III. Adapting to the new trend of economic globalization in the post-Covid world and promoting a new development dynamic
President Xi has pointed out that, as the world enters a period of turmoil and change, a backlash is occurring against economic globalization. He has argued that changes in the global political and economic environment have intensified the trend of de-globalization, as some countries have engaged in unilateralism and protectionism, thus significantly weakening the traditional international flow. China's new development dynamic, President Xi has stressed, is not a closed loop, but rather made up of open and mutually reinforcing domestic and international flows. China does not seek to develop only itself or to engage in zero-sum games, nor will it pursue development behind closed doors; rather, it aims to foster, over time, a new development dynamic that is focused on domestic flows while facilitating positive interplay between domestic and international flows. This will create more space for China's economic development and add impetus to global economic recovery and growth.
The world economic landscape is going through profound changes.
The international environment is increasingly complex, marked by a significant increase in instability and uncertainty. Global trade and investment growth is sluggish. Before the international financial crisis, global trade grew twice as fast as the global economy, but since then, growth in global trade and economy has roughly been on the same level. International organizations estimate that global trade would fall by about 30% in 2020, and will rebound by only 7.2% in 2021. Global direct investment would fall by 40%, with a further fall of 5% to 10% predicted for 2021. As populism and trade protectionism intensify, they are spreading from traditional industries to emerging and high-tech industries. Restrictions on international investment have been tightened.
The conditions of China's development are changing.
China's traditional advantages are being diminished while new ones are still in the process of being cultivated. In recent years, China's working population has gradually decreased, its cost advantages have been weakened, and some important resources have been in short supply. In 2019, China imported 80%, 72%, and 86% of its iron ore, crude oil, and soybeans, respectively. New advantages in areas like R&D, technology, standards, branding, and marketing still need to be further improved. The task of achieving high-quality development is indeed urgent. Yet, the advantages of China's vast market are obvious. China's economy is the second largest in the world. It has a per capita GDP of over US$10,000, a population of 1.4 billion, and a middle-income group of more than 400 million people. It possesses the world's most complete and largest industrial system with a full set of supporting capabilities. China is the world's most promising large market and its international attractiveness continues to grow.
In the face of major changes in the domestic and international environments, as well as the arrival of a new stage of economic development, China will follow a new development philosophy, promote high-quality development, and accelerate the creation of a new development pattern. China will continue to implement the strategy of expanding domestic demand, it will open wider to the world on all fronts, and it will promote positive interplay between domestic and international flows.
Building a large unified market accessible to the world. China has promoted far-reaching reform with high-standard opening up. It has improved urban and rural circulation networks, developed consumption, including spending on services, in urban and rural areas, promoted the integration of domestic and foreign trade, and expanded imports through its hosting of the China International Import Expo. In 2019, China's total retail sales of consumer goods reached 41 trillion yuan, second in the world. Imports reached US$2.1 trillion, and are expected to grow to US$22 trillion over the next decade. The Third China International Import Expo generated deals worth US$72.62 billion, helping to expand international demand despite the Covid-19 epidemic. Going forward, China will promote consumer spending in all domains, modernize trade flows, and expand imports of high-quality goods and services. We will make the Chinese market a market for the whole world to share in.
Attaining new standards in opening up. China will align its efforts to create a new development dynamic with the implementation of its coordinated regional development strategy and the development of pilot free trade zones. It will encourage pilot free trade zones to boldly carry out trials, make breakthroughs, and drive change. The development of Hainan's free trade port will also be accelerated. To date, 21 pilot free trade zones have been established, and 260 proven innovation outcomes have been replicated and applied elsewhere. The general plan for the development of the Hainan free trade port has been launched; it will promote the free flow of goods, services, capital, people, and information. In the coming period, China will push for high-quality development of pilot free trade zones and ports, developing them as important strategic nodes for the country's new development.
Promoting more open rules and institutions. Working to ensure alignment with international economic and trade rules, China has enhanced transparency, strengthened the protection of property rights, encouraged competition, and opposed monopoly practices to achieve a sustained improvement to its business environment. It has improved the management system for foreign investment, fully instituted a pre-entry national treatment plus negative list management system, and enacted the Foreign Investment Law. China's business environment has moved up to 31st place in the international rankings from 78th in 2017. The areas open to foreign investment have been consistently expanded to cover 120 of the 160 service sectors defined by the WTO. China has furthered reforms to streamline administration, delegate power, improve regulation, and upgrade services in the areas open to foreign investment in both inland and border regions. In the future, more attention will be paid to rules, regulations, management, standards and other forms of institutional openness, as China works to create a new and improved open economic system.