In September 2024, prominent economist and former leader of Chongqing, Huang Qifeng, delivered an engaging lecture at Sun Yat-sen University on the changes and transformations in the global economic landscape, identifying ways for deeper cooperation and openness between China and the world. In the context of discussions, Huang presented clear insights on how China is achieving radical changes in its economic structure, focusing on the importance of the role played by production services, citing Apple’s model as an example of how to achieve significant profits without relying on local production.
This article will delve deeper into the themes of this lecture, including the transition to a dual circulation model in the national and international economic cycle, and identifying new characteristics of China’s openness in the context of current global challenges, attempting to answer the question: How can China leverage its massive economy to achieve growth and prosperity amidst changing global conditions?
The Dual Circulation Development Under New Economic Pattern
Currently, China’s economy has entered a new development stage, referred to as the new development pattern of dual circulation with domestic circulation as the mainstay. The establishment of this pattern is a re-examination and adjustment of the economic development model of the past few decades. Firstly, from 1950 to 2010, China experienced a notable period of internal circulation and external circulation. Particularly after the reform and opening up, the external circulation dominated, deeply integrating China into the global market. However, with changes in the international environment, especially in recent years due to the U.S. trade war and technological blockade, China has realized the necessity of enhancing the self-circulation capacity of its internal economy to achieve stable economic growth.
Specifically, dominating the development of domestic circulation means that China will rely more on its domestic market, reducing dependence on external markets. This shift not only enables resistance against external risks but also activates the potential for domestic production and consumption. According to statistical data, in 2022, China’s import and export trade accounted for about 38% of GDP, indicating that domestic demand is gradually becoming the main driving force for economic growth. Coupled with a series of government policies aimed at promoting consumption, investment, and innovation, China’s internal circulation economy is expected to achieve higher levels of development in the future.
In this process, the country has also proposed to promote higher levels of opening up under the new pattern. Although domestic circulation is the mainstay, China will not close its borders but hopes to promote domestic market development through openness. For example, in recent years, China has continuously reduced import tariffs to encourage more quality foreign goods into the market, enriching consumer choices and promoting market competition. Furthermore, by hosting events such as the China International Import Expo, China is strengthening its connection with international markets, while attracting foreign investment and technology and encouraging domestic enterprises to go global and participate in global market competition.
Two-Way Drive of Productive Services and Foreign Investment
Huang Qifeng mentioned in the lecture that the case of Apple vividly illustrates the importance of productive services. In the past decade, Apple produced 170 million smartphones each year in China, which is not just a victory for manufacturing, but also a reflection of China’s cost advantages in manufacturing. The gross margin for each iPhone is as high as 40%, indicating that although manufacturing takes place in China, the vast majority of profits still flow into Apple. This phenomenon conceals the complexity of the Chinese manufacturing industry’s structure.
The reason Apple can obtain such massive profits in China, beyond the low production costs, is also attributed to the comprehensive industrial chain and efficient productive services in China. Productive services cover logistics, finance, research and development, etc., and the efficient operation of these links can effectively support the rapid production and delivery of products, thereby enhancing overall market competitiveness. As China continues to develop its productive services, foreign enterprises like Apple will be more willing to invest in China and expand their production scale.
Moreover, in recent years, the efforts of Chinese enterprises to invest abroad have been continually increasing. According to statistics, from 2017 to 2022, the total overseas investment by Chinese enterprises reached 500 billion USD. This phenomenon not only demonstrates the determination of Chinese enterprises to expand abroad but also reflects the attractiveness of the Chinese market. As the market expands and matures, more and more Chinese companies choose to invest overseas, which can not only enhance their global competitiveness but also promote the continuous growth of the domestic economy to a certain extent.
Five Key Tasks for Opening Up
The 20th National Congress of the Communist Party of China clearly proposed five key tasks for advancing high-level opening up, aimed at achieving effective connectivity between domestic and foreign circulations. Firstly, focusing on promoting institutional opening, China will gradually shift from a primarily factor-flow-based opening economic model to one that enhances the overall business environment through institutional innovation. This means that future reforms will strengthen market access and protect intellectual property rights, creating a more open and transparent business environment to attract global investors.
Secondly, in terms of service trade and digital trade, China aims to gradually enhance its position in the global market. In recent years, service trade has developed rapidly, but compared with developed countries, China still has a certain gap in high-value-added service sectors. Therefore, through policy guidance, promoting the rapid development of service trade, especially digital trade, is conducive to achieving effective connections between domestic and international markets and promoting high-quality economic growth.
Furthermore, the implementation of the Belt and Road Initiative is also an important measure for opening up. As a key platform for economic globalization and regional cooperation, this initiative not only provides a basis for cooperation among countries along the route but also opens up new spaces for China’s external markets. By strengthening infrastructure construction and interconnected industrial chains, China will deepen economic and trade cooperation with related countries and achieve win-win results.
Finally, realizing the “internationalization of the renminbi” and a high-quality go-global strategy will position China more favorably in global industrial division. By promoting the use of the renminbi in international settlements, China will enhance its currency’s global appeal, an important step in enhancing national soft power and achieving economic independence.
Source link: http://xinhanet.com/thread-36904-1-1.html
AI was used ezycontent
Leave a Reply