Lin Jiang: What’s New in the Open Economic System?
Under General Secretary Xi Jinping’s important instruction, one of the “Three Supports” is to support Guangdong Province in building a new open economic system. “New” means new ideas and new standards. In the past, openness in the economic system emphasized the amount of foreign business and investment, while China will now focus on the quality of this business and investment. To build a new open economic system, China hopes to push greater reforms through opening up to the outside world. What’s more, local governments should set aside the idea that the higher GDP, the better. Instead, local governments should work on bringing in advanced international manufacturing industries and modern service industries. Moreover, Guangdong Province must fulfill international standards in trade and investment to create a better economic environment.
Secondly, “new” means new inter-dependencies and close relationships. Past policies prioritized using preferential tax policies to encourage foreign enterprises to enter Special Economic Zones and Economic and Technological Development Zones. However, Special Economic Zones currently have little contact with Economic and Technological Development Zones. Further, maintaining these tax preference policies for long periods will eventually cause tax depression. In the new open economic system, Special Economic Zones, Economic and Technological Development Zones, Tariff-free Zones, State-level New Areas, Pilot Free Trade Zones, etc. are not isolated islands but serve together as investment platforms. In addition, these zones must share industry, technology, talent, and information with other cities in the Pearl River Delta and Guangdong, which will create a closely-connected state. In this way, Guangdong can integrate all its resources in the post-Internet era, so as to face new challenges and meet new requirements under the ever-changing circumstances of “Opening Up.”
Thirdly, “new” means the new transmission mechanisms for economic activity. As the Guangdong-Hong Kong-Macau Greater Bay Area and other clusters of world-class cities develop, Hong Kong can serve as an international financial center and Macao as an international tourism and leisure center, strengthening the influence and importance of of Guangdong Province. Hong Kong and Macau’s modern service industries promote Guangdong’s processing and manufacturing industries, which supports Guangdong’s efforts to continue bringing in and developing more advanced manufacturing industries. At the same time, the potential market in the northwest region of eastern Guangdong provides many potential business opportunities for Hong Kong and Macau that can help them secure their statuses as centers of international finance and modern service. Thus, it is clear that building the new open economic system can involve greater reforms to the opening up policy, which is a new facet to Chinese economic policy not utilized in the past.
Fourthly, building a new open economic system does not involve merely harnessing the potential of economic sectors individually, but rather designing a whole connected structure. The Guangdong-Hong Kong-Macau Bay Area will be the most important platform for greater development in Guangdong’s new open economic system.
