By Harvey Dzodin，a senior research fellow at the Center for China and Globalization(CCG).
Just as the year 2018 is fast winding down, significant policy decisions proposing economic reforms affecting the economy in China, and therefore the global economy, have considerably been ramped up. While most consequences won’t be felt for some time, there is a strong sense of positive movement on the Chinese side as we head into 2019, the 70th anniversary year of New China, and into 2020 when China’s goal of building a moderately prosperous society in all respects is expected to be achieved. Taken as a whole, these decisions should not only stabilize and energize China’s economy but also further open China’s vast market to foreign and multinational companies.
The annual Central Economic Work Conference (CEWC) that included top central government leaders, and other leaders and experts met in Beijing from December 19 to 21 to set economic policy for the coming year. The CEWC report made specific recommendations for both stabilizing the Chinese economy and further developing its domestic market as the top priorities. Chinese Premier Li Keqiang will announce detailed recommendations and implementation strategies at the two sessions in March.
A man walks through an Apple Store in Beijing, China, November 30, 2018. /VCG Photo
A few days after the CEWC adjourned, the National Development and Reform Commission (NDRC), China’s economic planning agency, in cooperation with the Ministry of Commerce, released a draft Foreign Investment Law (FIL) that has the potential to significantly open up much of China’s domestic markets to foreign investment and at the same time promises intellectual property protection and bans forced technology transfers from foreign companies to domestic Chinese entities.
The CEWC recommendations were made in light of the current ongoing trade dispute between China and the U.S. The draft FIL, although part of a longer-term process begun before U.S. President Donald Trump took office, are also made in light of the trade dispute.
Even though it’s the Christmas-New Year holiday season in Washington, D.C., and parts of the U.S. federal government are currently shut down and will remain so for some time due to a domestic political matter, active and robust bilateral negotiations are being held with progress being reported.
Several steps could influence a more positive outcome of these negotiations in the bilateral trade dispute before the truce expires on March 2, 2019.
Draft laws deliberated upon by the National People’s Congress (NPC) often take three or more readings, so normally the proposed FIL might not be passed until 2020 at the earliest. Some legislators, however, are calling for speedy consideration no later than the next NPC plenary session in March. This is possible although enactment is complicated by the unusually long comment period for this legislation runs until February 24. Of course, it will take months or years to see if the law’s promises are fulfilled, but this legislation is a potential giant step in the right direction.
Tiananmen Square, Beijing, China /VCG Photo
Intellectual property disputes are complex and often not easy to resolve. The U.S. side will be looking to see if enforcement provisions can be expeditious, fairly and expertly handled by the Chinese judicial system. In a lucky coincidence effective this Tuesday, a new branch of the Chinese Supreme People’s Court (SPC) dedicated to resolving IP disputes will open under the leadership of a respected SPC IP judge, Luo Dongchuan and is best suited to professionally resolve these complicated disputes.
I believe these steps represent a good-faith effort by China to address U.S. concerns. It will be up to the U.S. side to also show good faith, something that often has been in short supply for the past 23 months.