Expanding High-Level Openness Requires Flexibility and Resilience

Expanding High-Level Openness Requires Flexibility and Resilience

Openness is a defining feature of Chinese modernization. The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Promoting Chinese Modernization" (hereinafter referred to as the "Decision") passed by the Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC), has made arrangements for "improving the system and mechanism of high-level opening up to the outside world." This provides an important guideline for promoting reform and development through openness in the new era and new journey, and for advancing Chinese modernization. On this topic, when interviewed by a reporter from the People's Political Consultative Conference (PPCC) newspaper, Zhang Yichen, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) and Chairman of CITIC Capital, said that currently, a new round of technological revolution and industrial transformation is deepening, and the world is undergoing unprecedented changes in a century, with increasing external uncertainties. Deepening reform and expanding openness face new situations and tasks. The "Decision" proposes "to adhere to promoting reform through openness, relying on China's super-large market advantage, enhancing openness capabilities in expanding international cooperation, and building a new system of open economy at a higher level," which sends a clear signal to expand high-level openness and demonstrates China's unwavering determination to expand openness.

In Zhang Yichen's view, to promote Chinese modernization, it is necessary to improve the ability to utilize both domestic and international markets and resources, adhere to the overall planning of internal and external, and combine breaking and establishing to remove institutional and mechanical obstacles to opening up to the outside world, and accelerate the formation of institutional arrangements conducive to fostering new comparative advantages and competitive edges.

The "Decision" makes arrangements for improving the system and mechanism of high-level opening up from five aspects. In the part of optimizing the regional opening layout, it further points out the need to give play to the institutional advantage of "one country, two systems," and to consolidate and enhance Hong Kong's position as an international financial, shipping, and trade center. Zhang Yichen believes that this demonstrates the consistent emphasis and support for the Hong Kong Special Administrative Region, which is exciting. In the total market value of listed companies on the Hong Kong Stock Exchange, Chinese enterprises account for more than three-quarters, so the activity and valuation level of the Hong Kong market directly affect the overall valuation of Chinese assets.

To this end, Zhang Yichen suggests that it is possible to consider and study the timely adjustment of China's overseas asset allocation, actively consider using foreign exchange reserves to increase the allocation of Hong Kong stocks, and long-term funds such as basic pension insurance and qualified insurance companies to enter the overseas market through the Shanghai-Shenzhen-Hong Kong Stock Connect channel. At the same time, he looks forward to the five pro-Hong Kong measures announced by the China Securities Regulatory Commission (CSRC) at the beginning of this year to continue to deepen and implement, and to continuously introduce new specific policies, to continue to encourage and guide high-quality domestic enterprises to go public in Hong Kong, and to achieve mutual supplementation and organic integration between the mainland and Hong Kong capital markets.

To build a new pattern of high-level opening up, it is essential to have a group of financial institutions with world-class levels to take on important tasks. In this regard, Zhang Yichen said that financial institutions should better serve the real economy, pay high attention to the objective needs of domestic enterprises to reorganize the industrial chain and supply chain on a global scale, and provide more high-quality services in cross-border fund allocation, cross-border mergers and acquisitions, integration, investment, risk management, investment and financing, etc.

At present, affected by China's economic transformation, changes in population structure, and the differences in interest rate cycles between China and the United States, the asset return level of financial institutions such as banks, insurance companies, and securities companies is slowly declining, and the demand for allocating overseas matching financial assets is continuously increasing. At the same time, many domestic enterprises actively "go out" for overseas layout, but the progress of domestic financial institutions in providing cluster services is relatively lagging. In this regard, Zhang Yichen proposed that domestic banks, insurance companies, and securities companies that meet certain qualifications should use Hong Kong as a fulcrum, make good use of Hong Kong's role as a super connector, and leverage Hong Kong's advantages such as the common law system and free flow of funds, to actively radiate and expand into overseas markets such as Southeast Asia, the Middle East, and South America, providing financial, information, and legal support for the optimization and layout of enterprises' supply chains and industrial chains, and actively hedging the impact of China-U.S. competition and the headwinds of globalization. He also suggested encouraging and guiding large financial institutions to make high-quality asset allocations globally that match their own risk-return preferences with greater intensity.

In addition, Zhang Yichen said that in the long run, maintaining the international free trade, investment, and financial cooperation pattern to the greatest extent is beneficial to China's economic development. Expanding high-level openness requires further improving the level of financial services for cross-border trade and investment and financing, promoting two-way investment and financing activities in the financial market, attracting global resource elements, and better utilizing both domestic and international markets and resources. To this end, he suggested that according to the current domestic and international situation, China should show more flexibility and resilience in the fields of economic cooperation, financial opening, trade balance, and two-way investment, while safeguarding the overall national interest.

"The 'Decision' proposes a series of reform measures, such as 'fully implementing the cancellation of foreign investment access restrictions in the manufacturing sector, promoting the orderly expansion of openness in the fields of telecommunications, the Internet, education, culture, and medical care,' 'ensuring national treatment for foreign-funded enterprises in terms of factor acquisition, qualification licensing, standard formulation, government procurement, etc.,' 'improving the convenience of life for foreign personnel entering the country for residence, medical treatment, payment, etc.,' which will help to attract and utilize foreign investment more vigorously and consolidate the confidence of foreign capital in China's development." Zhang Yichen said.