In his keynote speech at the opening ceremony of the Boao Forum for Asia 2018 (BFA) on April 10, President Xi Jinping described economic globalisation as an irreversible trend, and noted that China would continue on its course of opening-up. This is positive news for enterprise, as extended opening-up will bolster investor confidence globally, while leading to a wide range of new business opportunities.
Against the backdrop of the 40th anniversary of China’s reform and opening-up, President Xi announced steps would be taken to widen market access significantly, create a more attractive investment environment, strengthen protection of intellectual property rights (IPR) and expand imports.
The Government Work Report released earlier this year had touched on most of these measures, but the current trade environment has given them new significance. Measures for enhancing alignment with international economic and trading rules, along with increasing transparency were specified, being regarded as particularly important for China’s development at this stage.
Measures on China’s further opening up and business implications include:
1. Further opening up in the financial sector
The People’s Bank of China unveiled policy details as well as a timeline on 11 April, with policies focusing on expanding market access and lifting ownership restrictions. This series of deeper financial opening-up measures are beneficial to both China and the global financial industry, as it will create new opportunities for domestic and foreign players in the areas of market competition, channels, products and services, customer experience, and operations.
2. Further opening up in the auto sector
The market entry restrictions for the auto industry would be phased out over the next five years. Gradually lifting the market entry barriers for new energy vehicles, as well as commercial and passenger vehicles will help home-grown brands optimise their production capacity structure and ramp up investments in research & development and production operations, thereby improving their competitive edge in international markets.
3. Taking the initiative to expand imports
The reduction of auto and anti-cancer drug tariffs will allow foreign models to be introduced to the country at a lower price. This may bring pressure to Chinese domestic enterprises initially, but it also motivates the Chinese enterprises to enhance their capabilities and adjust to the competitiveness of the international market.
4. Creating a more attractive investment environment
It can be anticipated that in the future, China will create a more fair and stable tax and business environment for taxpayers by focusing on both “reducing tax burdens” and “facilitating tax compliance”. The evolving tax and business environment are crucial for enhancing a country’s soft competitive power.
5. Strengthening the protection of intellectual property rights
In addition to actions taken at the national level, enterprises need to strengthen the protection of their IPR, investing more in enhancing their awareness and ability to innovate, and continually attract and cultivate innovative talent. By doing so, together with the government, they could effectively push IPR progress to a higher level.
6. Benefitting from the Belt and Road Initiative (BRI)
Future BRI projects will also likely pay closer attention to effects on the environment and seek to minimise environmental impacts in order to achieve the goal of “shared benefits” for all. The BRI is also not just about Chinese outbound projects, but also concerns foreign investment into China.