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Wider opening-up to stabilize foreign trade, investment

By LIU ZHIHUA and WANG KEJU | China Daily | Updated: 2023-04-17 09:11
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A worker operates equipment to produce chips for export at an electronic component manufacturing enterprise in Suqian, Jiangsu province, on Jan 5. XU CHANGLIANG/FOR CHINA DAILY

China is expected to promote the high-quality development of foreign trade through expanding high-level opening-up and strengthening international economic and trade cooperation, to offset impacts from external challenges such as geopolitical issues and weakening global demand, according to experts.

In this sense, it is of critical importance for foreign-trade enterprises to optimize their products, while the government is also expected to stabilize enterprise expectations by creating a more enabling business environment, they said.

Gao Lingyun, director of the international investment division at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences, said China places a high premium on opening-up even wider to provide greater facilitation to foreign trade and investment. Sustained steps have been adopted to foster a world-class, market-oriented business climate governed by a sound legal framework.

"As some companies have shifted their production lines out of China, the country needs to further consolidate its industry clusters with stronger business advantages underpinned by a skilled local workforce and the availability of strong local suppliers in proximity to one another. Such a competitive edge will not be easily imitated or taken away by low-cost competitors," Gao said.

"In addition, an exodus from Chinese manufacturing is led by cost-sensitive companies, which calls for dedicated efforts to develop the manufacturing sector toward higher-end, intelligent and better value-added products," he added.

Tang Yao, an associate professor of applied economics at Peking University's Guanghua School of Management, said that together with a huge domestic market and complete industrial system, China's steady economic rebound provides a solid base for the country to stabilize foreign trade and investment, especially as growth in many major economies is slowing down.

However, Tang stressed that facing fierce competition in global markets, the country needs to coordinate well on economic fronts like industrial policies, market access, financial support and cross-border payments to provide a more enabling development environment for enterprises to stabilize foreign trade and investment.

"The time has passed when local governments could attract enterprises and investment with only some favorable or investment-inducive policies," Tang said.

"Nowadays, institutional opening-up and a stable and consistent policy environment are key to boosting enterprise confidence," he added.

For enterprises, they need to sharpen their capabilities to identify enabling policy and economic conditions to grasp opportunities for investing in the key links of China's industrial chains for better development, despite challenges and uncertainties, Tang said.

According to Xu Hongcai, deputy director of the China Association of Policy Science's Economic Policy Committee, Chinese foreign-trade enterprises need to produce more technology-intensive products, considering that China exports consumer goods, and mechanical and electrical products, among others to Europe and the United States, while ASEAN countries can also manufacture daily necessities to meet their needs and look forward to importing more high-tech products.

Gao, with the CASS, said though labor costs in China have surely risen over the decades, overall costs of its manufacturing sector are still relatively low when compared around the globe as evidenced by its technically skilled workforce, good infrastructure, strong business ecosystem and cheap energy.

Chinese manufacturers should harness the window of opportunity to climb up the value chain and provide global customers with high-value-added products to offset the rising costs, he said.

Gao also said institutional costs must be slashed on a sustained basis to attract foreign investment as good quality institutions are widely seen to reduce investment risks and thereby reduce the costs of doing business.

Enterprise-specific policy measures should be formulated in particular to help address the pressing concerns, such as land use and utility services of the leading companies on the industrial chain. Their firm presence in China will ensure a stable industrial chain to a great extent, he added.

Experts also said the foreign trade potential of China's central and western regions needs to be tapped.

During the first two months, imports and exports of Hunan province registered a 54.3 percent increase and Jiangxi province posted a 46.8 year-on-year rise, said the General Administration of Customs.

Guangdong, Zhejiang, Jiangsu, and Shandong provinces and Shanghai remain the top five regions in terms of export volume in China, though with a contraction of varying degrees ranges from 4.9 percent to 10.4 percent.

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