Editor's note: On July 25, Li Shanshan, a researcher at the Chongyang Institute for Financial Studies of Chinese University, was interviewed by 21st Century Business Herald to interpret the "Decision of the CPC Central Committee on Further Comprehensively Deepening Reform and Promoting Chinese-style Modernization" (hereinafter referred to as the "Decision"). She believes that the Third Plenary Session of the 20th CPC Central Committee focused on comprehensively deepening reforms, especially the reform of the economic system and the reform of the national governance system. The content of the interview is forwarded as follows:
A few days ago, the Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) concluded successfully after successfully completing all its agendas. The plenary session adopted the Decision of the Central Committee of the Communist Party of China on Further Deepening Reform in an All-round Way and Promoting Chinese-style Modernization, closely following the theme of Chinese-style modernization, making comprehensive arrangements for further deepening reform in an all-round way, putting forward a total of more than 300 important reform measures, further explaining China's propositions and plans, and conveying China's ideas and voices to the world. Li Shanshan said: "At present, China's economic and social development is in a critical period of upgrading and climbing, facing multiple challenges such as 'three-phase superposition' and external interference. In this context, this plenary meeting is a meeting of historic significance. Through a series of major decisions and arrangements, the plenary session sounded the clarion call for a new round of deepening reform and high-level opening up to the outside world, and pointed out the direction for China's future development. This will not only affect China's own development prospects in the next 5-10 years, but will also have an important impact on the global economic and political landscape. She pointed out that the Third Plenary Session of the 20th Central Committee of the Communist Party of China focused on comprehensively deepening reforms, especially the reform of the economic system and the reform of the national governance system, involving the reform of the fiscal and taxation system, financial reform, state-owned enterprise reform and innovation-driven development, aiming to enhance economic vitality and competitiveness, and promote Chinese-style modernization. These contents demonstrate the strong determination of the Communist Party of China to further deepen reform in an all-round way and open up broad prospects for Chinese-style modernization, and send a strong signal to the international community to unswervingly hold high the banner of reform and opening up.
1
"Deepening the reform of the financial system" has attracted considerable attention
The "deepening of the reform of the financial system" proposed by the plenum has attracted particular attention from the market. The plenum pointed out that scientific macroeconomic regulation and control and effective government management are the inherent requirements for bringing into play the advantages of the socialist market economic system. It is necessary to improve the macroeconomic regulation and control system, promote the reform of key areas such as finance and taxation and finance as a whole, and enhance the consistency of macroeconomic policy orientation. It is necessary to improve the national strategic planning system and the overall policy coordination mechanism, deepen the reform of the fiscal and taxation system, deepen the reform of the financial system, and improve the implementation of the regional coordinated development strategy mechanism. Li Shanshan believes that Article 18 specifically expounds on "deepening the reform of the financial system", and most of the key points mentioned in the "Decision", such as improving the central bank system, five major articles, improving the capital market function of coordinating investment and financing, and bringing all financial activities into the supervision and early correction of risks in accordance with the law, have followed the key direction of financial reform and building a "financial power" in recent years. She pointed out that the "Decision" proposed for the first time to "formulate a financial law", although there have been many subdivisions of the financial field before, such as the People's Bank of China Law, the Commercial Bank Law, the Securities Law, and the Financial Stability Law, but the concept of a more basic and systematic "financial law" is still proposed for the first time. The construction of the rule of law in the financial field is the foundation for the modernization of the financial supervision and management system, and a complete financial legal system is the only way for the construction of the rule of law in the financial sector. In addition, the "Decision" also clearly proposes to "promote the construction of an independent and controllable cross-border payment system, and strengthen the financial security mechanism under open conditions". A cross-border payment system with extensive coverage has the attributes of an international public good, and a smooth cross-border payment system is the lifeblood of ensuring the operation of a modern international economic and financial system. In the context of the continuous escalation of the great power game, it is necessary to build an independent and controllable cross-border payment system parallel to the dollar-dominated system to maintain global and China's economic and financial security.
2
Steadily expand institutional opening-up,
Further relaxation of market access
The Third Plenary Session of the 20th CPC Central Committee made important arrangements for promoting high-level opening up and expanding the use of foreign investment. On July 19, Han Wenxiu, deputy director of the Central Finance Office in charge of daily work and director of the Central Agricultural Office, said at a press conference held by the Central Committee of the Communist Party of China, "In terms of expanding opening up and attracting foreign investment, China will continue to improve the market-oriented, law-based and international first-class business environment, and is willing to share with the majority of foreign-funded enterprises the huge opportunities contained in China's development of new quality productive forces and the promotion of Chinese-style modernization, and is happy to see foreign-funded enterprises grow together with China's economy." Li Shanshan said that institutional opening-up is not limited to market opening and trade liberalization, but also involves optimizing and improving the system and mechanism of economy, law, system construction, rule-making and governance capacity, emphasizing the integration with international rules, building a more open, transparent and efficient institutional system, and promoting a higher level of opening up and high-quality economic development. On this basis, it is also necessary to improve the shortcomings of existing international rules and enhance the voice of international rule-making. "Compared with the specific opening-up policy, institutional opening-up can form a more predictable and sustainable institutional guarantee, and bring more stable expectations for international enterprises and talents, international institutions and financial capital." Li Shanshan said, "In the context of rising trade protectionism and anti-globalization, China's implementation of institutional opening-up will not only help form a mutual promotion between opening-up and internal reform, promote high-quality economic and social development, but also contribute to economic globalization and stable growth of the global economy." Li Shanshan pointed out that in recent years, China has taken a number of measures to promote institutional opening-up, including the improvement of laws and regulations, the expansion of free trade zones, the opening of financial markets and cross-border e-commerce policies, etc., which have greatly enhanced the breadth and depth of China's opening up. On January 1, 2019, the Foreign Investment Law of the People's Republic of China came into effect, replacing the previous three foreign investment laws and strengthening the protection of foreign investment. The negative list for foreign investment access has been reduced year by year, and the national version of the negative list for foreign investment access has been reduced from 93 items in 2017 to 31 items in 2022. As of 2023, China has set up 22 free trade zones across the country, and has continuously introduced support measures to promote free trade zones to become a highland of institutional innovation, and the proportion of foreign trade in the country has also shown an upward trend. As of 2023, China has set up 105 cross-border e-commerce comprehensive pilot zones, promoting international trade facilitation. "China has further relaxed the access restrictions of foreign-funded financial institutions, expanded the opening up of banking, securities, insurance and other financial fields, and the entry of international financial institutions has brought advanced financial services and business philosophy. China actively participates in the formulation of international financial regulatory rules and financial governance, draws on advanced international experience in financial supervision and governance, enhances the competitiveness of the domestic financial market, promotes the stability of the financial market, and promotes the optimization of economic structure and scientific and technological innovation. Li Shanshan said.
3
Improve the mechanism for promoting high-quality Belt and Road cooperation
The Decision also proposes to improve the mechanism for promoting high-quality Belt and Road cooperation. Chinese enterprises are expected to usher in new development opportunities when they "go overseas". This year marks the beginning of the second golden decade of the Belt and Road Initiative. On July 18, Foreign Ministry Spokesperson Lin Jian said in response to a question on the Belt and Road Initiative that over the past 10 years, China has worked with all parties to promote the Belt and Road Initiative as a popular international public good and cooperation platform, and is willing to promote the Belt and Road Initiative to develop towards higher quality and higher standards. Lin Jian introduced that over the past 10 years, the achievements of the "Belt and Road" cooperation have been frequent, not only allowing people along the countries along the route to enjoy their travel and smooth flow of goods, but also bringing a sense of gain and happiness to the local people. China has signed cooperation documents with more than 150 countries and more than 30 international organizations on the Belt and Road Initiative. Last year, China's trade in goods with the Belt and Road countries reached 19.5 trillion yuan, an increase of 2.8 percent, accounting for 46.6 percent of the total import and export volume, the highest level since the initiative was proposed. Li Shanshan said that over the past 10 years, the "Belt and Road" initiative has created many important opportunities for Chinese enterprises to "go global": First, participate in infrastructure construction. The Belt and Road Initiative (BRI) focuses on promoting infrastructure connectivity in the countries it builds, including railways, roads, ports, power facilities and other projects. Chinese enterprises have accumulated rich experience and technological advantages in these large-scale engineering projects. The second is financial cooperation. Financial cooperation is an important support for the Belt and Road Initiative. Many of the Belt and Road countries are in a transition period of industrialization, urbanization and large-scale infrastructure construction, and there is a huge financing gap. China's financial institutions have expanded their development footprint by providing financial services to the co-construction countries. The third is to open up the international market. Many of the Belt and Road countries are developing countries with huge demand for industrialization and urbanization, and Chinese companies are taking advantage of these opportunities to promote their products and services to international markets. Fourth, technological upgrading and innovation. In the Belt and Road Initiative, Chinese enterprises are not only exporters of capital and resources, but also disseminators of technology and innovation. Chinese enterprises can bring advanced technology and management experience to the co-construction countries, promote local technological progress and industrial upgrading, and at the same time exercise themselves in the broader international market, promoting their own technological innovation and international competitiveness. In Li Shanshan's view, in the first decade of the Belt and Road Initiative, foreign investment was dominated by large state-owned enterprises, large policy banks and development banks. In recent years, the Belt and Road Initiative has become greener and more market-oriented, expanding development space and improving sustainability. According to the 2023 China Belt and Road Initiative (BRI) Investment Report released by the Griffith Asia Institute in February 2024, China reached a total of US$92.4 billion worth of deals with 149 countries through financial investment and contractual cooperation in 2023, a sharp increase of 18% year-on-year, while global foreign direct investment in emerging economies fell sharply that year, Li pointed out. Not only that, but the average investment size has also rebounded again, from $354 million in 2020 to $772 million in 2023, second only to the single size in 2018.
In addition, Li Shanshan said that the investment subjects and investment directions are showing a trend of diversification. "From the perspective of investment subjects, the main participants in outbound investment include not only Chinese state-owned enterprises, but also private enterprises, of which the investment field is dominated by private enterprises, and the construction contract field is dominated by state-owned enterprises. From the perspective of investment direction, an important growth point is the technology sector, especially in the fields of batteries, auto parts, electric vehicle manufacturing and telecommunications, etc., and more diversified and cutting-edge investment directions have enhanced the sustainability and development potential of future financial integration. ”
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Established on January 19, 2013, Chongyang Institute for Financial Studies of Chinese University of China (Renmin University Chongyang) is the main funding project donated by Chongyang Investment to Chinese University and set up an education fund for operation.
As a new type of think tank with Chinese characteristics, Chongyang has hired dozens of former politicians, bankers, and well-known scholars from around the world as senior researchers, aiming to pay attention to reality, advise the country, and serve the people. At present, the Chongyang National People's Congress has 7 departments and 4 operation and management centers (the Center for Ecological Finance, the Center for Global Governance, the Center for China-US People-to-People Exchange, and the China-Russia Center for People-to-People Exchange). In recent years, the Chongyang National People's Congress has been highly recognized at home and abroad in the fields of financial development, global governance, major-country relations, and macroeconomic policy.