment environment is worsening.
“Regulatory barriers and market entry restrictions are still the main restraints on the expansion of business in China. Domestic government departments and research institutions have provided denials and clarifications on multiple occasions that are not without basis.
“However, in this end this will not remove the trepidations of overseas companies in China, and is even less helpful for raising the level of openness of China to the outside. If domestic markets are unable to vigorously open us, based on the principal of reciprocal investment, China companies will find it even more difficult to expand abroad, particularly into the developed markets of Europe and North America.
“Expanding open is of benefit to remove overseas concerns about One Belt One Road. For the past four years external figures have suspected that the goal of the project is to use investment and trade as leverage, and radiate China’s regional political influence to the rest of the world, or channel China’s backwards external productive capacity abroad. The best response to this is to vigorously expedite the liberalisation and convenience of trade and investment, and in particular promote the establishment of a free trade zone.
“With respect to the regulation of overseas investors, [China] should increase the transparency of anti-monopoly inspections, national security and other specific procedures, and even more importantly change the government’s regulatory model and reduce the ‘negatives list.'”
“The summit especially emphasises ‘supporting the opening of reciprocal financial markets.’ At present, China’s insurance companies have the highest level of openness, and overseas capital are permitted to fully invest in them, with no restrictions on operations or regions.
“Fund companies and securities companies come second, with the cap on overseas holdings of equity capped at only 20%. China’s financial sector has displayed a continuous trend of opening up, yet with respect to the need to raise our own business levels, prevent risk and improve corporate governance, the level of openness remains comparatively low. During recent years financial risk has continuously accumulated, and these two matters aren’t unrelated. At the start of this year the State Council released its ‘Circular Concerning Several Measures in Relation to Expand External Openness and Positive Use of External Capital,’ which clearly proposed the focus opening of restrictions on the entry of foreign capital into various financial institutions.
“This major move should be realised as quickly as possible.”