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Foreign Policy

China Doesn’t Want to Decouple

Mar 24, 2023
  • He Wenping

    Senior Research Fellow, Charhar Institute and West Asia and Africa Studies Institute of the China Academy of Social Sciences

At a news conference following the conclusion of the annual sessions of the National People’s Congress and the Chinese People’s Political Consultative Conference on March 13, China’s new Premier Li Qiang reiterated the country’s determination to continue its reform and opening-up and analyzed the harm the U.S. decoupling theory will do to the interdependent China-U.S. relationship. While most of Premier Li’s remarks were about China’s domestic economic development, it cannot be separated from international markets and opening-up, nor can it be separated from the United States, the world’s largest economy and an important trading partner.

First, Premier Li noted, “Opening up is a basic state policy for China. No matter how the external situation may evolve, we will stay firmly committed to pursuing this policy.” The year 2023 marks the 45th anniversary of the start of China’s reform and opening-up. Since Deng Xiaoping began implementing the policy in the late 1970s, China has achieved development by opening its doors, attracting foreign investment and integrating deeply into the world economy.

Reform and opening-up has developed China and influenced the world. Without reform and opening-up, China could not have shaken off its poverty and backwardness, and could not have achieved the historic transformation of GDP per capita from $158 in 1978 to more than $12,000 today.

As the world’s most populous country, China’s development is also a boon to peaceful development worldwide. If China, with a population of 1.4 billion, remains poor, backward and even in conflict, the resulting famine and refugees would have an unimaginable impact on peaceful development elsewhere. In addition, as China's strength grows, it has transformed itself from a mere attractor of foreign investment to a major investor in other countries, contributing more than 35 percent to world economic growth in recent years.

In recent years, there have been some skepticism about China’s opening-up policy — the belief that the Chinese government’s policy of creating a new pattern of development that focuses on domestic circulation and features positive interplay between domestic and international circulation means that China will close its door and focus only on domestic economic circulation. In fact, such an understanding is inherently wrong and one-sided, interpreting the double circulation as a single circulation.

As Premier Li said, China will not close its open door but will only open itself wider to the world. For example, China’s actual use of foreign investment in 2022 reached a record high of more than $189 billion, an increase of nearly $50 billion over the three previous years. China not only remains a global investment hub but is also transforming from the world’s factory to a global market.

The China International Import Expo, held in Shanghai since November 2018, is a major Chinese initiative to open its markets to the world and share development opportunities. The expo has been held for five consecutive sessions so far without interruption, even during COVID-19 outbreaks. The CIIE in Shanghai in 2022 had more than 2,800 exhibitors from 127 countries and territories. Many Middle Eastern and African companies I have contacted have begun exporting their products to China after participating in the CIIE. For example, dried chili peppers and coffee from Rwanda have continuously appeared on the dining tables of Chinese consumers in recent years.

Second, the interdependent China-U.S. relationship is one in which cooperation is mutually beneficial and fighting is mutually detrimental. China is the largest developing country and the world’s second-largest economy, while the United States is the largest developed country and the world’s largest economy. The two are highly interdependent and each benefits from the other’s development. Good quality and inexpensive manufactured goods made in China not only meet the daily needs of the American consumers, but also contribute to calming the rising inflation faced by the U.S. and alleviating the global supply chain crisis.

Although the U.S. initiated its so-called trade war with China under the Trump administration, the interdependent trade relationship between China and the U.S. remains strong. According to Chinese statistics, China-U.S. trade reached a record high of nearly $760 billion in 2022. Looking ahead, China's manufacturing industry will not only need to deeply integrate with the U.S. market — and Chinese companies will need U.S. orders — but  U.S. high-technology companies and even consumer goods such as automobiles and cosmetics will also need the Chinese market, a single market of more than 1.4 billion people.

China’s middle-income consumer market is getting larger and its consumption level is climbing as the country’s economic strength continues to rise and as the standard of living and income levels of the Chinese people improve. No matter whether they are Chinese or foreign companies, those who can gain a foothold in the huge Chinese market will be invincible in the global market competition of the 21st century

As for the hype over decoupling China from the United States, it is totally caused by the new cold war mentality. It also completely ignores the fact that we live in an era of economic globalization in which countries are economically interdependent, interconnected and closely linked, with different degrees of cooperation and division of labor. In this era, capital flows, labor markets, information, raw materials, operations and management have long gone beyond national borders to become internationalized and integrated. If someone is determined to go against economic globalization and work to decouple China from the United States and break chains, it will be driving history backward to the benefit of no one.

Premier Li concluded by saying that China and the United States can and must cooperate, and there is a lot that the two countries can achieve by working together. Encirclement and suppression is in no one’s interest.

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