The overview of Global Times Leader RoundTable on January 24 Photo:GT
From left to right, John Russell, Long Yongtu and Li Daokui Photo:GT
Experts and scholars showed reserved optimism for the Chinese economy in 2019, against the backdrop of the US-China trade war, as efforts toward deeper reforms and opening up can be expected to provide a better environment for foreign companies, as well as a restructuring of the Chinese economy, according to the Global Times Leader RoundTable that was held on Thursday in Beijing.
The roundtable was held as one of a series of events celebrating the 40th anniversary of reform and opening-up, and was organized by the Global Times with the Beijing-based consultancy North Head as the strategic partner.
More than 30 leaders from government officials, to multinational company representatives and domestic international companies attended the event, including officials from the National Development and Reform Commission and Ministry of Commerce, and 30 heads of Fortune 500 companies.
Experts agreed that 2018 was a challenging year with uncertainties and a slower pace of growth, especially with regards to foreign multinational companies.
A more equal investment environment and a more balanced economic structure are expected in 2019 as the result of further reform and opening-up, they said.
New challenges for deeper reforms
December 2018 marked the 40th anniversary of the reform and opening-up, but new challenges have been found, so reforms must go deeper, to further facilitate a more equal environment for domestic and foreign business in China alike, said Long Yongtu, chief negotiator of China’s entry into WTO.
Reform and opening-up policy have been the driving force behind China’s development for the past 40 years, and will continue to be a basic national policy in China, said Long. It has become a consensus among the citizens as well as among the top leadership, and the consensus will remain as a foundation for China’s next policy steps.
As Long pointed out, however, new issues and difficulties have arisen in the current stages of reform and opening-up.
The first and foremost challenge is to improve the business environment for international companies in China, including lowering the threshold for foreign investment in certain sectors, with a better regulated and enforced national treatment policy, as equal competition opportunities have become increasingly important in China’s efforts to integrate further into the world’s economy, said Long.
“It is my personal but firm belief that regardless of the ownership of the companies, as long as the they are paying their taxes in China, they should be treated equally as with Chinese companies, at a policy level,” said Long.
Another issue highlighted by Long’s speech concerns the stability of market policies and regulations.
The biggest concern in multinational companies’ operations in China, according to Long, lies not so much in the number of preferential policies and special considerations the government is able to give to foreign enterprises, it is in the stability, predictability and transparency of such treatments.
A stable, predictable and transparent policy environment is the cornerstone of any long-term decision-making process for multinational companies, said Long.
Therefore, for the next round of reform and opening-up, the provision of an equal and stable environment for international enterprises in China is crucial to encourage more foreign business and investment, he said.
Politicization of business
One issue that stands out as particularly relevant to the current socio-economic landscape, especially with reference to the China-US trade war, is the politicization of issues that are supposed to remain within the business arena.
Long said at the roundtable, that the many aspects of the ongoing trade frictions had been overly politicized.
“Media reports should be more careful about the descriptions of the ongoing frictions, as the term ‘trade war’ implies that there is only one side that could win the game at the expense of the other, while in fact China sees some of the ‘concessions’ not as a compromise, but as policy change that is in line with China’s interests, or even as an opportunity to promote further economic reforms,” said Long.
Long’s view was echoed by a number of attendees, who say that China is making more efforts to deepen economic reforms.
Long noted that the politicization of business issues may well backfire, including areas such as the paranoid bipolarization of opinions and an unnecessary ideological confrontation that could lead to a toxic climate for constructive negotiation.
He also observed that in an attempt to depolarize business issues, it is crucial for media to remain objective and calm when reporting frictions in trade and business.
Reason for hope
Many experts and scholars at the meeting, including the moderator John Russell, raised concerns over the likely outcome of the US-China trade negotiations.
Given that China’s overall trade position is essentially balanced, Russell asked if a US-China agreement can be reached without having collateral effects on other trading partners in the region.
Li Daokui, director of Academic Center for Chinese Economic Practice and Thinking with Tsinghua University, emphasized that the current trade frictions should not be perceived as a zero-sum game, and it is extremely unlikely that a cold war would happen anytime in the near future, given the pragmatic attitude of the top leadership in China.
Li expressed reserved optimism on the likely outcome regarding the ongoing US-China negotiations and the prolonged trade tensions, predicting some meaningful outcomes from the negotiating table, while also warning that some issues will inevitably be left for future discussions, largely due to lack of confidence and trust for the US in the prospect of reaching a more comprehensive agreement with China.
Experts and scholars at the event also showed confidence over the possible performance of the Chinese economy, although worries still remain over its growth rate in 2019.
2018 was a year with many domestic and global economic uncertainties, however, robust growth is seen in sectors such as the retail industry, which showed an 8 percent growth last year.
Li also predicted a stable growth rate of at least 6.3 percent in 2019, as reform policies become more balanced and targeted.
Weak starts in equity markets and trade volume are also expected but these should rebound in the second half of the year. Growth will also be boosted by additional investment in infrastructure, coupled with recovery in key consumer sectors, he said.