While China is commemorating the 40th anniversary of reform and opening up this year, the Chinese leadership is ready to take measures to make China’s economy more open, as Mr. Liu He said in World Economic Forum in Davos. But many China observers don’t believe this. The diametrically opposing views of Chinese leaders and foreign observers are not surprising, and this has been the case in the past.
Actually, when China decided to join the WTO at the end of 1990’s, Chinese exports were booming thanks to foreign investment in China, so there was no need for China to accept a series of binding conditions to be accepted as a member. A lot of foreign experts on China didn’t believe that China would accept those conditions, but China did, because Chinese leaders considered that abiding by WTO rules would force Chinese firms and Chinese government branches and local authorities to be more market friendly. For this, China has amended more than 2,300 laws and regulations at the national level, and local authorities have cleaned up more than 90,000 regulations.
China’s economy has taken off after joining the WTO. Let’s take its foreign currency reserves as an example. In 2001, China’s foreign reserves reached $212 billion, which was already a comfortable amount. In 2011, China’s foreign reserve surpassed $3 trillion. In 2000, China’s GDP was still behind that of the UK, France, Germany, and Japan. In 2015, China’s GDP is second only to the US’ - it has more than doubled Japan’s, and is larger than Germany’s, France’s, and the UK’s combined.
Nowadays, China has plenty of reasons to further open its economy. China has to restructure its economy, and upgrade its manufacturing industry. For this, China has to break up vested interests. Opening up is a useful instrument to continue reforms, to make the Chinese economy more efficient, less vulnerable, and more competitive.