(China Daily)
Updated: 2008-02-27 10:52

The country's decision-makers must update their ideas about establishing an open market according to the latest developments in the economy.

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Since the country launched its economic reforms in the late 1970s, it has witnessed remarkable improvements in its industrial competitiveness. The penetration of Chinese exports into markets around the world has made China a target of barriers and limits imposed by many of its trading partners.

Some regions and departments in China have become so eager to attract foreign investment that they are willing to compromise local rules and interests. Many Chinese companies especially those private ones find obstacles to market-access and corporate financing, among other things.

Therefore, it might be more helpful to stress the idea of "establishing an open economy" instead of "opening up to the outside world" to avoid the misunderstanding that our economy should be more open to the outside world than to domestic business of all kinds of ownerships.

In an open economy, commodities, capital and labor flow freely whether these productive factors originate from outside of the country or from within it.

When a country has an open economy, its economic system is vigorous and fair, laying a solid base for sustainable development. Meanwhile, the State should be able to attract overseas resources that could place the country in a better position when it comes to international trade and economic cooperation.

Therefore, making the economy open to businesses based both at home and abroad is indispensable for economic development.

Having a big and mature market will make it easier to lure overseas investors. And having access to more foreign investment will inject fresh dynamism into the market, making it operate more smoothly.

At this point in history, there are some problems to tackle to ensure that all of the factors at play in the economy work together to ensure progress.

In some capital or technology intensive industries, or those most hospitable to natural monopolies, the government has to grant State-owned businesses the right to operate as monopoly players or at least impose relatively high barriers to market access.

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