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New-type Globalization and New Round of High-level Opening Up-Speech at China Development Forum

  

Distinguished Deputy Director Long Guoqiang and Professor Stiglitz

Friends and Guests,

Ladies and Gentlemen,

China Development Forum has gone through 17 years during which many events have taken place, such as China's accession to the WTO, the rapid growth of the world economy, the rapid development of globalization, the rise of emerging countries, global excess liquidity, the outbreak of the financial crisis, the world economy’s downturn and populism, protectionism, isolationism, etc. The Development Forum provides an important platform for China and the rest of the world, as well as the political and business circles, to share views and ideas on these major development issues. The host of this afternoon, Mr. Long Guoqiang, deputy director of the Development Research Center of the State Council, is my good friend whom I respect greatly. He also embodies some characteristics of the development forum: it is democracy and reason, and is full of conscience and social responsibility.

This morning, Vice Prime Minister Zhang Gaoli delivered an important speech. Minister of Commerce Zhong Shan attaches great importance to the meeting. He would have personally attended the meeting and delivered a speech, but because of other work arrangements, he entrusted me to attend the meeting. Here, I would like to talk about personal ideas on two issues: "new-type globalization" and promoting a new round of high level opening up. For a long time, economic globalization is an important driving force to promote world economic growth, but now there are twists and turns. In some countries, the trend of populism has risen from the civil level to the government level, and trade protectionism and isolationism have changed from trickling into an unprecedented trend. We cannot help worry whether the world today is entering a "deglobalization" cycle? Can globalization continue to develop? What kind of new globalization do we need?

We all know that globalization is not a new thing. Geographical discovery period has opened the prelude to globalization. Before World War II, the international resources and the distribution of international markets are mainly allocated through armed force and war which were gradually replaced by the international economic governance system and rules under the guidance of free competition after World War II. Under the GATT and WTO framework, countries have lowered tariff barriers, promoted industry and technology transfer, and promoted the development of globalization in a more civilized and ethical manner.

After the end of the Cold War, the two East and West parallel markets integrated, global development reached the peak, and the world economic growth entered the golden period. During this period, the total global GDP grew more than three times, reaching US$74.2 trillion. Exports of goods increased by nearly five times, hitting US$16.5 trillion. International investment has increased by more than 11 times and the number of poor people has decreased by nearly two thirds. Our world is more closely connected together to form a true sense of the "global village". Human civilizations intertwines with each other, while religions, cultures and traditions which have regional characteristics can exist in other countries and regions.

Economic globalization is characterized by cross-border movement of goods and elements, marking the expansion of the market economy in the geographical scope. Over the years, multinational companies dominated the economic globalization, greatly improving the efficiency of the market economy, but also brewing some problems. I summarize the following four unbalanced aspects.

First, the imbalance between the development of the countries. Developed countries are undoubtedly the main promoters of globalization and the main beneficiaries. Some emerging economies have achieved leapfrog development by seizing the opportunities of industrial transfer in developed countries. However, in Southeast Asia, the Middle East, Africa, Latin America and other regions, some small and medium-sized developing countries were marginalized, and they have failed to catch the hitchhike of development of globalization.

Second, the imbalance between the growth of the industries. In the process of economic globalization, the high-tech, high-end manufacturing industries occupying the high-end value chains have developed by leaps and bounds, while traditional industries declined increasingly with jobs lost. Among the number of layoffs in the developed countries, that of the wholesale, retail, trade, logistics and other industries accounted for 1/3 of the total number of layoffs.

Third, the imbalance of income distribution. This problem is manifested not only in developing countries but also in developed countries. Multinational companies conduct global production layout and bring employment opportunities abroad at the same time. The return rate between capital to labor increased and the income gap between employers and labor significantly expanded. Since 2008, the average profit of manufacturing enterprises in developed countries increased by 70%, and the profits of financial enterprises increased by 6 times. At the same time, the average wage of manufacturing workers increased by only 20%, the financial sector wages increased by 25%. Data shows that the proportion of US middle-class families in the last century 70's was 61%, but has declined to 49%.

Fourth, the imbalance of environmental protection and development. Over the past 100 years since industrialization, the pressures on the earth's resources and environment have exceeded the sum of the past few thousand years. Environmental issues have become a common topic of all mankind. But different countries are at different stages, their interests and appeals are not the same. The environmental protection demands of the developed countries are higher than those of the development demands; while the development demands of the developing countries are higher than the environmental protection demands. The contradiction between development and the environment is increasing.

What is the root cause of these problems? I think the governance in the two main areas has been lagging behind:

First, the domestic governance capacity of countries did not follow up. Economic globalization encourages competition and focuses on efficiency. Countries need to build a "safety net" in terms of social security and income distribution to make up market failures and take into account efficiency and equity. Especially in the economic downturn, "cake" cannot be quickly made bigger. If policies cannot follow up, it will produce the distribution problem and the contradiction between capital and labor will be more prominent. This is the eternal paradox of market economy, the internal harm that market itself cannot solve, and the bruising of market fundamentalism.

Second, the global governance regulations and means lag behind. Today, many of the problems faced by human beings are global, such as the release of liquidity in developed countries will lead to expansion of capacity in emerging countries, in turn, the liquidity contraction in developed countries will lead to excess capacity in emerging countries. But the existing international governance system is not typical enough, still in a "fragmented" state most of the time, incapable of forming a concerted effort. It can be said that multilateralization and fragmentation of governance have resulted in the weakness in solving many global problems, which provides the space for the "anti-globalization" movement.

Behind the lack and absence of the two above capacities, the most critical is the issue of attribution, namely, whether these problems should be attributed to globalization, or to other countries, or to themselves.

The current problems faced by globalization are the same ones in the way forward. We have to face them directly and try to solve them. We cannot throw away the apple because of the core or let go of the dirty water and the children. We need to establish the concept of "human fate community", inherit the rational elements of globalization in the past, such as market orientation, free trade principle, international division of labor based on comparative advantages, international trade system based on multilateralism, etc., and face the existing problems of globalization of the past. What we are going to do is not to start a new stove, nor be immutable, nor blame each other, nor fight trade war with each other, but to reform, to innovate and to lead a new type of globalization. The new-type globalization should also highlight the following points in addition to inheriting the rational elements of globalization in the past:

Firstly, inclusiveness. In my opinion, the most prominent problem in today's global plight is the lack of inclusiveness. For example, some regional free trade arrangements are clearly discriminatory and exclusive; in multilateral trade negotiations, the agenda for the benefit of developing countries is always protracted. We urgently need to proceed from realizing the fundamental interests of the largest majority of people, to build an open and inclusive institutional arrangement, and to respond to the global dilemma with inclusive, coordinated and coordinated-type development. The Chinese government has put forward a major initiative of the “Belt and Road”, and persisted in common discussion, common building and common sharing, that is, to contribute China's wisdom and Chinese program, to promote common development of all countries, to improve global governance and to explore a new path of globalization.

Secondly, sharing. That is, through the enhancement of international policy coordination and international and domestic governance capacity, developed and developing countries, no matter big or small, large multinational corporations, small and medium enterprises, capital owner and wage earners are all involved into the chorus of globalization and to share its benefits..

Thirdly, promoting and adapting to innovation. The long-term development of the world economy is driven by innovation. Today, when globalization goes into the downstream stage, re-igniting trade and investment engine cannot do without innovation. Efforts should be made to take advantage of the opportunities brought by the new round of industrial revolution and the digital economy, to strengthen training at the same time, to help practitioners of traditional industries overcome the impact of "creative destruction," to strengthen development assistance and technology transfer, and to help poor countries cross the " technical divide "and" digital divide "

Fourthly, greening. Over the past century, with the “pollution transfer” brought by the transfer of industries, developing countries face greater pressures in resources and environment. Environment is the basis of development. Development is out of the question if leaving the environment. But development is the prerequisite for the environment. Environmental protection will lose the fundamental guarantee if there is no economic and social development. Building a new type of globalization under the framework of sustainable development, achieving global economy growth and environmental protection can only be realized by considering and planning economic development, eradicating poverty and protecting the relationship with environment as a whole, through breakthroughs and sharing of national technology and capacity, and through actively promoting green development.

New Globalization, in addition to the four features of inclusiveness, sharing, innovation and greening that I have just said, many other features can be enumerated too. . What is more important is how to achieve this kind of new-type globalization? In this regard, the benevolent see benevolence, the sage see Moses. But it is certain that the new-type globalization is incompatible with protectionism and isolationism. The stakeholders must uphold open development concepts, face contradictions and imbalances accumulated in the past 30 years, take the initiative to adapt to a new round of big impact brought by technological revolution on the traditional industries and lead the development of new-type globalization.

I'll talk about the second question - how China will push forward a new round of high-level opening up. China is not engaged in protectionism, but also firmly opposed to protectionism in various forms, against trade war. In China’s most recent “two sessions”, “opening up” is an important issue discussed by representatives. On March 5, General Secretary Xi Jinping, when attending the Shanghai delegation’s review, stressed that China's opening door will not be closed and efforts should be made to adhere to an all-round opening up, continue to promote trade and investment liberalization and facilitation. Premier Li Keqiang also pointed out in the government work report that we will actively expand the opening up. This shows that China will always adhere to its opening up and development, and work together with the rest of the world to unswervingly lead the process of economic globalization. It can be said that this is China's policy statement and solemn commitment to the world.

The opening up over the past three decades is a vivid practice of China's participation in economic globalization. Standing on a new historical starting point, China will promote a new round of high-level opening up to build a new global exploration of China program.

Firstly, to expand the opening field. To create a system of attracting foreign investment, and constantly expand the access of foreign markets, and better promote the sound and formal development of foreign investment.

Secondly, enhance the vitality of openness. Regard enhancing the vitality of enterprises as the center, relax, encourage and help enterprises and reduce their burden.

Thirdly, improve the quality of openness. Implement the opening strategy of “importing and exporting good-quality goods”, accelerate cultivating new advantages of foreign trade competition, promote foreign trade to shift from “growing up” to “being strong”, insist on developing investment attraction, technology attraction and wisdom attraction simultaneously, improve the quality and level of foreign investment and China’s capability of allocating factor energy in the world.

Fourthly, to optimize the opening layout. To cooperation with the eastern and western areas to open to the outside world, and gradually form a new model of open economy with division of labor and interactive development. To support the eastern region to play a leading role, take the lead in the implementation of transformation and upgrading, create a global advanced manufacturing base and enhance the international level of service industry. We should encourage the inland areas to rely on local advantages to improve the ability to absorb international and domestic industrial transfer, accelerate the development of export-oriented industries, while promote the interconnection of infrastructure with border areas and neighboring countries, strengthen production capacity and improve the level of openness and development.

Fifthly, improve the opening system. Adhere to the innovation driving, achieve a breakthrough in key areas such as profoundly promoting the structural reform of supply side, replicating and promoting the experience of free trade area. Achieve a new jump in the system reform and institutional innovation of the open economic development.

Sixthly, promote the common open. China will continue to adhere to its regional, multilateral and two-wheel driving force, support the status of the main channel of the multilateral trading system, accelerate the construction of free trade zones. China will also actively participate in global economic governance and governance of public goods, promote the development of an open world economy. China doesn’t start another stove, nor move the cheese, but make incremental contributions to global governance.

China will be more open when it is more developed. We welcome all countries to take the development of China's ride. We are also willing to work with all parties to actively embrace the new globalization and make positive contributions to the development of the world economy and the progress of human civilization.
Thank you all!

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