PART Ⅰ Contribution of China’s Reform and Opening up to the World and Formation of the Belt and Road Initiative

1 The Historic Contribution of China’s Reform and Opening up to the World

Zhou Fangye

The development process of China’s reform and opening up

Since 1978, China has adhered to the basic state policy of “carrying out domestic reforms and opening to the outside world”. Reform and opening up complement and promote each other. The Party has firmly promoted reforms in the country’s economic, political, cultural, social, and ecological systems, as well as in the system of Party building. China’s opening up has also been promoted continuously, and the achievements have drawn the attention of the world. During the years from 1978 to 2017, China’s GDP increased from RMB 367.8 billion to RMB 82.7 trillion, an increase of 225 times, firmly occupying the position as the secondlargest economy in the world; its per-capita GDP increased from RMB 385 to RMB 59,500, an increase of 155 times, entering the ranks of middle-income countries; its total foreign trade increased from US$ 20.6 billion to US$ 4.12 trillion, a 200-fold increase, becoming the world’s largest exporter; its foreign exchange reserves (forexreserves) increased from US$167 million to US$ 3.14 trillion, putting China at the top of the list of forex reserve holders worldwide.

The development process of reform and opening up can be divided into three historical stages.

The first stage was a comprehensive exploration state from 1978 to 1992.

In 1978, the Party made the historic decision of shifting the focus of work of the Party and state to economic development and initiating the reform and opening-up drive at the 3rd Plenary Session of the 11th CPC Central Committee. The reform started with implementing the household contract responsibility system in rural areas and delegating more decision-making power to enterprises and implementing the enterprise-contracting system in urban areas, and comprehensive and specific reforms were carried out on a trial basis. In the mid to late 1980s, the focus of reforms shifted from rural areas to urban areas, from the economic field to the realms of politics, science, technology, and education, as well as other areas of social life, and remarkable results were achieved. In 1992, the Communist Party of China clearly proclaimed establishing the socialist market economic system as the goal of its economic reform at its 14th national congress, based on the famous statement made by Deng Xiaoping in his talk during his inspection tour to south China that a market economy is not capitalism, there are markets under socialism too.

In terms of opening up to the outside world, from 1979 when the special economic zone was launched on a trial basis to 1984 when some coastal cities were opened up, to 1985 when the three delta areas along the Yangtze River and the Pearl River and in the southern part of Fujian province and the Bohai Rim were selected as the open coastal economic areas, to 1990 when Pudong New District in Shanghai was opened up, an opening-up pattern in coastal areas has, by and large, taken shape in China as the opening-up policy was advanced step by step from south to north.

The second stage is the stage of comprehensive advancement from 1992 to 2013.

In terms of domestic reforms, we were able to turn a highly concentrated, planned economy into a vigorous, socialist market economy. To set up and improve the socialist market economic system, we installed a two-tier management system based on the household contracting system and features an integration of unified management with separate management. A basic economic system was established, with public ownership as the pillar and all forms of ownership developing together. A distribution system was installed mainly on the principle of distribution according to work, while allowing other modes of distribution. An economic management system has taken shape, enabling the market to play the basic role in resource allocation under the macro-regulation of the government. Along with deepening reform of the economic system, we have reformed political, cultural, and social institutions, creating flourishing entities to suit China’s actual circumstances.[1]

In terms of opening up to the outside world, 13 cities along the border, 6 cities along the Yangtze River, and 18 inland capital cities were opened up in the 1990s upon the approval of the government, and 32 national-level economic and technological development zones, 52 high-tech development zones, 13 bonded zones, and 34 ports were opened up, forming a multi-level and all-directional opening-up pattern in the areas along the coast, along the river, along the border, and in inland areas. After 15 years of tough negotiations, China joined the WTO in 2001. China’s opening up has shifted from policy-oriented opening up to a pattern of omnidirectional, multi-level, and wide-ranging opening-up under the legal framework, and has successfully achieved a great historical change from a closed and semi-closed economy to an all-around open one.[2]

The third stage is the comprehensive deepening stage since 2013.

In terms of domestic reforms, the 3rd Plenary Session of the 18th CPC Central Committee in November 2013 adopted the Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform, which proposed that the overall goal of deepening the reform comprehensively is to improve and develop socialism with Chinese characteristics, and to promote the modernisation of the national governance system and capacity; economic system reform is the focus of deepening the reform comprehensively; the underlying issue is how to strike a balance between the role of the government and that of the market, and let the market play the decisive role in allocating resources and let the government play its functions better. Specifically, the contents of comprehensively deepening the reform mainly include adhering to and improving the basic economic system, accelerating the improvement of the modern market system, accelerating the transformation of government functions, deepening the reform of the fiscal and taxation systems, improving mechanisms and institutions for integrated development of urban and rural areas, building a new open economic system, strengthening the building of the socialist democratic system, promoting the rule of law, strengthening the check and oversight system of exercise of power, promoting innovation in cultural systems and mechanisms, promoting the reform and innovation of social undertakings, making innovations in the social governance system, accelerating ecological progress, deepening the reform of national defence and armed forces, and strengthening and improving the Party’s leadership in the course of comprehensively deepening the reform.[3]

In terms of opening up to the outside world, we will promote the formation of a new pattern of all-round openingup. On the one hand, we will continue to cultivate a business environment that is law-based, internationalised and business-friendly and continue to strengthen efforts in “bringing in”; on the other hand, we will promote the construction of the Belt and Road, strengthen international capacity cooperation and fully participate in global economic cooperation and competition to meet the development need of domestic enterprises and industries to “go global”.

The historic contribution of China’s reform and opening up

First, China’s development pattern provides the developing countries with a new alternative development path. The most important result of reform and opening up is that we have created and developed socialism with Chinese characteristics, which has provided a powerful impetus and strong guarantee for the socialist modernisation drive.[4] The road of building socialism with Chinese characteristics and related theories, systems, and culture have continued to develop, expanding the channels for developing countries to move towards modernisation and providing new choices for countries and nations in the world that want to accelerate their development and maintain their independence.[5]

For developing countries, the path of building socialism with Chinese characteristics provides a successful practice different from the Western path: economically, the government’s “visible hand” and the market’s “invisible hand” are combined, the plan and the market are combined, the state-owned economy and the private economy are combined through the socialist market economy to avoid the disadvantages of “market fundamentalism”; politically, selection and election are organically combined through socialist democratic politics, and innovations are made from the perspective of contents and results, changing the formal and procedural dogma and stereotype of “democratic fundamentalism”; socially, it has promoted comprehensive social governance, advanced social consultations and dialogues, established positive interactions between the societies and the countries, and bridged the inner tension of the Western societies and countries.[6]

More importantly, China’s path adheres to the concept of keeping abreast with the times and asserts that the development of practice, the emancipation of the mind, and the reform and opening up know no boundary. China’s path advocates “diversification” and thus is fundamentally different from the stagnating and conservative “centralised” Western path. It helps developing countries to actively explore the development path that suits their national conditions on the basis of drawing on China’s experience and avoid repeating and copying the mistakes of the Western path.

Second, China’s development path has broken the traditional shackle that “a strong country is bound to seek hegemony” and provides an important guarantee for world peace and stability. As the second largest economy in the world, China’s road to revival is a peaceful development road that has stepped out of the historical cycle of Western hegemonic conflicts. In short, China should develop itself by upholding world peace and should contribute to world peace through its own development. It should achieve development with its own efforts and by carrying out reform and innovation. At the same time, it should open itself to the outside and learn from other countries. It should seek mutual benefit and common development with other countries in keeping with the trend of economic globalisation, and it should work together with other countries to build a harmonious world of durable peace and common prosperity.[7]

China has chosen the path of peaceful development because China has a peace-loving cultural tradition. There’s no gene for invasion and seeking global hegemony in the blood of Chinese people. China does not subscribe to the outdated logic that “a strong country is bound to seek hegemony”. The Chinese people want, more than anything else, to live in peace and harmony with the people of other countries, and to work with them to promote, defend, and share peace together.[8]

On the other hand, it depends on the peace and development demands of reform and opening up. Through domestic reforms, China carries out reform and innovation for economic and social development through its own efforts, and does not shift problems and difficulties onto other countries. Through opening up to the outside, China both pursues independent development and takes part in economic globalisation and both carries forward the fine traditions of the Chinese nation and draws on all the fine achievements of other civilisations. It combines both the domestic and foreign markets and uses both domestic and foreign resources. China integrates itself with the rest of the world with an open attitude, expands and deepens the opening-up strategy, and strengthens exchanges and cooperation with other countries in a bid to build a new system of open economy that is diversified, balanced, safe, and efficient, and that brings about mutual benefits and win-win outcomes.[9] Thus, China needs not follow the same old disastrous road of seeking hegemony as the Western powers did, and has an incentive to proactively safeguard world peace and stability.

Third, China will contribute its wisdom and solutions to help solve human problems. Since the beginning of the twenty-first century, China has actively solved the common problems faced by human society and has provided an important direction for cooperation among all countries in the world. In 2015, on the basis of inheriting the Millennium Development Goals, the United Nations further proposed the 2030 Agenda for Sustainable Development, which advocates to end poverty and hunger everywhere; to combat inequalities within and among countries; to build peaceful, just, andinclusive societies; to protect human rights and promote gender equality and the empowerment of women and girls; and to ensure the lasting protection of the planet and its natural resources.[10]

To solve the common problems for mankind such as poverty reduction and environmental protection, China always adheres to the major strategic judgement that development is still the key to solving all problems in China during its reform and opening up and takes economic construction as our central task. We will deepen social structural reform by concentrating on safeguarding and improving the people’s well-being and promoting social fairness and justice. We will reform the income distribution system and promote common prosperity. We will promote system innovation in the social sector, promote equal access to basic public services, and step up efforts to form a scientific and effective social management system so that our society is not only full of vigour, but is also harmonious and orderly. We will deepen ecological environment management reform by concentrating on building a beautiful China. We will accelerate system building to promote ecological progress, improve institutions and mechanisms for developing geographical space, conserving resources and protecting the ecological environment and promoting modernisation featuring harmonious development between man and nature.[11]

Through reform and opening up, China has not only submitted a high-quality answer sheet for the UN Millennium Development Goals, but has also taken the lead in the implementation of the 2030 Agenda for Sustainable Development and made significant achievements, particularly in reducing poverty. The number of people below the poverty lineinruralareas in China fell from 770 million in 1978 to 43.35 million in 2016. The poverty incidence rate dropped from 97.5% in 2015 to 4.5% in the same period, thus making a positive contribution to the great cause of poverty eradication in human society.[12]

More importantly, China’s development experience in the process of domestic reforms, especially its experience in poverty reduction, will provide China’s wisdom and solutions for other countries facing a daunting task in development. Meanwhile, in the process of opening up to the outside, China has actively advocated inclusive economic development through bilateral and multilateral cooperation and strived to create conditions and provide assistance for developing countries to learn from China’s development experience, effectively promoting the historical process of poverty eradication in the world.

Fourth, China provides new impetus for the development of globalisation. Economic globalisation is an objective requirement of development of social productive forces and an inevitable result of scientific and technological progress. It provides a strong driving force for economic growth in the world and promotes the flow of commodities and capital, the advancement of science and technology, the progress of human civilisation and people-to-people exchanges among all countries. The long-term rapid development of China’s social economy has largely benefited from the constant adaptation and integration into the process of globalisation through reform and opening up.

However, globalisation is notalways a bed ofroses. Since the international financial and economic crisis in 2008, the global economy has remained sluggish for a long time, and the three critical issues in the economic sphere have not been effectively addressed: lack of robust driving forces for global growth makes it difficult to sustain the steady growth of the global economy; inadequate global economic governance makes it difficult to adapt to new developments in the global economy; and uneven global development makes it difficult to meet people’s expectations for better lives.[13] In response to the practical problems of globalisation, China is firmly committed to the policy of reform and openingup and will continue its efforts to safeguard world peace, and contribute to global development and uphold the international order. China will assume the historic task of promoting to build a community of a shared future for mankind.[14]

Through domestic reforms, China has steadily strengthened the innovation capacity and competitiveness of its economy. We must put quality first and give priority to performance. We should pursue supply-side structural reform as our main task, and work hard for better-quality, higher-efficiency, and more robust drivers of economic growth through reform. We need to raise total factor productivity and accelerate the building of an industrial system that promotes coordinated development of the real economy with technological innovation, modern finance, and human resources. We should endeavour to develop an economy with more effective market mechanisms, dynamic micro-entities, and sound macro-regulation. As the world’s second-largest economy, China has contributed more than 30% of global economic growth annually since the international financial crisis and thus has provided strong momentum for the sustained and stable growth of the world economy.

Through opening up to the outside world, China has achieved interactive development with a large number of countries. We should pursue the Belt and Road Initiative as a priority, give equal emphasis to “bringing in” and “going global”, follow the principle of achieving shared growth through discussion and collaboration, and increase openness and cooperation in building innovation capacity. With these efforts, we hope to make new ground in opening China further through links running eastward and westward, across land and over sea. This will make global economic development more balanced and more inclusive, providing favourable conditions for the further improvement of global economic governance.

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[1] “Speech by Hu Jintao at the 30th Anniversary of the Conveningof the Third Plenary Session of the 11th Central Committee of the Communist Party of China”, Xinhua News Agency, Beijing, December 18, 2008.

[2] Chang Jian, “The Historical Process of China’s Opening to the Outside World”, Proceedings of the 6th China Forum on Modernization Research, 2008, pp. 301-304.

[3] Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform, adopted at the Third Plenary Session of the 18th Central Committee of the Communist Party of China on November 12, 2013.

[4] Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform, adopted at the Third Plenary Session of the 18th Central Committee of the Communist Party of China on November 12, 2013.

[5] Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era, Xi Jinping’s report to the 19th Na tional Congress of the Communist Party of China on October 18, 2017.

[6] Zhang Weiwei, “The Transcendence of the Chinese Path to the Western Model”, People’s Daily, 5th ed., October 23, 2016.

[7] White Paper on China’s Peaceful Development Information, Office of the State Council, September 6, 2011.

[8] “Speech by President Xi Jinping at China International Friendship Conference in Commemoration of the 60th Anniversary of the Chinese People’s Association for Friendship with Foreign Countries”, Xinhua News Agency, Beijing, May 15, 2014.

[9] White Paper on China’s Peaceful Development Information, Office of the State Council, September 6, 2011.

[10] Transforming our world: the 2030 Agenda for Sustainable Development, the United Nations, 2016.

[11] Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening the Reform, adopted at the Third Plenary Session of the 18th Central Committee of the Communist Party of China on November 12, 2013.

[12] China’s Progress Report on the Implementation of the 2030 Agenda for Sustainable Development, the Ministry of Foreign Affairs of the People’s Republic of China, August 2017, p. 5.

[13] “Keynote Speech by Xi Jinping at the Opening Ceremony of the 2017 Annual Conference of the World Economic Forum” ,Xinhua News Agency, Davos, Switzerland, January 17, 2017.

[14] Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era, Xi Jinping’s report to the 19th National Congress of the Communist Party of China on October 18, 2017.