Yang Guoliang
Capital from developed countries continued to “capture new markets,” seeking resources and achieving optimal allocation of production factors on a global scale. This included the continuous transfer of labor-intensive industries to developing countries in order to minimize production costs and maximize high global profits. However, this resulted in the “hollowing out” of industry within developed countries. As manufacturing moved abroad, more and more skilled workers shifted to low-skill, low-income service industries, leading to the decline of the middle class and polarization between the rich and the poor. At the same time, some developing countries absorbed more foreign investment, vigorously developed general manufacturing industries by leveraging their low-cost advantages such as cheap labor, and thus promoted the rapid development of their national economies. As a result a few emerging countries also rose rapidly. Within developed countries, due to the relaxation of capital controls, capital has increasingly avoided the real economy sector with its relatively low profit margins and operating risks, and turned to the financial speculation sector, leading to the “financialization” of the economies of these countries. Financialization is a way for capital to “exploit old markets more thoroughly.”
Yang Guoliang
Jan 15, 2025
On China’s High-level Opening Up to the Outside in the Context of Major Changes Unseen in a Century
Yang Guoliang, a professor at the University of International Business and Economics (UIBE) in Beijing, frames U.S. pursuit of strategic competition with China as a reemergence of Western imperialism. He suggests the relative shift in economic power away from the West in past decades, toward the rest of the world, has led Washington to characterize globalization as “out-of-control” and introduce its own set of restrictions on international commercial engagement. While reiterating the need for continued reform and opening up, he underscores the need for China to set its own limits on commercial openness — particularly in the realm of inbound foreign investment from the West — in order to safeguard its sovereignty, security and development interests.
Key takeaways
Yang claims the heyday of what he calls the “free competition period” was the years immediately following the Cold War, when capital from developed countries continued to capture new markets such as China as part of profit maximization. Such reallocation of production factors globally, he observes, led to the decline of capitalist countries themselves, as evidenced by deindustrialization and widening income gaps.
Yang adds that as China and other developing economies continue to rise, the U.S. and other Western countries have come to attribute the relative shift in economic power to “out-of-control” globalization. To Yang, such views morphed from a budding “anti-globalization” movement to a wave of deglobalization over time, culminating in Trump’s election in 2016. Yang further argues that U.S. allies and partners now sense Washington is mainly interested in protecting its own economic interests and global hegemony, which could present opportunities for Beijing to rally support not only from the Global South, but also from European countries.
Yang stresses the importance of “protecting” China from Western capital, particularly in key industries and sensitive fields. While recognizing China has increasingly regulating foreign investment in recent decades, he still finds current standards too abstract and limited. He warns Beijing must prevent large-scale cross-border capital flows and data leaks to avoid major financial losses, and he recommends further improving China’s laws and regulations on foreign high-tech investment as well as its risk prevention and control capabilities.
Opening up to the outside is China’s basic national policy. For a long time, China has enhanced its ability to be self-reliant by opening up to the outside world. During this time, the national economy has achieved substantial development, overall national strength has greatly increased, and the lives of the people have greatly improved. Early research often failed to distinguish between imperialism and capitalism, while later research mistakenly believed that imperialism had completely disappeared and called imperialism that reappeared in a new guise by the name “neo-imperialism.” This article distinguishes between capitalism and imperialism, and argues that the so-called “neo-imperialism” is just the re-exposure of the imperialism that had been “hidden.” It then analyzes the changes in the means of imperialist control and, based on these changes, divides the external environment facing China’s opening up into two periods, namely the period of free competition and the period of strategic competition among major powers. We are currently in the process of transitioning from the former period to the latter period, and this transition constitutes part of a larger change. There must be limits to implementing high-level opening up in the context of this larger change. If these limits are ignored or not properly grasped, and the timing, sequence, and conditions for introducing certain policies are inappropriate, this may harm national sovereignty, security, and development interests.
I. Literature review
During the period of primitive accumulation in the development of capitalism, some countries launched wars of aggression against other countries, established colonies and dependencies, plundered resources and wealth from them through armed conquest and unfair trade, and laid the foundation for their industrial revolutions. The Industrial Revolution provided advanced productive forces for the development of capitalism and contributed to the formation of the capitalist world market. In the unfinished sequel to Das Kapital, Marx revealed the capitalist state and its role in that period. The third part of the “Five-Part Plan” discussed the question of the “state.” Later, the discussion of “colonies” originally included in this part was moved to the fourth part “The State’s External Relations” (that is, “International Relations of Production”). The fourth volume proposed in the “Six-Volume Plan” was “The State,” followed by “Foreign Trade” and “The World Market”. This shows that, at that time, states played an important role in developing foreign trade and opening up the world market, and establishing colonies had become the manner in which some countries acted towards the external world. Later, “a very small number of ‘advanced countries’” launched aggressive wars with greater frequency, monopolized colonies, and divided up the world market, and imperialism became widespread.
In the period from the death of Marx and Engels to the 1930s, Lenin, Luxemburg, Hilferding, Bukharin, and others analyzed the new changes in capitalism at that time and formed the theory of imperialism (widely referred to as the “classical theory of imperialism”). Lenin held that imperialism was the highest stage of capitalism. During this stage, monopoly capital adopted a policy of external expansion both economically and politically. Economically, this expansion was mainly manifested in the capital export of international monopoly alliances, and politically, it was mainly manifested in the monopoly over colonies and the carving up of the globe by a few imperialist countries. This understanding confuses imperialism with capitalism. In fact, economic expansion is mainly a capitalist behavior, while political expansion is mainly imperialist behavior. Imperialism is an alienated form of capitalism. We can only call a situation “imperialism” when “a very small number of ‘advanced countries’” use various means to control and plunder other countries. Historically, imperialism is mainly characterized by the use of aggressive wars to control other countries and plunder their resources and wealth.
After the Second World War, the establishment of a new international order and the collapse of the old colonial system put an end to the outdated imperialist practices of establishing colonies and dividing up the world territorially, at least in its form at the time. At the same time, capital exports from capitalist countries continued, while other functional forms of capital also expanded rapidly. Among them, international direct investment in the form of productive capital became increasingly larger in scale and greater in proportion, and its position in the world economy became increasingly important. Free competition did not reach its “peak and highest stage” of development in the 1860s and 1870s as Lenin said. On the contrary, the “monopoly advantage” enjoyed by monopolies made free competition more advantageous to developed capitalist countries and their multinational corporations. Therefore, under the instigation of the United States, the United States and Western countries vigorously advocated liberalism internationally to pave the way for the external expansion of their capital. During this period, imperialism hid behind the developed capitalist countries and their advanced enterprises, relying on their dominant position in free competition to control and plunder other countries. In this, imperialism was so successful that people mistakenly believed that it had completely disappeared.
Marx and Engels demonstrated very early on the inherent instability of capitalism and the possibility of crises. Capital overcomes these crises “on the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones.” The subsequent development of capitalism confirmed these judgments of Marx and Engels. It is only due to the development of economic globalization that “seizing new markets” and “more thoroughly exploiting old markets” have become the main means for capital to overcome crises. Luxemburg carried on the tradition of Marx and Engels who studied capitalism as a whole with capital at the center. She argued that the antagonistic nature of capitalist production determined it was always insufficient to meet “social needs,” and that there must be a non-capitalist social environment outside the capitalist market to absorb capitalist products and provide means of production and labor for capitalist production. Economic globalization has opened up a vast space for capital expansion, but the continuous external expansion of capital will inevitably “use up” this space. By then, the “final crisis” of capitalism will have arrived. As we can see, “the true limit of capitalist production is capital itself”.
II. Changes in the environment of opening up in the context of major global changes
After the Second World War, an international environment generally favorable to the external expansion of capital emerged. The United States developed into a superpower, and the economies of other developed countries also recovered quickly. Because developed capitalist countries and their multinational corporations occupied an advantageous position in competition, they strongly advocated free competition internationally and launched a struggle for “freedom for capital.” At the beginning, the liberalization of trade in goods was mainly promoted through the General Agreement on Tariffs and Trade (GATT) negotiations, which promoted the reduction of tariffs and non-tariff barriers. In the late 1980s and early 1990s, liberalism extended from the field of the trade in goods to areas such as investment, trade in services, government procurement, and intellectual property rights, and an international economic and trade system with the World Trade Organization as its core entity and trade and investment liberalization as its characteristics was established. After the end of the Cold War, the United States and major Western countries further promoted neoliberalism, forming the “Washington Consensus,” which was widely disseminated and implemented internationally. This period, characterized by free competition, can be called the “free competition period.” The “free competition period” can be regarded as a “romantic period” of traditional economic globalization, which attempted to make people believe that “free competition” would naturally benefit every country, every region, and every person.
Ironically, although this round of economic globalization was led by developed capitalist countries, they themselves inevitably declined in the process. Capital from developed countries continued to “capture new markets,” seeking resources and achieving optimal allocation of production factors on a global scale. This included the continuous transfer of labor-intensive industries to developing countries in order to minimize production costs and maximize high global profits. However, this resulted in the “hollowing out” of industry within developed countries. As manufacturing moved abroad, more and more skilled workers shifted to low-skill, low-income service industries, leading to the decline of the middle class and polarization between the rich and the poor. At the same time, some developing countries absorbed more foreign investment, vigorously developed general manufacturing industries by leveraging their low-cost advantages such as cheap labor, and thus promoted the rapid development of their national economies. As a result a few emerging countries also rose rapidly. Within developed countries, due to the relaxation of capital controls, capital has increasingly avoided the real economy sector with its relatively low profit margins and operating risks, and turned to the financial speculation sector, leading to the “financialization” of the economies of these countries. Financialization is a way for capital to “exploit old markets more thoroughly.” It has repeatedly been taken to the extreme and resulted in collapse, reflecting the powerful driving force of capital’s continuous expansion within capitalist countries as well as its insurmountable limitations.
The establishment of the global value chain and the global production system shows that, at least in terms of geographical space, the “new markets” that capitalist countries can “capture” have become increasingly limited, and capitalism has almost used up the space available for external expansion. Not only that, with the rise of some emerging countries, as exemplified by China, some markets that have been “captured” may shrink in the process of fierce international competition. For example, the Belt and Road Initiative proposed by China has become a global public product broadly welcomed by the international community, and more and more countries are joining the initiative. In response to the Belt and Road Initiative, major Western countries such as the United States have continued to propose alternatives. “Competing with China for leadership in a field where they are weak does show that the competition between the East and the West is entering a new stage.” The reduction in the global space for capital expansion and capital’s shift to financial speculation at home indicate that capitalism itself has fewer and fewer means to overcome crises and will inevitably fall into decline. The international financial crisis that broke out in 2008 marked a fundamental change in the international division of labor and market competition situation determined by comparative costs and resource endowments. The world entered into a period of major change unseen in a century (hereinafter referred to as “major changes”).
Since the outbreak of the international financial crisis, the United States and other developed countries have attempted to promote new high-standard trade and investment rules that represent the interests of developed countries. To accomplish this, they used negotiations on trade and investment agreements such as the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), and the Trade in Services Agreement (TiSA). If we take the TPP as an example, we can see that it mainly focuses on two main lines: The first main line is to require further deregulation in the fields such as trade in goods, trade in services, investment, and finance; the second main line is to require the strengthening of effective supervision to ensure the maintenance of public interests, national security, financial security, environmental protection, labor protection, and fair competition. One of the notable features of the TTP is its extensive attention to “behind the border rules” (i.e., the internal laws and regulations of trading partners) and the high standards it requires in this regard. These agreements are one of the strategic tools used by the United States and major Western countries. Their purpose is to promote the application of their own new trade and investment rules on a global scale in order to maintain their vested interests and consolidate their dominant position as well as to suppress emerging countries, weaken their competitive advantages, and prevent their rapid rise.
In the 2016 U.S. election, Trump won the presidential election by turning to populism. He believed that the agenda initiated by the Obama administration to establish new international economic and trade rules was too slow and cumbersome and cannot stop the rapid rise of emerging powers. As a result, Trump launched the “Trump Doctrine” of solving problems in a destructive “quick and hasty” way, adhered to the “America First” approach, and implemented protectionist and isolationist policies. In January 2017, Trump signed an executive order and announced the United States’ withdrawal from the TPP. The TTIP was also shelved due to Trump’s signing of the “Buy American and Hire American” executive order and protests from European citizens. Although TiSA negotiations are still ongoing, they have made relatively little progress. After the Biden administration came to power, it carried on the foreign policy of the Trump administration, further developing “decoupling and breaking ties” into support for “small yards and high fences” and attempting to suppress emerging powers by ganging up on them. In short, since 2017, the old dregs of populism, unilateralism, and protectionism have risen again, and traditional economic globalization has encountered considerable resistance. Therefore, some in the Western media have lamented: “The death march of globalization began in 2016.”
From the Obama administration’s “new rules for international trade and economy,” to the Trump administration’s “decoupling and breaking ties,” to the Biden administration’s “small yard and high fences,” the U.S. government has gradually abandoned the liberal policies it has long pursued and turned to a greater reliance on economic strength and hegemony. It is using “new” means such as economic sanctions to control other countries in order to plunder their resources and wealth. Imperialism has reappeared in a new way. Some scholars call this “neo-imperialism.” In fact, it is just the re-exposure of imperialism that hid itself during the period of free competition. The only thing “new” about it is the fact that it increasingly uses “new” means such as economic sanctions to achieve its aims of control and plunder. In order to maintain their hegemonic status, the United States and Western countries have used various means to suppress and contain major competitors such as China. Since most other Western countries are relatively weak, they can only act as vassals of the United States and become its “client states.” Therefore, this struggle is actually a struggle between the imperialist powers of the United States and its vassal states and the emerging countries, such as China, that they are attempting to control and plunder. “Strategic competition among major powers” has clearly returned. In order to highlight the importance of high-level opening up to the outside in the context of major changes, we will tentatively call this period the “period of strategic competition among major powers.”
III. The inevitability of high-level opening up in the context of major changes
At present, the world is undergoing major changes unseen in a century, the international landscape is evolving at an accelerated pace. The world has entered a new period of turbulence and change, and the international economic and trade environment is full of uncertainties. Today, China is increasingly moving to the center of the world stage and gradually becoming an important participant in global economic governance. Some of its emerging industries are on par with those of developed countries or are even global leaders. This requires China to take its higher level of development as a new starting point and implement high-level opening up: Internally, we must persist in implementing opening up on a larger scale, in a wider range of fields, and at a deeper level; externally, we must advance bilateral and multilateral cooperation, promote high-quality joint construction of the Belt and Road, and actively participate in the reform of the global economic governance system.
Implementing high-level opening up is necessary to adapt to the new generation of scientific and technological (S&T) revolutions and industrial transformations. Today, the world is facing a new generation of S&T revolutions and industrial transformations. A new technological revolution represented by big data, the Internet of Things, artificial intelligence (AI), space technology, biotechnology, and quantum technology is underway all around us, which has promoted the tremendous development of new models, new industries, and new industry formats. We must seize the new opportunities presented by the global industrial restructuring and re-positioning, build more innovative, higher added-value, and more resilient production chains and supply chains, and improve the quality and level of opening up to the outside. We must strengthen the connection and interaction between domestic and foreign production chains and strive to extend to foreign medium and high-end production chains on the basis of domestic production chains. We must encourage domestic enterprises to participate deeply in the international division of labor and international cooperation and cultivate advanced manufacturing clusters with global competitiveness. We must optimize the structure of foreign investment, guide foreign investment to high-tech, high-standard, green, and low-carbon fields, and allow foreign investment to play its role in promoting industrial upgrades. We must accelerate the green and digital transformation of foreign investment and foreign trade. We must strengthen green and low-carbon cooperation, establish new advantages in green and low-carbon development, promote information sharing and capacity building for green and low-carbon development, and deepen cooperation in ecological environment and climate governance. We must deepen cooperation in the digital field, promote new models and new industry formats in China’s digital economy, and promote the circulation of goods and services.
Implementing high-level opening up is necessary to adapt to China’s high-quality development. After more than 40 years of reform and opening up, China has made tremendous achievements in economic development, but there are still some “deep water areas” of reform, such as further accelerating the transformation and optimization of government functions, eliminating regional market barriers, and breaking up administrative and industry monopolies. We must further clarify the boundaries between the government and the market, explore the requirements for the new generation of international economic and trade rules, and effectively promote the construction of a unified national market. The impact of the international financial crisis and the series of major changes that followed the crisis on China’s economic growth is actually the impact on the development model. There is an urgent need to achieve a transformation from high-speed growth to high-quality development. In the past, insufficient investment in R&D by enterprises and weak innovation-driven capabilities led to an oversupply of some lower-end products and a shortage of higher-end products. The reason for this is closely related to the fact that in the past, enterprises mainly relied on low-cost advantages to integrate into the international division of labor system. Although low-value-added economic and trade activities can generate some processing profits, these activities are easily relegated to the lower end of the value chain by advanced enterprises in developed countries. Only by implementing high-level opening up and increasing cooperation and exchanges involving global talents, technologies, and other resources can China further enhance its innovation capabilities, promote changes in its development model, and achieve high-quality economic development.
Implementing high-level opening up is necessary to adapt to high-standard international economic and trade rules. As mentioned earlier, after the international financial crisis in 2008, developed Western countries such as the United States promoted new high-standard international economic and trade rules. Although the United States later withdrew from the TPP negotiations, under the leadership of Japan, the 11 Asia-Pacific countries participating in the TPP negotiations jointly signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018. In 2020, China officially signed the Regional Comprehensive Economic Partnership Agreement (RCEP). Compared with the China-ASEAN Free Trade Area that preceded it, RCEP has a wider scope of cooperation and higher rules and requirements. Although China has established relatively high-standard international economic and trade rules with some Asia-Pacific countries through RCEP, compared with RCEP, CPTPP proposes higher standards for intellectual property supervision, competition policies, government procurement, environment, and labor rules to promote coordination and consistency of domestic supervision among members. Except for some “harmful” content, most of the high-standard international economic and trade rules are not inconsistent with China’s overall reform direction. They are advanced and leading in nature and will become the benchmark for future negotiations on high-level international economic and trade rules. Only by actively aligning with them can China better participate in the construction of a network of high-standard free trade zones and play a greater role in building new international economic and trade rules and even in global economic governance.
In this round of economic globalization, the United States and Western countries see the “collective rise” of developing economies as the result of “out-of-control” globalization. The inability of the United States and Western countries to solve domestic social problems such as soaring unemployment and polarization between the rich and the poor has led to an undercurrent of an “anti-globalization” movement springing from the margins of society. Then, following the rise of populism, these “anti-globalization” ideas gradually rose to the level of national will and were put into political action, finally evolving into a wave of “deglobalization.” The attempts by the United States and Western countries to resolve international economic and trade issues through contests of strength, protectionism, and isolationism have undermined the global economic governance order. The World Trade Organization (WTO), one of the three pillars of global economic governance, has seen its Appellate Body paralyzed for a long time due to manipulation by the United States. Against this backdrop, China has implemented opening up to the outside at a high level, worked to build and maintain a multilateral trading system with the WTO at its core, united the many developing countries, and continued to strengthen economic and technological cooperation with them on the basis of equality and mutual benefit to achieve mutually beneficial results.
The current global governance system is facing the challenge of “four major deficits”: a peace deficit, a development deficit, a security deficit, and a trust deficit. During the Ukrainian crisis, relations between the United States, the European Union, and Russia deteriorated, and the European Union completely “decoupled from Russia,” resulting in the inability of the global governance mechanism to play its proper role. The U.S. government has promoted the so-called “values alliance,” made divisions in multilateral cooperation based on ideology, and attempted to form a so-called “Indo-Pacific version of NATO,” leading the world from economic globalization to geopoliticization. In the geopolitical game, the United States’ allies and partners have gradually discovered that the actions of the United States are mainly aimed at protecting its own economic interests and maintaining its hegemonic position, even at the expense of the interests of its allies and partners. For example, after the Nord Stream oil and gas pipeline was blown up, European countries had to buy American oil and natural gas at prices that were several times higher. The economies of European countries have been hit hard by the loss of cheap and stable supply of Russian natural gas through pipelines. The U.K. media even published an article pointing out that Germany, once the locomotive of Europe’s economy, had become the “sick man of Europe.” As European countries gradually wake up to this reality, China’s high-level opening up will not only be welcomed by the countries of the “global South”, but will also receive support from European countries.
From reform and opening up to the outbreak of the international financial crisis in 2008, China’s system of domestic rules has been gradually opened up, especially in China’s “re-entry into the GATT” and “accession to the WTO,” which was a process of passively accepting international economic and trade rules. Since the international financial crisis in 2008, China’s contribution to the world economy has gradually increased. It has put forward new ideas such as the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative, proposed new theories such as building a community of common destiny for humanity and joint consultation, joint construction, and shared benefits, and provided new international public products such as the Belt and Road Initiative, the Asian Infrastructure Investment Bank, and the New Development Bank for the BRICS. As China accelerates reform and opening up and intensifies international institutional innovation, the institutions it supplies overlap with the current global economic governance system, creating an “institutional competition effect.” In the new era, institutional competition will become more intense, and different systems will gradually merge to form a new system of global economic governance. China will actively and proactively align with the new generation of international economic and trade rules, better participate in the construction of a network of high-standard free trade zones, organically integrate high-level opening-up with comprehensive and in-depth reform, provide investors with a more stable and predictable investment environment, and create new institutional dividends.
IV. The limits of high-level opening up in the context of major changes
The early days of China’s reform and opening up were a period of free competition in an open environment. The main content of opening up was to gradually open up the Chinese market, encourage and attract foreign investment to establish Sino-foreign joint ventures, allow the establishment of foreign-invested enterprises and Sino-foreign cooperative enterprises, and successively formulate and pass corresponding laws, such as the Sino-Foreign Equity Joint Venture Law, the Foreign-Invested Enterprise Law and the Sino-Foreign Cooperative Joint Venture Law (referred to as the “Three Foreign Investment Laws”). The “Three Foreign Investment Laws” regulate three types of foreign-invested enterprises, but there are no provisions directly requiring the national security review of foreign investment. Preventing foreign capital from controlling China’s important and key industries during opening up to the outside world was mainly achieved through the promulgation of corresponding administrative regulations or rules, restricting foreign investment access through approval procedures, and regulating foreign investment operations through a series of “compliance requirements.” For example, in Sino-foreign joint ventures, the Chinese side is required to hold a majority stake. However, in practice, multinational corporations from the United States and other Western countries achieved actual control over joint ventures “under conditions of incomplete control” through corporate governance structure design, technology and brand control, control of the number of joint ventures, and control of sales areas.
After the start of the 21st century, with China’s accession to the WTO, China further expanded its open market and relaxed equity restrictions on foreign investment. More industries allowed foreign investors to hold more than 51% of the equity in joint ventures, and China relaxed restrictions on wholly foreign-owned operations in service sectors such as banking, insurance, telecommunications, transportation, tourism, and legal consulting. As a result, foreign investment quickly showed a trend toward “wholly foreign-owned” ventures. Not only did newly established enterprises tend to be wholly foreign-owned enterprises, but the foreign parties in existing joint ventures also achieved controlling stakes in the enterprises through capital increases and share expansions, thereby strengthening their control over the enterprises in order to obtain more profits. At the same time, foreign-funded enterprises launched a “decapitation” initiative against Chinese enterprises, especially state-owned enterprises, through mergers and acquisitions. The top five companies in different industries were almost all controlled by foreign capital. It was not until 2003, when China issued the Interim Provisions on the Takeover of Domestic Enterprises by Foreign Investors, that China began to pay attention to the impact of foreign investment mergers and acquisitions on national economic security. In 2006, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, and six other departments jointly revised and issued the Provisions on the Takeover of Domestic Enterprises by Foreign Investors, which proposed reporting requirements for certain situations in which foreign investors acquire domestic enterprises and obtain actual control. Subsequently, the State Council issued the Notice of the General Office of the State Council on Launching the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors in 2011, which actually established a preliminary security review system for foreign investment mergers and acquisitions in the form of administrative regulations.
In the context of the major changes, China has proposed to further improve its level of opening up and establish a new high-level system of opening up. As the competition among major powers becomes increasingly fierce, the United States and the West are gradually losing their competitive advantage in free competition and are relying more and more on imperialism, trying every available means to achieve actual control over their competitors. They not only want to obtain huge profits and plunder resources and wealth, but also seize opportunities to defeat their competitors and maintain their hegemonic position. Therefore, the implementation of high-level opening up to the outside must be limited: U.S. and Western capital must not be allowed to actually control important industries, key industries, and sensitive fields related to the national economy and people’s livelihood or to national security. This is to prevent any harm to national sovereignty, security, and development interests. In March 2019, China promulgated the Foreign Investment Law, which replaced the original “Three Foreign Investment Laws” and clearly stipulated that the country would establish a foreign investment security review system. In December 2020, the National Development and Reform Commission and the Ministry of Commerce jointly issued the Measures for the Security Review of Foreign Investment. Article 4 of the Measures stipulates the scope of national security review of foreign investment, which has a very positive significance for improving the security review standards system. However, from the perspective of legal doctrine, these laws have problems. For example, the review standards are too abstract and do not cover all harmful behaviors, and the list of reference factors is insufficient.
During the period of free competition, China’s competitors were mainly developed capitalist countries. At that time, China’s overall competitiveness was relatively low compared with these countries. Because the developed capitalist countries were in a comparatively advantageous position and could therefore reap huge profits, these countries were able to take the lead among countries in formulating liberal international economic and trade rules and to abide by these rules to a large extent. Against this backdrop, China implemented opening up to the outside world. Even without subversive error, losses occurred, although they were mainly losses of economic interests. In the past, such losses were often regarded as the necessary “tuition fees” for opening up to the outside. In the period of strategic competition among major powers, China’s competitiveness has greatly improved and it has increasingly stood at the center of the world stage, while the strength of developed capitalist countries has declined to varying degrees. In their attempts to maintain their vested interests and hegemonic status, the United States and major Western countries have begun to regard China as a “strategic competitor” or even an “enemy,” smearing and suppressing China. They can no longer take advantage of China by subtle tricks and so have resorted to plunder by force. Against this backdrop, China must further improve its level of opening up to the outside and implement high-level opening up. The door to opening up can only open wider and wider. However, if we ignore the limits of opening up or fail to grasp these limits and if the timing, sequence, and conditions for introducing certain policies are inappropriate, China may give imperialism an opportunity that it can take advantage of. Therefore, the most prominent limitations on the high-level opening up at the current stage are the lack of awareness of risk prevention and control and insufficient risk stress testing.
In fact, U.S. and Western multinational corporations, especially those in the financial industry, are mostly owned or controlled by financial capital groups and carry out transnational business activities under their manipulation. These financial capital groups cover almost the entire financial industry and are the “core of the core of capitalism.” The financial capital groups that control these companies actually also control the domestic and foreign policies of these countries and are the “shadow governments” that manipulate these countries. Therefore, some foreign-invested enterprises and their overseas investments are often given the strategic mission of curbing the development of the host country. Ironically, some U.S. and Western media outlets have also criticized those who have “poorly implemented” the containment strategy. The financial capital groups are owned or controlled by a few large financial capital. Under their manipulation, the groups establish connections and coordinate actions through closed-door meetings and other approaches. Their foreign policies are covert, long-term, and strategic, and their actions with respect to the outside world are often secretive and brutal. Some people believe that they possess the “four hidden things,” namely hidden knowledge, hidden technology, hidden organization, and hidden resource flows. Because everything is done in a hidden manner, their operations are easily overlooked by the host country. In the context of strategic competition among major powers, if we respond with the mindset of the previous free competition era, not only will our economic interests be controlled and plundered, but our sovereignty and security will also be threatened and challenged.
V. Lessons
For a long time, the United States and a very small number of Western countries have pursued imperialism to plunder the resources and wealth of other countries. Historically, they have mainly relied on launching aggressive wars. After World War II, they shifted to relying primarily on free competition. After the outbreak of the international financial crisis in 2008, and especially after the Trump administration came to power, they have shifted to strategic competition among major powers. The common feature is that they consistently seek benefits by achieving control over other parties. If we ignore the limits of opening up to the outside, the losses we suffer will not only be economic interests as during the period of free competition. Rather, in the period of strategic competition among major powers, national sovereignty and security may also be endangered.
What must we do?
1. We must be wary of the control of people’s thoughts exercised by U.S. and Western imperialist forces. The United States and other major Western countries have various means of controlling their competitors. When facing a big country like China, tough measures in the political, economic, and military fields are unlikely to be completely effective. Therefore, the use of their powerful media power and discourse power to carry out ideological infiltration and promote peaceful evolution has become their most important and effective means. They directly cultivate agents by bribing international students and training government officials, they use the selection of textbooks and curriculum to promote their ideology and cultivate comprador thinking, or win over “public intellectuals” and select “global youth leaders” to make them spokespersons. The measures to promote peaceful evolution, similar to the “Ten Commandments,” are implemented quickly or slowly, openly or covertly, gradually achieving the goal of creating agents in key areas such as policy making, talent training, and public opinion propaganda. This way, the positions, views, and ways of thinking of government officials, university teachers, and researchers in relevant departments are transformed in a direction that is conducive to their actual control. Some people hold important positions in key areas, but they ignore, downplay, or even suppress discussion of the above-mentioned phenomena and related opinions and suggestions, allowing these phenomena to run rampant and ensuring that opinions and suggestions contrary to them come to nothing. Therefore, we must abandon illusions, carry out necessary rectifications in the fields of political thought, cultural education, and propaganda and media, always adhere to our main ideological positions, and firmly seize the initiative in cultivating souls and educating people.
2. We must be wary of the control over the financial field exercised by U.S. and Western imperialist forces. The financial market is the lifeblood of the national economy, and it is also an area that U.S. and Western financial capital groups have long coveted and in which they continue to “deepen their roots.” With the hollowing out of industries in the United States and Western countries, the economies of these countries are becoming increasingly financialized. A large number of financial practitioners and financial institutions are familiar with financial tools and means, and can skillfully employ them for the purposes of control and plunder. However, there has been no quantitative systematic research on the limits of financial market openness and the consequences of overstepping these limits, which are major issues related to national sovereignty, security, and economic interests. Completely removing restrictions on foreign shareholding in banking, securities, fund management, futures, and life insurance sectors may facilitate the actual control of U.S. and Western financial capital in these sensitive areas. Therefore, we must be cautious about the level of openness of the financial industry and guard against the United States and the West using their powerful financial tools and techniques for the purpose of control and plunder. We must prevent the large-scale cross-border flows of funds that would result from opening up too quickly. The incident where the Evergrande Group transferred assets overseas shows that such capital flows are highly concealed, difficult to supervise, and hard to recover, and that being “overconfident” with respect to regulatory capabilities may result in huge losses. In addition, it is also necessary to prevent leaks of important data, including financial information data and personal information, from becoming tools and means to achieve control and plunder. The United States’ repeated crackdowns on TikTok have used data and information leaks as an excuse, indicating that the United States and Western countries are already using data leaks as a tool and a means.
3. We must be wary of U.S. and Western imperialist forces using legal tools to achieve control in areas such as finance. In recent years, in order to maintain their dominance and hegemony in the world economy, the United States and Western countries have frequently formulated and amended laws and regulations in an attempt to give “legitimacy” to their “new” means of control. For example, the Foreign Investment and National Security Act, which was promulgated and implemented in the United States in 2007, lists the factors that need to be considered in the national security reviews of foreign investment. The Foreign Investment Risk Review Modernization Act of 2018, revised in 2020, expanded the scope of “covered transactions” to include certain financial fields, geographic locations, health data, and genetic test results, and stipulated the important factors that should be considered when judging national security risks. In addition, it required review for some non-controlling forms of foreign investment. These adjustments represented an increased emphasis on the effect of “actual control” rather than specific rights (“controlling stakes” or “controlling interests”), reflecting the new understanding of national security among the United States and major Western countries in the period of strategic competition among major powers. Therefore, we must correctly understand the real motives of the United States and Western countries in making everything “national security” and, while granting foreign capital more and greater access and operating rights, further revise and improve China’s laws and regulations on foreign high-tech investment, improve its supervision capabilities and risk prevention and control capabilities for foreign high-tech investment, truly weave a tight web protecting national security, and effectively safeguard national sovereignty, security, and development interests.
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