CHINA and the U.S. have their respective stances and requirements of each other in the volatile trade and economic sphere, their common expectation being to exert optimum control to limit unexpected changes. Within that process, mutual trust remains the core test of bilateral relations.
The U.S. expects China to further expand free trade, apply more market-oriented monetary and financial policies, and provide a transparent, fair and predictable environment for U.S. businesses. China, in turn, expects the U.S. to enlarge its investment market, expand cooperation on cutting-edge technology, and separate politics from economics. The foreign trade and economic strategies laid down in the 13th Five-Year Plan (the Plan) will have direct impact on China-U.S. trade and economic relations.
Expand Free Trade
Free trade will expand further to cover more fields, so making China and the U.S. more complementary.
The Plan's recommendations clearly state that efforts will be made to speed up the optimization and upgrade of China's foreign trade, and to elevate China from a large to a strong foreign trading country; to improve the overall arrangement of foreign trade and innovate the development model; to improve marketing and after-sales service networks; to enhance the competitiveness of traditional superior products and consolidate their share in the international market; to promote foreign trade through producing goods of higher quality and better price; to strengthen new export-oriented industries such as equipment manufacturing; and to develop service trade.
If foreign trade is indeed successfully elevated by means of high quality, low price, excellent imports and exports, U.S. consumers may continue to reap the benefits of inexpensive, quality made-in-China commodities. United States Department of Labor statistics show that the growing share of Chinese-made goods in the U.S. market has lowered the retail prices of commodities in the country -- those of home appliances having dropped by 9 percent every year, and of sports equipment by 3 percent. For example, as a result of growing Chinese exports of cookware and kitchen tools the price of a pan has fallen over the space of three years from its original price of US $49.9 to US $29.99. It is likely that development of service trade will bring even more convenience to U.S. consumers.
To remedy the traditionally unhealthy relationship wherein the U.S. is the "ultimate consumer" and China the "ultimate producer," the Plan calls for great efforts towards implementing proactive import policies and further opening domestic market up to the globe as a whole. On the one hand, China needs U.S. technology and brands; on the other, China must consume its domestic savings. Last year saw the first occasion on which China's service industry scale exceeded that of its manufacturing industry.
The Plan also has indirect impact on China-U.S. trade and economic relations. For example, favorable policies are needed to achieve smooth bilateral free trade and to streamline people-to-people exchanges and communications. The Plan hence proposes that China strives to achieve either mutually exempt or simplified visa procedures with more countries.
In November 2014, the U.S. government announced that Chinese visa applicants would be issued multiple-entry business and tourist visas for up to 10 years. Chinese students and exchange visitors, meanwhile, are eligible for multiple-entry visas valid for up to five years. According to White House statistics, 2013 saw 1.8 million visitors from China to the U.S., so boosting the latter's economy by US $21.1 billion, and creating around 109,000 jobs in the U.S. The White House projects that close to 7.3 million Chinese will travel to the U.S. in 2021, so contributing around US $85 billion a year to the economy and creating 440,000 jobs.
Optimize Business Environment
An optimized business environment, featuring legalization, internationalization, and facilitation, along with a mechanism conducive to win-win cooperation and compatible with international trade and investment rules, is anticipated. Certain U.S. government officials and journalists have commented that the U.S. has long expected China to reform its financial sector, in particular its foreign exchange and monetary policies. Perceived RMB manipulation and devaluation have hence been a focus of disputes.
A country like the U.S. that has an ongoing trade deficit needs large inflows of overseas capital to support its financial and monetary system. It is clearly in the interest of China, at a time of slowing economic growth and further diversifying its assets abroad, to support financial market liberalization and a stronger RMB.
The Plan emphasizes that China will in future expand two-way opening of its financial industry, realize RMB capital account convertibility, and make the RMB a convertible, widely used currency; transform its ways of managing and using foreign exchange reserves by shifting from positive to negative list management; and ease restrictions on overseas investment exchange settlements. China will moreover strive to maintain a fundamental international balance of payments, meanwhile enhancing two-way openness of the capital market, and gradually easing or even canceling restrictions on domestic and overseas investment quotas.
All those measures imply that in the coming five years, China will speed up the openness of capital market and promote market-oriented reform of its economic system. China hopes to win the support of international society for the RMB through its pragmatic actions. It has also intimated that, as a large and responsible country, it will proactively promote economic reforms and shoulder its due responsibility in the global economy.
The Chinese government has in the past helped multinational corporations deal with many social problems. Today, along with establishment of the market economy, a complete domestic "eco-system" has been formed whose stakeholders include consumers, suppliers, employees, government departments, and community residents. All participate in the supervision of corporate ethics and social responsibility. Such organizations, therefore, need to adopt standardized management and legalized operations. China will eradicate unlawful practices such as monopoly, trade secret theft, intellectual property infringement, fraud, production of fake, poor quality commodities, and bribery.
The Plan stipulates that China will fully implement the management system of pre-establishment national treatment plus negative list, treat domestic and foreign-funded companies equally and without prejudice and so strengthen fair competition, improve management of overseas investment, and improve policies and services to promote investment abroad. It will also expand in an orderly way the opening up of the services industry to broaden bank, insurance, securities, and senior care market access. China will moreover do its utmost to participate in high-level bilateral investment treaties and judicial-assistance agreements, and strive to mutually exempt or simplify visa procedures with more countries.