Why is China driving a higher level of opening-up?

I'm Robert Lawrence Kuhn and here's what I'm watching: China's commitment to continue opening up its domestic markets to foreign businesses, even as China continues to prioritize expanding its domestic markets. Some foreign media say that China is self-isolating, resisting if not reversing reform, and focusing more on national security than on economic development. China says that, despite the rising tide of deglobalization and protectionism, the country, as the world's second-largest economy and the largest trading nation, remains committed to high-standard opening-up to boost foreign investment, providing much-needed certainty and opportunities to global businesses.

President Xi Jinping emphasized that "Taking the domestic circulation as the mainstay is by no means seeking development behind closed doors. Instead, it aims to forge stronger connectivity between internal and external markets, better capitalize on the resources of the two markets and achieve more robust and sustainable development by leveraging the potential of domestic demand." China is expanding opening-up with rules, regulations, measures, management and standards to ease market access and level the playing field, so that foreign companies can enjoy a better business environment. China aims to create, as it says, "a top-notch business environment that is market-oriented, law-based and internationalized."

We cannot ignore some foreign investors' sentiments: uncertain domestic economy, real-estate troubles, excessive local debt, declining birth rates and aging demographics, youth unemployment, heightened national security rules and regulations and deep international tensions. Foreign direct investment into China was lower in 2023 than in 2022, but officials voice optimism for the future. 

The State Council, China's cabinet, issued 24 new guidelines to attract more global capital and further optimize the country's business environment for multinational corporations. Provisions include encouraging foreign investors to establish major scientific research projects, ensuring equal treatment of foreign and domestic companies, enabling convenient and secure mechanisms for cross-border data flows, empowering foreign enterprises to fully engage in government procurement and stronger fiscal support and tax incentives. Foreign-invested projects in biomedicine will see accelerated implementation.

China proclaims that it provides an ultra-large market and a complete industrial chain with more than 220 industrial products ranking first in the world in terms of output. Officials say it is easier to find reliable and cost-efficient suppliers in China than in any other part of the world. In 2023, 239 items were added to the Catalogue of Industries Encouraged for Foreign Investment.

An encouraging local initiative is in Hunan Province where Party Secretary Shen Xiaoming is launching a campaign to "emancipate the minds" of local officials. Measures include opposing local protectionism, market fragmentation, and discriminating against foreign businesses and correcting and guiding behaviors of local officials. I met Secretary Shen when he was Shanghai vice-mayor and Party Secretary of Pudong New Area and I can attest to his innovative spirit.

Remember, China is not opening up further as a bow to foreign pressure, but because opening up further is good for the Chinese economy. Foreign companies bring technologies and knowhow, and increasing competition forces good Chinese companies to improve and poor Chinese companies to exit. The Chinese consumer benefits by better goods at attractive prices, as do the foreign companies. 

China says that the next “China” will still be this China.

I'm keeping watch. 

I'm Robert Lawrence Kuhn. 

Script and Presenter: Robert Lawrence Kuhn

Producer: Yang Yutong

Video Editor: Hao Xinxin

Graphic Designer: Qi Haiming

Executive Producer: Sun Lan

Chief Editor: Wei Wei

Supervisors: Xiao Jian, Adam Zhu

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