Reviving China’s economy through reform, opening-up: Views from Prof. Zheng Yongnian
China needs an open enterprise system, an open financial system, and an open science, education and talent system.
The arrival of 2023 brings about curiosities as to how the Chinese economy could recover, and take a further step on the "Chinese path to modernization", a concept introduced by the 20th Communist Party of China (CPC) National Congress
[See GRR's collection of the official documents of the Congress]
Today's piece, which is a translation of Professor 郑永年 Zheng Yongnian's article, analyses the internal and external issues the Chinese economy is facing and makes recommendations for how China might address these challenges by putting the focus on reform and opening-up.
Zheng Yongnian, the Presidential Chair Professor and the Founding Director of the Advanced Institute of Global and Contemporary China Studies (GCCS), the Chinese University of Hong Kong, Shenzhen (CUHK-SZ), regards development as the principal cure for most of the problems China has faced. That is why the country must not lose sight of the big picture by dwelling on fragmentary impediments and devising stopgap solutions to the present little problems. Problems will be sorted out in the process of development, Zheng points out, and that makes "development" the rightful focus of China's blueprints.
Here are some highlights:
Practically speaking, it is extremely difficult to restore the property sector as one of the pillars of the Chinese economy. There has been no precedent in world history for an economy to become highly-developed by means of a long-term reliance upon the property sector.
Domestically speaking, China has three impediments ahead. The first is the impact of COVID-19. China has lifted many of its COVID-19 restrictions and had in place less stringent travel policies. It is a right decision, but it will take longer for the aftereffect of the pandemic to disappear.
The second internal challenge concerns the private firms. Last year, China introduced sweeping reforms for the property, tech and private education industries, the three backbones of the private sector. The move has had some negative impacts on private enterprises, yet was, nevertheless, important and necessary. It was not intended as a crackdown on private businesses, as some people are apt to put it, but to consolidate and improve the institutional arrangements for their sustainable development.
The third internal challenge comes from populism and even ultra-leftism that have permeated public opinion, especially on social media. There has been much name-calling targeting private businesses, including “capitalists”, “capitalism”, and “private ownership”. Personal attacks on private entrepreneurs are also to be seen. Such extreme populism has a deteriorating effect on the Chinese business environment as a whole.
External challenges also come from three aspects. First, the gloomy China-US relations. The U.S. government, whether the president be Donald Trump or Joe Biden, has been intent on cutting China off cutting-edge technologies and even decoupling its tech industries from China. So far, the situation hasn’t improved. It keeps getting worse. [FM expresses strong dissatisfaction, protest against US' shooting down China's civilian airship]
The second external challenge is the ongoing Russia-Ukraine conflict. The conflict has a negative impact not just on Chinese businesses, but also on foreign enterprises in China. This is because the "Russia-China axis" rhetoric that Western media often alludes to has a profound influence on foreign investors' views on the business environment in China.
The third external challenge is even more severe, that is, the increasingly stronger competitors in our immediate surroundings. Some developing economies in Southeast and South Asia, such as Vietnam, Malaysia and India are developing very fast. Their rapid growth, to some extent, can be attributed to their own effective reforms. But another reason is the fact that the US and other Western countries are shaping their economies and offering aid, especially in the case of Vietnam and India.
Changes in internal and external factors mean what China has today is not enough for the shift from a moderately prosperous society to a developed economy. In other words, the methods that have been used to sustain the Chinese economy in the past decades can no longer work in the next stage.
In terms of the economy, China needs to build three open systems, through reform and opening-up: an open enterprise system, an open financial system, and an open science, education and talent system.
Practically speaking, if China couldn’t take a share of the global talent market, it would struggle to rival the US, in a case where talents in the US come from across the world, while talents in China are mostly overseas Chinese or nationals studying abroad.
Now that the US has seen China as a rival, China should really take the US seriously. The two countries should compete to get more open, not more closed. With the rise of populism and internal political split, the U.S. political system is not as open as it was before, making it harder for its political parties to launch reform. But the CPC has advantages in these two aspects.
China’s success over the past decades hinged on institutional reform and opening-up, which also holds the key to reviving the Chinese economy in the next stage. Reform and opening-up is the only way for China to achieve its 2035 and 2050 goals on "a Chinese path to modernization", before reform and opening-up ushers in its third centenary (2078). [China announced its reform and opening-up policy in 1978]
The piece was posted on Jan. 19 on the WeChat blog of Z.H.Island, a China-based high-end O2O social networking platform for entrepreneurs around the world. The article was originally published by Great Bay Area Review, a WeChat blog founded by the Institute for International Affairs of the Chinese University of Hong Kong (CUHK), Shenzhen, and the Center for China Studies of the CUHK.
Prof. Zheng is currently the Presidential Chair Professor and the Founding Director of the Advanced Institute of Global and Contemporary China Studies (GCCS), the Chinese University of Hong Kong, Shenzhen (CUHK-SZ).
He previously served as the former Director of the East Asian Institute, National University of Singapore (2008-2019), and the former Research Director and Professor of the China Policy Institute, University of Nottingham (2005-2008).
Prof. Zheng has long been an influential voice in the Chinese mainland. For example, he was invited to speak at a meeting with the top leadership in 2020 on China’s 14th Five Year Plan (2021-2025), as reported by the prime-time news program on China Central Television (CCTV) then.
If you missed the two last GRR newsletters on Prof. Zheng's interview:
Reviving China’s economy through reform and opening-up: Views from Prof. Zheng Yongnian
The 20th CPC National Congress introduced the concept of "Chinese path to modernization." Just as the economy constitutes the base of society [the forces and relations of production in Marxist theory that are predominant in economic development], the sustainable development of the economy is, by all means, the most essential element in the Chinese path to modernization. This new modernization concept, on the other hand, is as much a proactive driver of economic growth as the superstructure [the Marxist concept for culture, institutions, and political structures that have a powerful impact on the base] an influential force over the changes of the base.
Now that the "Chinese path to modernization" has been laid out, we may expect more specific explainers very soon to elucidate the concept, especially as to what it means regarding economic growth. At present, for all we know, the 20th CPC National Congress has created a two-stage plan, targeting 2035 and 2050. The second milestone is still a long way away, but the first is already round the corner.
The goal is, that by 2035, the GDP per capita in the Chinese mainland should at least reach the level of China's Taiwan, the lowest of the Four Asian Tigers, which stands between 28,000 and 35,000 U.S. dollars. As of today, China has no doubt achieved a phenomenal leap from less than 300 U.S. dollars in the early 1980s to almost 13,000 U.S. dollars (12,561 U.S. dollars by the end of 2021), but the road towards 28,000 U.S. dollars and even 35,000 U.S. dollars is no easier feat.
That leads to the question: how could such a goal be achieved? High-quality economic development or quality-oriented economic development is the only choice, as far as I am concerned. The problem is, modernization would be impossible without addressing directly the present economic adversities felt by us all and finding solutions to these challenges.
01 Two popular ideas
How we go about with the economic recovery is a very important question. Currently there are two main factions. One seems to be catching at straws by calling to revert to traditional means such as reviving the infrastructure or the real estate market.
Whether the traditional methods would work is a question of long-term economic development. They may work in the immediate term, but are far from enough to propel the economy forward to 2035 and beyond, to 2050. This is because infrastructure and other traditional ways can no longer offer as much room for economic development and growth as they did in the past. And as the real estate market becomes saturated, the current measures can only ease the situation, not solve the problems.
Practically speaking, it is extremely difficult to restore the property sector as one of the pillars of the Chinese economy. There has been no precedent in world history for an economy to become highly-developed by means of a long-term reliance upon the property sector.
The other faction is future-oriented but unrealistic, full of idle talk about some economic concepts. Many are used to envisaging a utopian future with fancy PowerPoint slides, without having generated one feasible and effective solution. Either idea would pose as a tangible threat to the future of the Chinese economy, should they ever be used to approach the current economic issues.
02 Internal and external challenges facing China’s economy
We should realize that today China’s economy is met with bitter challenges, both internally and externally. Domestically speaking, China has three impediments ahead. The first is the impact of COVID-19. China has lifted many of its COVID-19 restrictions and had in place less stringent travel policies. It is a right decision, but it will take longer for the aftereffect of the pandemic to disappear.
It is evident in the US and Europe that the psychological imprints shall endure long after the lifting of COVID restrictions. In the US, for example, many people who got used to working from home during the lockdown are now unwilling to work on site. There has been an ongoing "Great Resignation" where many are quitting their jobs.
The same is happening in China. Optimists believe that the trend will be short-lived, but that does not tie in with reality. The truth is, COVID-19 is never an equivalent of the common cold, in spite of all the variants. The emotional trauma brought about by the pandemic, whether individual or population-wide, requires a very long period of healing.
Red lanterns at a shopping mall ahead of the Chinese New Year after COVID restrictions had been lifted, Yangzhou, Jiangsu Province.
The second internal challenge concerns the private firms. Last year, China introduced sweeping reforms for the property, tech and private education industries, the three backbones of the private sector. The move has had some negative impacts on private enterprises, yet was, nevertheless, important and necessary. It was not intended as a crackdown on private businesses, as some people are apt to put it, but to consolidate and improve the institutional arrangements for their sustainable development. [Note: Institutional arrangements are the policies, systems, and processes that organizations use to legislate, plan and manage their activities efficiently and to effectively coordinate with others in order to fulfill their mandate.]
The negative impacts on private enterprises, though, are admittedly detrimental and widespread due to the hasty implementation simultaneously across the three sectors. In some regions, the government was even seen to resort to campaign-style enforcement. This means an uncertain time for private businesses in China. It is highly unrealistic, complained some business owners, that they were called right back to work after such a major blow which proved fatal to certain companies.
The third internal challenge comes from populism and even ultra-leftism that have permeated public opinion, especially on social media. There has been much name-calling targeting private businesses, including “capitalists”, “capitalism”, and “private ownership”. Personal attacks on private entrepreneurs are also to be seen.
Such extreme populism has a deteriorating effect on the Chinese business environment as a whole. It is noteworthy, though, that China is not alone in having populistic trends, but in many Western countries like the US, the impact of these ideas is more or less confined to the realm of public opinion and rarely borders on the business environment. Why? Because developed economies usually have well-established legal systems to regulate the market. Operating under a law-based framework, private businesses will not be directly affected by public opinion.
But in China, where legal systems are not fully developed, populism could have a direct impact on private businesses. Our survey of private firms in the Yangtze River Delta and Pearl River Delta regions found that worsening views of private firms had significantly exacerbated the business environment.
Despite the emphasis laid on private firms by China’s top officials, including the top leader, the public has yet to undergo a fundamental change in attitude towards them. At present, populism is still deeply-rooted, especially among the low-income groups that have taken up a considerable proportion of the Chinese population. The business environment would only turn for the worse if the populism surge continued.
Social media accounts behind the rise of populism are experts in manipulation and distortion. In the name of “socialism” and “patriotism”, they are capable of wavering, maneuvering, and even weaving public opnions to suit their commercial interests.
External challenges also come from three aspects. First, the gloomy China-US relations. The U.S. government, whether the president be Donald Trump or Joe Biden, has been intent on cutting China off cutting-edge technologies and even decoupling its tech industries from China. So far, the situation hasn’t improved. It keeps getting worse.
On Nov. 14, 2022, Chinese President Xi Jinping and US President Joe Biden met in Bali on the sidelines of the 17th Group of 20 Summit and talked for more than three hours. The meeting was significant in improving the bilateral relations. But we should be keenly aware that the U.S. will not change its key policies on China just because it wants to improve bilateral ties. Biden, on the one hand, said he hoped to set up “guardrails” in the relationship with China, but on the other hand has always stressed enhancing the ability to have intense competition with China.
We should be keenly aware that the U.S. will not change its key policies on China just because it wants to improve bilateral ties
The second external challenge is the ongoing Russia-Ukraine conflict. The conflict has a negative impact not just on Chinese businesses, but also on foreign enterprises in China. This is because the "Russia-China axis" rhetoric that Western media often alludes to has a profound influence on foreign investors' views on the business environment in China.
The third external challenge is even more severe, that is, the increasingly stronger competitors in our immediate surroundings. Some developing economies in Southeast and South Asia, such as Vietnam, Malaysia and India are developing very fast. Their rapid growth, to some extent, can be attributed to their own effective reforms. But another reason is the fact that the US and other Western countries are shaping their economies and offering aid, especially in the case of Vietnam and India.
The US has shifted focus in terms of its China policy from changing the Chinese systems to reshaping its vicinity. Among China’s neighboring countries, Vietnam is a key country for the US. As a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam has advanced reforms in line with CPTPP standards for years. It is fair to say that Vietnam is following the footsteps of Japan and Singapore on the road to another westernised Asian country.
The pressure on China brought about by Vietnam's reshaping lies not just in the economic realm, but also in the geopolitical and more importantly, in the political ones. The so-called opening-up and reform underway in Vietnam will pose competition and influence to all aspects of China.
03 How do we develop a new line of thought?
Having seen what we have to face, what is there that we can do?
Obviously, neither fragmented thinking nor traditional methods can solve the current internal and external challenges for China. The scope is so big and the problems so many that books may need to be compiled to tell them all. Western studies on China are speaking in a similar tone - most of them “excessively criticize” China, many constantly anticipate the collapse of China, and very few that “excessively flatter” China because they do not understand the country. Many of the problems mentioned in those studies actually exist, rather than being made up.
Since the reform and opening-up, we have indeed been coping with endless problems along the way. But just look at what we have achieved. We weren’t always deeply troubled, as we are today, by the search for solutions to our problems. In fact, quite a numbers of problems simply disappeared as time went by. So our problems, as I often put it, are “problems with development” . That is to say, development itself was the cure to most of the problems.
The same argument can be used for our current conundrum. Grappling in the ocean of problems for an immediate remedy will take us nowhere near the solution. Taking a fragmented line of thought will only make us slaves to whatever problems we face and lose sight of the bigger picture.
So we must put the focus back on development. The importance of development has been highlighted by top leaders, from “Development is the absolute principle” in Deng Xiaoping's time to “Development is the primary task” nowadays.
An intelligent factory in east China’s Zhejiang Province. Zhejiang is vigorously promoting the application of artificial intelligence and digital supply chain technologies in its factories to make them automatic, green and low-carbon. (Photo/Xinhua)
I was amazed how the Zhejiang province carried out reforms when I visited the place a while ago. Zhejiang is now the demonstration area for Chinese modernization and common prosperity. Local officials have been thinking independently and came up with this marvelous idea that it is the Chinese system that has supported us out of poverty and into a moderately prosperous society all the way since the 1980s.
However, changes in internal and external factors mean what we have today is not enough for the shift from a moderately prosperous society to a developed economy. In other words, the methods that have been used to sustain the Chinese economy in the past decades can no longer work in the next stage.
That’s why they’re now considering real institutional breakthroughs to assist the Chinese economy on its next journey. Though still at a very rudimentary level, their views are fairly thought-provoking and typical of Marxist thinking on the base-superstructure relationship.
Over these years, especially since China joined the World Trade Organization (WTO), China’s economy has been in a natural process of development without experiencing drastic reforms. We did once carry out drastic and even detrimental reforms to economic systems before the entry, but those reforms died down after that, and the economy simply took its own way. The pre-WTO reforms, I think, served as an institutional base for the following economic development.
Do we need to return to bold institutional reforms today? Over the years, we are still pushing forward reform and opening-up, but with increasing emphasis on the latter. Reform, especially institutional reform, has received little theoretical and practical attention. In this context, Zhejiang is without a doubt most forward-looking and future-oriented in its thinking about reforms to the economic system.
What else should we think about on the basis of the Zhejiang idea? How do we safeguard the economy in the next stage? In terms of the economy, at least, we need to build three open systems, through reform and opening-up.
04 Build three open systems
Globally, history shows that opening-up is the key to sustainable economic development. In the next stage, we should build three open economic systems through reform and opening-up.
1. Open enterprise system
In the US, the bigger an enterprise, the stronger it is. But in China, big enterprises are not so strong. Why? The main reason is that Chinese firms are not open enough. The U.S. economic system is open. So are its firms, where large firms are open to each other and to small and medium-sized firms. Openness is of the utmost importance.
For example, in the U.S., internet companies, new energy companies, and new energy vehicle (NEV) companies are open to each other. This mutual openness is exactly why they can create synergy, which allows them to set rules and standards for their counterparts as they grow bigger and stronger.
But in China, enterprises are not mutually open, not among state-owned enterprises or among private enterprises - let alone between the two parties. The consequence of seclusion is that they are weak, even though the total number is phenomenal.
Without mutual opening, Chinese firms don’t have standards and rules to create a unified domestic market, and it’s even harder for them to go global.
Therefore, if Chinese enterprises could advance institutional reform that encourages mutual opening, not only between state-owned enterprises and private enterprises, but also between large private enterprises and small and medium-sized enterprises, there would be healthy competition among the enterprises that eventually brings about unified rules, standards and regulations. In this way, enterprises would grow bigger and stronger, which would bode well for domestic economic flows and the creation of a unified domestic market. More importantly, the openness would help facilitate international economic flows and create an international market.
High-quality economy is built on rules and standards, which undoubtedly are the weak link for China. The largest internet companies in the world, for instance, generally base themselves in China and the US. But it’s the US that sets rules and standards for global internet companies because their internet companies are open to each other. The European Union (EU) also sets standards for internet companies by virtue of the strong EU market although none of them are globally strong.
In contrast, China has a huge number of internet companies, but they only have domestic regulatory rules. Why can’t they go global? Some non-institutional factors are at play. But the main reason is that Chinese internet enterprises are not mutually open. Viciously competing with each other, they are not able to join forces in any sense.
The same is true for the NEV sector, one of the few technology sectors where China can hope to compete with the US. [Check a previous post by GRR to know more about the key issues of China's NEV sector: Why is it more urgent for China to have a reliable operating system than chips in the automotive industry?] More than half of China’s NEV manufacturers are based in the Pearl River Delta region, and among them, more than half of the entrepreneurs graduated from the South China University of Technology. But why can’t they work together?
American firms are open to each other, but it’s not that they choose to do so. Essentially, American firms are no different from Chinese ones, as both incline to compete viciously. But the US enacted antitrust laws requiring its enterprises to be open to each other. Such mutual openness has proven very important. No large enterprise in the US can manufacture everything by themselves. Instead, they compete and cooperate with each other, thus generating strong momentum for their growth.
But Chinese firms, both state-owned and private, operate and develop mainly by their market share and monopoly status. This means that only through major institutional reforms can enterprises secure high-quality development.
More importantly, an open enterprise system can take the place of the public-private partnership (PPP) model. We should, of course, acknowledge the contribution made by the PPP projects of state-own enterprises. However, problems that ensued them call for immediate reflection. Our survey found that under the PPP model, state-owned capital is flowing into high-return projects, squeezing the profit margins for private enterprises.
Furthermore, the PPP model has begun to result in an outflow of state-owned assets, which is even more serious than the privatization of state-owned enterprises in the 1990s. Replacing the PPP model with mutual opening between enterprises may be a feasible approach, or else Chinese enterprises wouldn’t grow bigger, let alone grow stronger.
An intelligent production base of the Great Wall Motors (GWM) in Yongchuan District of Chongqing, southwest China (Photo/Xinhua)
2. Open financial system
Both basic scientific research for universities and R&D for enterprises require support from the financial system. But China’s financial system is as far from US one as it gets. Nevertheless, we could take advantage of the status of Hong Kong as an international financial hub. The future of Hong Kong’s financial development lies in the Chinese mainland, which also needs Hong Kong to go global.
Recently, we have been calling for building dual financial centers in China. The first financial center, with Shanghai at its core, serves the real economy of China and its financial stability. The second, the Greater Bay Area financial center with Hong Kong at its core, is expected to become a rival to Wall Street.
Build dual financial centers in China: a financial center, with Shanghai at its core, that serves the real economy of China and its financial stability; Greater Bay Area financial center with Hong Kong at its core.
If a country wants to become a real economic powerhouse in the world, it must have a powerful financial center. That’s what happened to the United Kingdom (UK) in the 19th century and the US in the 20th century. Germany and Japan used to try to become economic powerhouses too, but their attempt ended with suppression of the US. With their security systems integral to that of the US, the two countries will have no hope of success as long as the US says no.
Now that China has been regarded by the US as the only country that has the ability and the will to compete with it globally, and that the US has been suppressing China for the exact reason, we must take on the competition. We can compete with Wall Street by building the Greater Bay Area financial center. Without such a financial center, China’s financial economy would struggle to grow. And without support from the financial economy, the real economy and economy in other areas would not enjoy effective development.
We oppose the financialization of the real economy or virtualization of finance, but that does not mean we don’t need the financial economy. Quite the contrary, developing the financial economy has become more important given the current situation. We need an open financial system to support an open economic system.
3. Open science, education and talent system
The Report to the 20th CPC National Congress emphasized the importance of science and education at great length, which, as I see it, is the root of the problem. China’s high-quality development ultimately relies on science and education, scientific innovation, and technological advances. Although the middle-income trap is no longer a problem in developed areas such as the Yangtze River Delta and Pearl River Delta regions, it still needs solving nationwide, judging from the economic development levels across the country.
The crux of the middle-income trap is the middle-technology trap. If we want to escape the middle-income trap and turn China into a developed economy, we must first overcome the middle-technology trap.
How do we overcome the middle-technology trap? A look at the development history of world economy shows that science, education, and especially talent system are the most crucial elements. But we are facing huge bottlenecks in attracting talent. And the biggest competitor in that regard is the US.
We have got to admit that the US is a platform that gathers talent from across the world. After all, the US is, through and through, a country of immigrants. After World War I and World War II, the US attracted a huge number of scientists from Europe. Albert Einstein, for example, emigrated to the US after having first moved to the UK from Germany. Basic scientific studies in the US were mostly brought in by European scientists in the post-war period.
The US started working on basic research after Word War II, with the publication of Science: the Endless Frontier, a report by Vannevar Bush, as a starting point. At the same time, the country also paid attention to commercialization of technologies, creating a scientific research system that integrates industries, universities, and research institutes, which led to the strong country it is today.
During the Cold War, the US used talent from across the world, including those from the Soviet Union and Eastern Europe, to compete with the Soviet Union. Finally, the war ended with the collapse of its opponent. Today we’re facing a similar reality, as the US is using talent from across the world, including Chinese immigrants to the US, to compete with China.
After reform and opening-up, China exported millions of skilled people to the US. Many of them have returned to China, of course, but a lot of scholars and scientists are still staying in the US for various reasons and making contribution to the U.S. development. Practically speaking, if China couldn’t take a share of the global talent market, it would struggle to rival the US, in a case where talents in the US come from across the world, while talents in China are mostly overseas Chinese or nationals studying abroad.
If it is difficult to attract European and U.S. scientists to China, how about bringing in scientists and technical professionals from India or Eastern European countries such as Russia and Ukraine? The San Francisco, New York, Tokyo, and Guangdong-Hong Kong-Macao Bay areas are called the four largest bay areas in the world. The proportion of foreigners stands at 40 percent in the first two areas, and is also very high in the Tokyo Bay area of Japan, which adopts the most conservative immigration policy among Asian countries. But in the Guangdong-Hong Kong-Macao Bay area, the figure is negligible.
Shenzhen calls itself China’s Silicon Valley. But in the Silicon Valley of the US, foreigners account for 60 percent of the population. Our research found that about two-thirds of the unicorn companies there were created by the first or second-generation immigrants instead of generation-old Americans. The point is not that China must have such a high proportion of foreigners to become a powerhouse in scientific innovation, but the figures could at least reveal its weakness.
In 2018, China established the National Immigration Administration (NIA). But so far no policy has been unveiled about the immigration of skilled labor, the most important indicator. [NIA says on Jan. 28, 2023 that it will implement more active, open, and effective policies and push forward institutional opening up in immigration management.] In this respect, we really should learn from Singapore, another Asian country which has no resources but establishes itself as a global hub for foreign talent.
05 Strong enterprises, powerful economy
Enterprises, from state-owned to private enterprises, play the principal role in economic development. But to grow bigger and stronger, enterprises, which are just a link in the economy, need a sound environment. Globally, it is empirically established that a country must meet three conditions, i.e., the aforesaid three open systems, to become a real economic powerhouse.
First, universities and research institutes that are able to engage in basic scientific research; second, enterprises or institutes that can transform basic science into applicable technologies; third, a financial system that can support basic scientific research and technology commercialization.
In the US, the financial system supports enterprises primarily in the form of venture investments. As mentioned above, China’s financial system doesn’t allow that form of investments. In cities like Shenzhen and Guangzhou, municipal state-owned assets supervision and administration commissions also engage in venture investments, which, however, are not real venture investments. In China, the investment cycle depends on the term of the commission director, lasting three to five years at most, but real venture investments have a term of eight to fifteen years.
Can we make institutional breakthroughs in these three aspects? The answer is yes. China has the institutional foundation, especially in the Greater Bay Area. In terms of basic scientific research, all the universities in the Bay area combined can basically be on a par with those in the New York Bay area, in both scale and capacity. With regards to the financial center, Hong Kong, as part of the Greater Bay Area, can play a part. Besides, the Greater Bay Area is also home to enterprises with the world’s strongest capability in technology commercialization, which has made the area a global manufacturing hub in the past two to three decades.
At present, we’re truly facing some economic difficulties. We need a new way to look at the economy. We can’t just take measures on a small scale - if we do that, we will only be going backwards, not moving ahead. The small-scale approach might help solve some problems gradually, but would create more trouble in the end. We are in urgent need of new reform, new opening-up, and new innovation.
Now that the US has seen China as a rival, China should really take the US seriously. The two countries should compete to get more open, not more closed. With the rise of populism and internal political split, the U.S. political system is not as open as it was before, making it harder for its political parties to launch reform. But the CPC has advantages in these two aspects.
For a start, the CPC, the governing party of China, has always been stressing opening-up and globalization. From the perspective of institutional advantages, China has what it needs to carry out institutional reform. Without being tied to any vested interest, the CPC will go for it as long as the direction is set. All in all, we need to regain the spirit of reform and opening-up since Deng's time. Only in that way can we achieve the 2035 and 2050 goals on "a Chinese path to modernization", before reform and opening-up ushers in its third centenary (2078).
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