The government work report delivered by Chinese Premier Li Keqiang on March 5 demonstrates that China is determined to promote high-standard opening up. According to the report, China will open more sectors and improve the layout of opening up, continue to promote opening up based on flows of goods and factors of production, and give greater emphasis to opening up based on rules and related institutions, driving an all-round deepening of reforms through high-standard opening up. China will also adopt new policies and measures to promote development and opening up in the west of the country.
In the early days of China’s reform and opening up, the country focused more on opening its eastern and southeastern coastal areas to the Pacific Ocean. In that period, western China, mainly consisting of bordering and inland provincial-level regions, fell short of transportation convenience and access to information, lacked supporting national policies, and thus became less attractive to foreign investment compared with eastern China.
Without effective approaches to cut cost, western China lost several significant opportunities to become a destination for outsourced processing trade and experienced hardship in realizing industrial agglomeration, which caused it to lag behind in industrial transformation and upgrade. The growth of foreign trade in western China was limited because its industries were not complementary enough with those in neighboring countries in Central Asia, South Asia and Southeast Asia. Plus, the local governments, business enterprises or relevant service agencies in western China did not prioritize opening up because they were insufficiently cultivated.
Over the past decades, western China has been “ignoring what is near and seeking what is far away.” It focused more on opening to the east while it neglected its geographical advantage of neighboring regions rich in resources including Central Asia, South Asia and Southeast Asia. In fact, transport routes through the Indian Ocean can connect it with West Asia, the Middle East and Africa. Looking westward offers a better solution to further opening up in western China.
Currently, western China is beginning to focus its efforts both eastward and westward. Since the Belt and Road Initiative was announced in 2013, China has been improving its relations with neighboring countries and regions and promoting economic and trade cooperation. The construction of the ASEAN-China Free Trade Area has moved to a new stage. The Shanghai Cooperation Organization has also established an economic cooperation mechanism. And the building of free trade areas for China and South Asian countries is also making progress. Thus, the 12 provincial-level regions in western China should leverage their own economic advantages and geographical conditions and each take a differentiated route for opening up.
Western China, rich in resources and labor, has tremendous potential for development, but it needs more supporting national policies as well as financial and technological support. Since the launch of the country’s reform and opening up in the late 1970s, western China has been supporting the rapid development of eastern China with its resources and labor, featuring projects such as the west-east gas and electricity transmission, the western route of the South-to-North Water Diversion Project, and ecological restoration in the upper reaches of the Yangtze River. Now it is time for the east to return the favor to the west.
Further opening up also requires a shift from “passive” to “active” participation. Compared with coastal regions in the east, local governments in western China appear to act more slowly in providing services and local enterprises seem to be more hesitant in expanding business. Local governments ought to develop closer relationships with business enterprises, helping them better understand overseas markets and inquiring into their concerns. On the other side, entrepreneurs should actively express their willingness and demand for international business and investment cooperation to local governments.
The author is a professor at the Institute of South Asian Studies of Sichuan University.