The Forum on Free Trade Zone Development 2024 was successfully held in Sanya, Hainan, from December 16 to 19. The forum was hosted by the China Council for the Promotion of International Trade Hainan Provincial Committee, organized by the Trade Promotion and Exchange Center of the China Council for the Promotion of International Trade and China Chamber of International Commerce Hainan Chamber of Commerce, and co organized by the World Federation of Free Trade Zones and the Guanghua School of Management at Peking University. The forum, with the theme of "Building an Open Cooperation System to Achieve Mutually Beneficial and Win Win Development," attracted over 400 government representatives, heads of free trade zone (port) management agencies, business elites, and experts and scholars from more than 20 countries and regions around the world. The attending guests conducted in-depth discussions on hot topics such as the development of regional economic integration, the docking of high standard economic and trade rules, and the innovation of free trade park systems, and achieved multiple cooperative results.
Professor Yu Miaojie, deputy to the National People's Congress, member of the International Economic Society, deputy secretary of the CPC Committee and president of Liaoning University, attended the event and gave a keynote report. The original report is reproduced as follows:
Dear Director He Kang, Director Zhang, Director Ma, good afternoon to all leaders and guests. First of all, I would like to express my sincere gratitude to Director Yan for his kind invitation, and especially thank the China Council for the Promotion of International Trade for providing me with the opportunity to learn. Today, I would like to share with you my immature understanding of free trade zones and China's opening up to the outside world. I would be extremely grateful if you could kindly share any insightful suggestions or comments to help me improve.
We know that we are facing unprecedented changes and arduous tasks of reform and development. Like other countries, we are also facing the challenges of population aging and the rise of anti globalization forces. But we have seen that under the strong leadership of our government, we have shifted from high-speed growth to high-quality development. As our director just said, we need to comprehensively and completely understand and implement the five new development concepts, such as innovation as the primary driving force, coordination of green features, and sharing as the goal. It mainly includes two aspects, one is the establishment of a unified domestic market, and the other is the construction of a new pattern of comprehensive opening up.
Building a comprehensive and new open pattern towards the outside world, as well as building a community with a shared future for China, is in line with the common aspirations of people all over the world. We know that one of the goals we are pursuing now is economic globalization, and two additional attributes are added before it, namely inclusive and inclusive economic globalization. We made this judgment because we have seen some countries implementing trade protectionism, engaging in trade bullying, and the role of the World Trade Organization gradually deteriorating. The global trade pattern has become a tripartite situation, with the North American Free Trade Area centered on the United States, the European Union centered on Germany, and the RCEP centered on China.
Of course, the tripartite balance is not completely isolated, but gradually interconnected with each other. For example, CPTPP connects USMCA and RCEP, while RCEP's connection with the European Union is reflected in the China Europe Comprehensive Investment Agreement and the transatlantic trade agreement connecting the EU trade agreement. In fact, we have seen that although the growth rate of international trade has been relatively slow in recent years, the global international trade volume reached $51 trillion in 2019 and has grown to $63 trillion by 2023. In other words, it is gradually on the rise, so we say that economic globalization is still a trend, and therefore our goal is to pursue an inclusive and inclusive economic globalization. We know that the economic foundation determines the superstructure, and another aspect of our superstructure is world multipolarity. It is not a unipolar world led by the United States, nor is it a bipolar world between China and the United States, but a multipolar world. The two adjectives for multipolarity are equality and order, not chaos or war. An equal and orderly multipolar world is our goal.
How can we achieve this goal? I will share with you the second point. We are building a new pattern of comprehensive openness, which has three key words: larger scale, wider field, and deeper level. What does' larger scale 'mean? Currently, China's total foreign trade has reached 41 trillion yuan, and not only is commodity trade continuing to grow, but service trade is also steadily increasing. Service trade has reached 950 billion US dollars. But there is still room for improvement, for example, in terms of studying abroad, tourism, and even transportation, which is particularly emphasized in our Hainan Free Trade Port, we can still strengthen development.
What does' broader field 'mean? At least five aspects can be understood. The first aspect is the diversification of export destinations. When we face the more complex international and trade environment, the diversification of export destinations becomes even more important. Our export destinations should not be limited to mature markets such as Europe and America, but should also consider more Southeast Asian countries, ASEAN countries, and more South South cooperation countries. Therefore, emerging industrial countries are a new direction for our export destinations.
Secondly, and more importantly, expanding imports. There are several benefits to expanding imports. The first benefit is that expanding imports of final consumer goods can increase consumer surplus from an economic perspective, and in plain terms, enhance the sense of gain, happiness, and security of ordinary people; If you import intermediate goods, the fusion of foreign intermediate goods with domestic intermediate goods can produce a Schumpeter effect where 1+1 is greater than 2; If there is no problem with importing the final product, the overall productivity of the industry can be improved through fierce competition, which is beneficial to the long-term development of the industry, economy, and society. Therefore, we need to expand imports.
Thirdly, it is also very important for us to continuously introduce foreign investment. Some people say that as labor costs rise in China, labor-intensive industries will be transferred out, and other industries will also be transferred out. The transfer of labor-intensive industries has become a trend, but capital intensive industries will not be transferred and will be relatively more concentrated. Capital intensive industries value the advantages of supporting systems and mechanisms throughout the entire industry chain, rather than labor costs, which is the unique weapon of the Chinese economy. So from this perspective, foreign direct investment (FDI) in capital intensive industries will continue to flow into China.
Fourthly, we have strengthened our outward investment in other countries, which not only creates more employment opportunities for other countries, but also provides technology spillovers to more countries, reflecting the situation of "a hundred flowers blooming and a spring full of gardens". This is one of our proactive strategies to 'go global'.
Fifthly, as mentioned just now, the "the Belt and Road" initiative is a public product we provide to the world, and also an important measure for China to build a community with a shared future for mankind. Due to time constraints, we will not delve into it in detail today.
The third point I want to talk about is the unique role and advantages of our free trade zones and ports in building a new pattern of comprehensive opening-up to the outside world. Our current third sentence of openness is called 'deeper level', which means that our original business oriented openness has shifted towards institutional openness. Specifically, our goal is to regulate and manage international economic and trade zones with high standards through rules and regulations, such as free trade zones like CPTPP. Therefore, we should see that we have already carried out several aspects of work:
The first aspect of work is trade facilitation, for example, we implement the policy of "opening up the front line and regulating the second line". For processing trade, we not only have zero import tariffs, but also zero value-added tax and consumption tax, fully reflecting free trade. At the same time, we are accelerating the clearance of this perishable product and improving clearance technology and efficiency. This is the first point about trade facilitation.
The second aspect is about the facilitation of investment. Our reform direction is to shorten the negative list, from 41 categories to 29 categories, and the specific content within each category is constantly being simplified. Therefore, it can be seen that the implementation of the negative list is very practical. This is the second point.
The third aspect is that we can see different elements of openness. The first element discusses personnel mobility, which not only makes it more convenient for oneself to enter the park, but also for spouses to enter the park. The same goes for capital flows. We emphasize the openness of capital, which is similar to our financial openness. One is called optimal national treatment, and the other is national treatment. How do we treat domestic enterprises, and how do we treat foreign industries in the park. This most favored nation treatment, if given to Germany, will also give the same benefits to other countries. Therefore, we can see that we are very free and open in financial products such as securities and insurance, including our direct foreign exchange inflows and outflows, which are also very convenient. This is another point about our openness in terms of capital, personnel, and finance.
The last aspect is our openness in transportation and data. Our data flow is particularly efficient, emphasizing more efficient openness on the basis of security. Therefore, I think everyone can also see that our digital trade is flourishing. The same goes for transportation, so we can see that whether it is a free trade zone or a free trade port, a free trade port is certainly one step higher than a free trade zone. By providing more convenient conditions through zero tariffs, simplified tax systems, and low tax rates, it has indeed become an important measure to promote China's opening up to the outside world and build a new pattern of comprehensive opening up to the outside world. It is also a necessary path for us to achieve a community with a shared future for mankind. We believe that just as China's foreign trade is flourishing, China's future is full of confidence, and the Chinese economy will have a better tomorrow. We also hope that all countries can work together with China to realize our community with a shared future for mankind, where flowers bloom and spring fills the garden. Thank you everyone!
