The Third China International Import Expo (hereinafter referred to as “CIIE”) will be held in Shanghai. Unlike the previous two sessions, the third CIIE takes place in a specific historical period when the COVID-19 pandemic spreads widely across the world, forcing the Tokyo Summer Olympics to be postponed, and causing stagnant growth or even recession in the world economy. Therefore, it has special historical significance.
Building “dual economic cycles” is a major measure to deepen reform and opening up and promote high-quality development.
The sudden outbreak of COVID-19 pandemic is classified by the World Health Organization (WHO) as a major global public health emergency. Its impacts on world economy are different from those of economic and financial crises, because the influencing mechanisms are completely different. This time, the problem doesn’t lie in the structural imbalance within the economic system. Instead, countries have to press the “pause button” on the production and supply side due to epidemic prevention and control, and take measures to “lock down countries” and “lock down cities”, cutting off the flow of personnel and materials across the world, greatly reducing the cross-border flow of funds, leading to a sharp decline in global investment and trade demand, and resulting in a global recession. The IMF and World Bank predict that the world economy will see negative growth this year, and that China is the only country able achieve positive growth. These are short-term impacts brought by the pandemic. In the medium and long term, the pandemic will bring major changes in the global economic structure and governance system, becoming a “watershed” admist the changes unseen in a century.
Judging from impacts of the pandemic on China’s domestic economy, disruption of global industrial chains and supply chains caused by shutdown of production in developed economies, as well as obstruction of international logistics and the sharp decline in external demand have exerted negative influences on China’s economic recovery. The outbreak of the pandemic also triggered an escalation in America’s containment strategy against China, making it impossible to implement the first phase of the trade agreement reached between China and America before the pandemic. Besides, America’s sanctions against China have expanded from trade to all aspects in technology, finance, people-to-people and cultural exchanges, leaving a more severe environment for China’s medium and long-term development. To address this challenge, the Chinese government has introduced a number of policies and measures to ensure stability on the six fronts and maintain security in the six areas in a timely manner, hoping to minimize the negative impacts of the global spread of the pandemic on the domestic economy. Besides, it has proposed new measures for reform and opening-up in the medium and long term to build a new development pattern with “dual economic cycles” according to possible, far-reaching impacts of the pandemic.
The core part of the “dual economic cycles” is to take the domestic economic circle as the mainstay, make full use of the advantages of its relatively complete industrial system and industrial chain, as well as the huge consumer market to facilitate smooth production, distribution, circulation, and consumption in domestic economic operation, and realize self-cycle including the supply and demand cycle, business cycle and production factor cycle. With these efforts, we can not only better meet market demand, but also further create effective demand and form a high-quality domestic economic cycle.
Instead of negating the importance of the “international economic cycle”, or suggesting that the domestic and international economic cycles are separate, the “dual economic cycles” pays more attention to opening to the outside world, and emphasizes the need to rely on institution-based opening to further improve the level of opening to the outside world. Besides, it uses international capital to promote domestic reforms, optimize the development environment, and form an institutional system complying with internationally accepted rules. Meanwhile, by promoting external development through pursuing internal development, the ability of Chinese enterprises to go global and participate in international competition and cooperation will be continuously enhanced, thus achieving the international economic cycle at a high level.
Shanghai will become a strategic link between the domestic and international economic cycles.
During the “14th Five-Year Plan” period, Shanghai will become a center in the domestic economic cycle and a strategic link between the domestic and international economic cycles and achieve high-quality development under the new development pattern of “dual economic cycles” in services.
Expanding domestic demands is the basic guarantee for realizing “domestic economic cycle”. Shanghai will combine its service resources with urban development and accelerate the innovation and development of the service industry and trade in service. First, it will promote the integrated development of culture, tourism and business by attracting tourists with culture, spreading culture through tourism, and promoting business by cultural tourism; second, it will seize the development opportunities of the online economy, platform economy, and digital economy to accelerate innovation in consumption models; third, it will promote upgrade of investment demand with new infrastructure. Compared with the “extensive” investment model in traditional infrastructure construction, the new infrastructure can promote supply-side structural reforms, accelerate upgrading of the industrial structure, and avoid residual problems of repeated construction and overcapacity while expanding domestic demand. It involves 5G infrastructure, artificial intelligence, big data center and industrial internet, all of which may foster new consumer behaviors and new demands, and promote consumption upgrading through digital technology, network operations management and new consumption scenarios.
Opening up is Shanghai’s biggest advantage in its development. Market competition will be introduced through opening up to the outside world to improve operating efficiency and service quality, form a mechanism forcing relevant systems to reform, continue to improve the internationalized, rule of law and convenient business environment, strengthen people foreign investors’ confidence, further give play to the clustering and radiating effects of headquarters economy of foreign enterprises, and lay a solid foundation for building a high-quality domestic economic circle with high-level opening up. On the other hand, it’s necessary for the enterprises intended to go global to shift from development based on seeking resources and exploring markets to growth driven by high-quality factors. It’s important for them to establish overseas product R&D innovation bases through foreign direct investment, equity mergers and acquisitions, capitalize on overseas high-end talents to develop and make products with their own intellectual property rights or patents, and use the international sales network channels brought by overseas investment to quickly occupy global market shares, while continuously improving the status of Chinese enterprises in the global value chain.
As the world’s first international expo with import as its theme, the CIIE is not only a major measure to open up the Chinese market to the outside world and expand international cooperation in economy and trade, but also an important public product for China to promote economic globalization. Compared with the previous two sessions, the third CIIE’s new mission, new highlights and new features have attracted worldwide attention.
In terms of the new mission, the CIIE will become an important carrier to build “dual economic cycles”. The six featured exhibition areas will bring together global products, services, and technologies, and match global resources, which will pave a new way and build a new bridge for Shanghai to expand its opening to the outside world and deepen international trade and investment cooperation, while providing a gold opportunity for it to create a world-class business environment and build the image of an international metropolis. The new products, new technologies, and new concepts debuted worldwide and exhibited for the first time in China will also help guide consumers’ pursuit of quality consumption and exquisite life, stimulate Shanghai citizens’ consumption enthusiasm and demand potential, promote consumption upgrading, and speed up Shanghai’s transformation into a consumer city.
In terms of new highlights, the new technologies, new services, and new exhibits unveiled at the CIIE will help improve the quality of products from the supply side and promote the formation of a high-level “international economic cycle”. Although the pandemic is still spreading cross the world, the number of Fortune Global 500 companies and industry leaders attending the expo reaches the scale of the last session, and the exhibition area is larger than the previous one. 5G technology, AI technology, green environmental protection technology, and other high-tech products supporting the new infrastructure construction, as well as medical and health, and high-end consumer products will become highlights of exhibition and transaction during the third CIIE.
In terms of new features, the third CIIE has adopted various online methods such as “cloud matchmaking”, “cloud negotiation”, “cloud promotion” and “cloud signing” to ensure the success of offline exhibitions and enhance enterprises’ confidence to participate. The model of “cloud overseas investment promotion” is in line with the development trend of digital economy and online economy in the post-pandemic era. In addition, the CIIE can set up a “offline+online” regular platform for exhibition and transaction to turn exhibits into goods, enabling foreign exhibitors to start with Shanghai at the “center of the circle” and quickly reach other markets in China, and contributing to the formation of a new development pattern with the domestic economic cycle as the mainstay, and the domestic and foreign economic cycles boosting each other.
(Sun Lixing, Director and Researcher of International Investment Research Office, Institute of World Economy, Shanghai Academy of Social Sciences)