Editor’s Note: The Central Committee of the Communist Party of China and the State Council, China’s Cabinet, recently co-issued a guiding document urging the country to accelerate the shift from openness based on the flow of goods and factors to openness based on rules and institutions. Such kind of shift is a basic requirement and institutional guarantee for the high-quality development of China’s trade. 21st Century Business Herald comments:
World trade over the past few decades has been driven mainly by the global movement of capital and the use of cheap labor, which has meant that developing countries including China have to accept the rules set by the West and implement preferential policies toward the developed countries in order to attract investment from them. Such a factors flow-based trade model has brought development opportunities to developing countries and lifted their share of the global economy. However, it has also given rise to major problems such as the imbalanced distribution between capital and labor, and the widening gap between the rich and poor. At the same time, with the rise in labor costs, the factors flow-driven world trade is difficult to sustain, causing people to consider how to restructure world trade and investment rules.
With the global trade rules needing reconstruction, all economies have put forward their proposals, with developing countries demanding a greater say in the global governance system and an end to the West’s monopoly on the rules, while developed countries are seeking to maintain their monopoly over rulemaking. Under these circumstances, China should try to promote institutional openness. It should adapt to the international rules while taking an active part in the making of new international rules and promoting their development in a more balanced direction.