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The international status of a country relies heavily on its economic level since economic strength is its core competitiveness.Economic development and economic connections are also the underlying factors that affect the evolution of the international landscape.2022 is a turbulent year for the global economy which faced unprecedented pressure from the superimposed crises such as high inflation，debt and leverage rates across the world，the energy，food and refugee crises due to the Russia-Ukraine conflict，public health crisis arising from the COVID-19 pandemic，and industrial crisis caused by broken industrial and supply chains.With the global economy showing a serious recession，economic globalization has come to a crossroads of history.
China，as the world's second-largest economy，has withstood the challenges and continued to develop，achieving a growth rate of 3%，despite internal and external impacts in 2022，when the global economy is extremely uncertain，unclear and unstable.The fact fully reflects the resilience，potential and vitality of China's economy.The steady economic growth of China in the turbulent international environment is the result that China has grasped the general direction and trend of global and China's economic development，persisted in advancing the great rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization，adhered to the general principle of pursuing progress while ensuring stability，fully implemented the new development philosophy and made efforts to construct a new development pattern，made overall plans for pandemic prevention and control and economic and social development，overcome difficulties and challenges in economic operation，and maintained firm strategic focus and determination.China's economic development will certainly add new kinetic energy to boost global economic development.This is because the open，confident and stable Chinese market will drive the global economic recovery and development.The new achievements of the Chinese path to modernization will also provide new opportunities for global development，serve as a new impetus for exploring the path to modernization，and make new contributions to the theoretical and practical innovation of social modernization.
Looking back on 2022，experts of RDI had sized up the situation to contribute their wisdom and offer suggestions and solutions in the process that China's economy has gradually become the biggest engine to promote global economic growth.We regard shared destiny as the cornerstone of sharing a better life for mankind，and will make unremitting efforts on fostering the steady development towards a community with a shared future for mankind.Looking into the future，China will continue to widen its opening-up，stay connected with the world and abreast with the times with a broad mind，creating opportunities by opening-up and solving problems through cooperation.We will contribute Chinese strength to global development while advancing the great rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization to realize our high-quality development.By strengthening coordination and cooperation with the international community，we will work together to make the pie of the global market even bigger，strengthen the mechanisms for sharing benefits globally，and explore new ways of international cooperation so as to promote the recovery and sustainable development of global economy in the post-pandemic era.
We are in a new period in which the timeframes of the Two Centenary Goals converge，achieving moderate prosperity in all respects throughout the country to embark on the journey of building a major modern country and then a great modern country，which is the key stage to work towards the centenary goal of building a great modern socialist country in all respects.In 2022，domestic and international situations were subject to unstable and uncertain factors and became more complicated and severe.Regarding the external situation，global inflation，supply chain shortage，international situation and other issues can hardly be addressed in the short term，and economic recovery and growth still face uncertain challenges.Regarding the internal situation，China is under triple pressures posed by shrinking demand，disrupted supply and weakening expectations in pursing economic development.At the historical juncture with major changes unseen in a century，in the context that the global economy was profoundly impacted by the COVID-19 pandemic，especially that some countries irresponsibly“shift the blame to China”and“decouple from China”，it is necessary to vitalize the Chinese market—the largest single market in the world—to the maximum by deepening reform，widening opening up and encouraging innovation，so as to make China a major magnet for global production factors and resources，and cope with all future and external uncertainties based on the certainty of China's high-quality development.In the next fifteen years，to boost economic development of China in the new stage，it is essential to foster a new pattern of development that is focused on the domestic economy and features positive interplay between domestic and international economic flows.We need to grasp the general direction and trend of global and China's economic development all the time，maintain our strategic focus and determination，and persist in advancing the great rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization，so as to contribute Chinese strength to global development.Only in this way can we promote the high-quality development of national economy and lift it to a new level.
Affected by multiple factors such as the COVID-19 pandemic，Russia-Ukraine conflict and high inflation of major developed countries，the global economic recovery and growth have suffered a serious setback，with global and systematic economic and financial risks accumulating.China is also under the triple pressures posed by shrinking demand，disrupted supply and weakening expectations in pursing economic development.In such a context，we are facing at least the following six challenges at present and in the future.
First，exacerbated uncertainty of the external environment.As we speak，the global economy has been deeply impacted by the COVID-19 pandemic，major developed countries have been saddled with excess liquidity，prices of staple commodities fluctuate greatly，and global inflation is approaching.With the thorough adjustment of the international economic and trade order and the occasional resurgence of de-globalization，we face more challenges to ensure the stability of the industrial and supply chains.“Grey rhino”and“black swan”events emerged one after another，putting pressure on China's macroeconomic stability.
Second，China's total factor productivity（TFP）is low.Since 2008，the growth rate of China's TFP has tended to decline.The TFP growth rate of China is about 1.25%，40% that of the U.S.，43% that of Germany and 63% that of Japan.To make our TFP reach 60% that of the U.S.by 2035，when China plans to basically achieving modernization，our TFP growth rate must reach 2.7%.If our GDP growth rate can reach about 5% in the next fifteen years，a TFP growth rate of 2.7% means that its contribution to GDP growth needs to reach 54%，which is a tough challenge.
Third，the constraints from resources and environment are tight.China has become the world's largest manufacturing nation and largest trading nation as well as a biggest resource-and energy-consuming country，with a high dependency on imports of important resources such as oil，natural gas and iron ore.The long-standing economic model characterized by massive imports and massive exports and inefficient and blind development is unsustainable in the face of increasingly tight resource and environmental constraints.Therefore，it is urgent for China to transition toward green and low-carbon development，especially after China announced the“3060 goals”（dual-carbon goals），which calls for strenuous efforts.
Fourth，the sci-tech and industrial revolutions have kept breaking new ground.Digital economy with digital industrialization and industrial digitalization as the core，bioeconomy represented by technological breakthroughs and applications such as cellular immunity，gene editing and synthetic biology，and green economy represented by the development and promotion of zero-carbon and low-carbon technologies are reconstructing the industrial chain，supply chain，value chain and innovation chain.Coupled with the ever-expanding technologies such as deep water and deep space explorations，collaborative Brain-Computer Interfaces（cBCIs），Man-Machine Interaction（MMI），Virtual Reality（VR）and Augmented Reality（AR），the industries in the future will be constantly updating and iterating.Therefore，seizing the opportunity to participate in and even lead these sci-tech revolutions is an important mission that China should undertake as a major economy in the world.
Fifth，the society is in inclusive development with arduous tasks.For example，the aging trend of population has become increasingly prominent.Data from the 7 th National Population Census showed：in 2020，China's population aged 60 and above was 264 million，accounting for 18.70% of the total population，an increase of 5.44 percentage points over the 6 th National Population Census.It is expected that China will enter the stage of severe population aging around 2035.For another example，although we have solved the problem of absolute poverty，there are still a large number of people in relative poverty.Moreover，solving the problem of relative poverty is more complicated and difficult than that of absolute poverty.China still has many shortcomings in the fields of education，medical care，health and culture，and thus has a long way to go to promote common prosperity.
Sixth，China and the U.S.are decoupling.In recent years，the U.S.has launched trade and technology wars against China to impose maximum pressure on and comprehensively contain China.“Decoupling”（or threatening to“decouple”）from China has become an important strategic deterrent and tactical strike tool in the toolbox of the U.S.policy toward China.No matter the recent policy trends or the long-term strategy，in the coming period，the U.S.ruling and opposition parties as well as the Senate and the House of Representatives will adopt hard-line policies toward China and take China as the primary long-term opponent to contain and suppress it for a long time.Generally speaking，the struggle between“decoupling”and“anti-decoupling”will be a longstanding fundamental problem in China-U.S.relations under the new historical conditions.By summing up these decoupling measures repeatedly hyped by the U.S.government and politicians in recent years，we can see that they generally cover those in trade，investment，sci-tech，education，Internet，capital market，financial market，SWIFT network，foreign exchange market，and international rules.They can be classified in：①high-risk decoupling fields：the U.S.may“violently decouple”from China in technology，Internet and international clearing network；②medium-risk decoupling fields：the U.S.may“semi-decouple”from China in trade，investment，capital market，and educational and people-to-people exchanges with China；③low-risk decoupling fields：the U.S.may only“slightly decouple”from China in financial institutions，foreign exchange market，and international economic and trade rules and systems.
The China-U.S.relations involve both“competition and cooperation”.In a long historical period in the future，the competition side will become more prominent，and various forms of“decoupling”will become the new normal.However，“decoupling”does not necessarily mean a total breakdown of the China-U.S.relations，but an inevitable reorganization and reconstruction of China-U.S.interest pattern in a new historical context.The world is experiencing major changes unseen in a century.However，no matter how it changes，who serves as leaders of the United States，where the decoupling policy advances，or how deglobalization measures advance，the final result，I think，will follow the five laws in the world that will not change：
First，the trend of globalization will not change，but its feature will evolve from the dominance by only one country into multipolarization.Globalization is an inevitable trend in the process of human development.Deglobalization measures implemented by politicians will never fragment the world，especially in the current information society，where the network has mixed the whole world.So，the trend of globalization will not change.However，a trend in the globalization pattern will change：in 20 or 30 years，globalization led and dominated by only one superpower，the U.S.，in the past 40 years will gradually evolve into multi-polar globalization，where perhaps the U.S.is only one pole，the European Union and China will also be poles，and Russia，Japan and Britain will become relatively important poles.
Second，the trend that Asian economies are increasingly becoming the“barycenter”of the world economy will not change.Seventy years ago，Asia contributed to only 10% of the world economy.By the 1980s，the Asian share of the world economy increased to 17%.After 40 years，it now has reached 37%.I believe that the Asian share of the world economy will keep increasing，and is expected to reach 50% in another 30 years.If Asia accounts for 50%，and the rest world in Europe，America，etc.，account for 50%，this pattern is reversed from the situation after World WarⅡthat the U.S.'s GDP accounted for 50% of the world GDP.If Asia accounts for 50% of the world GDP，then China may account for 30%.It is said that the center of the world is shifting to Asia—such is the case in the past 50 years，and it will continue in the next 30 years.
Third，the Fourth Industrial Revolution will lead the world economy out of the predicament，and this trend will not change.The world has experienced three industrial revolutions，and now is experiencing the fourth one.Each industrial revolution，whether it is a mechanization revolution—steam engine revolution，an electrification revolution—the internal combustion engine revolution，or an informationization revolution—the information superhighway computer revolution，had revived the original floundering economy to new heights.Now the artificial intelligence，“big data”and cloud computing—the intelligent revolution based on integrated digital platform constitutes the Fourth Industrial Revolution.In this revolution，the most meaningful thing is that Chinese people participate and play a leading role.However，we are not the only leader—the U.S.，Europe and Japan are also leaders，and we are just one of them.
Fourth，the trend of China's reform and opening-up will not change.We give priority to domestic circulation，but the opening-up under domestic circulation will not change.
Fifth，China's contribution to world economic growth will not change.In the past 30 to 40 years，China's annual economic growth accounted for 30% of the world's total growth.In the next few decades，even if China's annual economic growth slows down to 5% or 4% from more than 10%，the base of our GDP has increased from CNY 10 to 20 trillion to the present CNY 100 trillion.Should the growth rate slow down，China's annual economic growth would still be 30% of the world's total due to its high base.This share will not change.In this sense，the function and role of China in building a community with a shared future for mankind jointly with the rest of the world will be highlighted.Finally，to sum up in one sentence，the more the U.S.“decouples”from China and even woos its allies to isolate China，the more China should open up and integrate into the rest of the world.
With China at a historical juncture of major changes unseen in a century，the priorities of our planning for the next stage of China's economy include：establishing a complete system of domestic demand and gradually fostering a new pattern of development that is focused on the domestic economy but features positive interplay between domestic and international economic flows.The Fifth Plenary Session of the 19 th Central Committee of the Communist Party of China made a detailed plan for the strategy of“fostering a new pattern of development that is focused on the domestic economy but features positive interplay between domestic and international economic flows”，which is our long-term development strategy in the future.What basic characteristics will this new development pattern bring to the national economy？What important changes will this new strategic path bring to the national economic dynamics？Under the new pattern of development that is focused on the domestic economy but features positive interplay between domestic and international economic flows，China's economic operation will have the following five new characteristics：
First，in the future，the impetus to China's economic development will rely more on domestic demand.After China's accession to the WTO，its ratio of dependence on foreign trade once reached 64% in 2006—the highest，and slowly decreased in recent years，reaching 32% in 2019.In the future，with the further expansion of the middle-income group，the advantages of China as a super-sized market will be further highlighted.In the past，China relied on the international circulation of high consumption in the international market to drive the economy.But it will gradually transition to a new pattern of multi-level and diversified consumption in China's own super-sized market to drive the domestic circulation and promote the dual circulation.Under this pattern，China's ratio of dependence on foreign trade will gradually drop to about 25%，and the economic operation will be healthier and more efficient.Under the new development pattern，China's economic development will no longer merely expand exports just to achieve trade surplus，but aim at moderately expanding imports and achieving a balance between imports and exports.To the world，China is the most potential market in the world.In the coming decade，total import of goods and services into China is expected to top USD 22 trillion and reach USD 5 trillion，respectively，resulting in a sum of over USD 27 trillion.Such an enormous market demand will definitely bring direct and lasting impetus to the world economy.
Second，China's industrial system will be more resilient，safer，higher-quality and more efficient.Although the largest in the world，under the operation mode of focusing on the international circulation，which has lasted for more than 30 years，our industrial system has three obvious shortcomings as follows：①under the development mode of“reliance on foreign markets and resources”and characterized by massive imports and massive exports，the processing industry is of low economic benefit；②low-end and low-quality products account for a high proportion，while high-end and high-quality products a low proportion，critical technologies and components are“dependent on foreign supply”；③the homogeneous competition is fierce，the low-end production capacity seriously excess，the intra-industry division of labor not so detailed，and the development of market segments seriously insufficient.Under the new pattern of development that is focused on the domestic economy but features positive interplay between domestic and international economic flows，these problems will be effectively solved，the value of the industrial chain greatly increased，the security of the supply chain effectively guaranteed，and the resilience of the value chain comprehensively enhanced.
Third，the economic circulation will be supported by a higher standard market system.A high-standard market system consists of a high-standard commodity market system and a high-standard factor market system.Driven by international circulation，eco nomic growth is inefficient，relying on a large amount of labor and capital investment.However，due to factors such as preferring production to consumption，“order is king”and mercantilism，the endogenous impetus is insufficient for long-term economic growth.To shift to domestic circulation，we should not only further break through the obstruction in links such as production，exchange，distribution and consumption to form a smoother economic circulation，but also promote the market allocation of labor，capital，land，technology，data and other factors to improve the total factor productivity.To put it simply，the input cost of factors is critical if the development is driven by international circulation，while the allocation efficiency of factors is critical if the development is driven by domestic circulation.Therefore，we should make a thorough supplyside structural reform and establish a more perfect socialist market economic system.
Fourth，the business environment supporting entrepreneurs in entrepreneurship and innovation will be more fair，stable and predictable.The basic feature of strong economic growth under domestic circulation is that nongovernmental capital always has investment enthusiasm.Whether entrepreneurs are willing to expand reproduction or engage in innovative adventure activities is closely related to factors such as their economic expectations，the fairness of market competition and the effectiveness of property rights protection.Under the domestic circulation，the key to improving the investment enthusiasm of nongovernmental capital is to take effective measures to build a marketoriented，law-based and world-class business environment，stabilize the confidence of private entrepreneurs，and create a long-term positive expectation for China's economy.Its core lies in implementing the six measures put forward by Xi Jinping，general secretary of the CPC Central Committee，at the meeting attended by private entrepreneurs：first，the burden of taxes and fees on the companies should be eased；second，measures should be taken to address the difficulty and high cost of financing for private firms；third，the playing field should be leveled.Private firms are encouraged to participate in the reform of state-owned enterprises；fourth，policy implementation should be improved.The requirement of“strengthening the protection of intellectual property rights”should be implemented meticulously；fifth，a new type of cordial and clean relationship between government and business should be established；sixth，entrepreneurs'personal and property safety should be ensured. [2] With the implementation of these six measures，massive private capital will be fully active in the new pattern of development that is focused on the domestic economy but features positive interplay between domestic and international economic flows.
Fifth，employment，distribution，housing and public services will be more balanced，inclusive，sustainable and healthy：①a virtuous circle of employment driven by employment will be formed.②the institutional foundations of common prosperity will be further consolidated.③the real estate market will be promoted towards healthy development according to the principle that“houses are for living in，not for speculation”to prevent it from being sidelined under the domestic circulation.We should correct the phenomenon that the real estate industry is dominant and the high housing price crowds out residents'consumption.④public services such as medical care，health care，education and culture will be more balanced and inclusive.This is not only determined by the nature of socialism in China，but also the inherent requirement of domestic circulation，to which“labor”are the backdrop.Balanced and inclusive public services are conducive to the free flow and creation of“labor”，the most important factor of production.
First of all，we need reform，opening-up and innovation.We need to deepen reform，open up wider to the outside world and stimulate innovation to maximize the vitality of China，the largest single market，and then make China a major magnet for global production factors and resources so that we can cope with all future and external uncertainties with the certainty of our own high-quality development.We should form a market system consistent with the Chinese path to modernization，a complete industrial system and a sci-tech innovation system，and accelerate the creation of coast and inland urban agglomerations with healthy，harmonious and benign development.We should also advance rural vitalization and prosperity，narrow the gap between urban and rural areas，and foster a new pattern of development that is focused on the domestic economy but features positive interplay between domestic and international economic flows to move towards an opening-up in a wider field and at a higher level.
The reform involves many aspects，and should focus on building a unified market at present.This is the top priority to further release the economic potential of China as a super-size single market and makes China grow into a major magnet for the world economy.To this end，we need to eliminate the structural and institutional obstacles in the economic system and policy obstacles to domestic circulation with reform thinking and pragmatic measures and expand market space with new policies and applications.At present，from a realistic point of view，eight institutional and fundamental problems that result in obstacles to domestic circulation：
First，the adverse effects of excessive competition among regions.Competitions among regions in terms of the economic growth rate and scale are considered as an internal impetus for China's sustained and high-speed economic growth.This is a positive effect of regional competition.However，regional competition also has adverse effects，such as low-level and redundant industrial projects and local protectionism，which hinder the market from playing its role of survival of the fittest.In recent years，with the advancement of supply-side structural reform，such phenomena have decreased，but still exist objectively to a certain extent.
Second，the urban-rural dual economic structure leads to market segmentation.This is manifested in the factor allocation，e.g.，constraints exist in labor movement between urban and rural areas and between regions，and the market-based transfer mechanism of use right to rural collective land designated for business-related construction is still being explored.For commodity service，the commodities circulating in some rural areas are similar to those in urban areas，but the quality standards are far from the same，and some are fake and shoddy products.Regarding transportation and logistics，market facilities，and public services，the gap between urban and rural areas is significant，which restricts the free flow of commodities and factors and aggravates the development imbalance.
Third，the feature of administrative allocation of resources in some areas still stands out.For example，the import and export of oil and gas are still highly regulated in the field of energy.Although China is a big energy importer and consumer，it lacks the right to speak on energy pricing，which is related to our policy of such regulation.For another example，there was a large-scale power shortage in the electric power field last year caused by the unbalanced feed-in tariff allocation and coal price allocation.For this reason，China has orderly liberalized the feed-in tariff for all coal-fired power generation，an important step in the reform of electricity marketization.In addition，there are still various so-called“glass doors”and“swing doors”in some fields.Market access policies in some fields vary from place to place，causing enterprises can make registration in one place，but not in another，and so on.
Fourth，the logistics system is not smooth enough，and the cost remains high.In 2020，the ratio of total social logistics cost to GDP in China was 14.7%，significantly higher than the global average；however，it is only 7% in the U.S.，6%-7% in Europe and Japan，and only about 10% in developing countries in Southeast Asia.It is a social consensus that the logistics cost is on the high side.Basic reasons are as follows：①The proportion of railway traffic volume is low，accounting for only 9.5% of the total traffic volume at present.Generally speaking，the railway transportation cost is one third of that of expressway.The logistics cost will be effectively saved if the proportion of railway traffic volume is increased to 15%-20%.②The road tolls are high.Some expressways have been tolled for decades and are still subject to tolling though the tolling period has expired；whereas，in developed countries，tolling will be ceased once the BOT toll period expires.③Low intermodality efficiency.Seamless connections between hardware and software of infrastructure have not been realized.
Fifth，there are policy barriers such as artificial traffic restrictions and purchase restrictions in some industries.Over the past few years，significant progress has been made in controlling excess capacity，but there are still many industries restricted by simple policy measures such as purchase，traffic and license restrictions.As a result，certain demands that could be met remain unfulfilled.For example，in the automotive industry，according to World Bank，the number of cars owned per thousand people in 2019 was 837 in the United States，589 in Germany，591 in Japan，and even 433 in certain Asian countries like Malaysia.While in China，the figure was only 173，indicating significant potential and promising market prospects.In certain regions，there is a clear demand for cars among ordinary people.However，people have difficulties in purchasing cars due to policies such as traffic restrictions and license plate limitations.At present，there is excess capacity in office buildings in certain cities，while there is a lack of building-type mechanical parking garage.To address this situation，it is proposed to adjust the original plans for constructing additional office buildings and instead allocate that space for mechanical parking garages，which will not only stimulate consumption，but also help balance the market.
Sixth，the lag in certain technical standards has inhibited the demand.China is currently the country with the largest production capacity of steel equipment production line worldwide，but with relatively low utilization rate in production capacity.Additionally，China is a country with insufficient steel reserves and a relatively low proportion of scrap steel in circular economy worldwide.At present，the output of China's steel structures only accounts for 7%-8% of China's steel output，while the proportion in countries（regions）such as Europe and America is about 40%.Increasing the proportion of steel structures in various buildings will significantly expand steel demand and help to absorb these advanced“excess”capacities.At present，reinforced concrete houses generally have a service life of 40-50 years，while steel structure houses have a service life of up to 100 years.Improving the standards of construction steel and promoting the use of steel structures can bring about multiple benefits：it can not only make full use of the existing steel capacity in China，but also greatly improve the quality of houses and prolong the service life of houses；and in the long run，it can also form a circular economy of scrap steel，which is also conducive to earthquake resistance and hazard mitigation.
Seventh，it is urgent to accelerate the market-oriented reform of factors.For various reasons，the markets of production factors such as land，labor，capital and technology have，to varying degrees，problems of excessive administrative intervention，poor market-oriented operation and inefficient resource allocation in their operation.Measures currently being implemented，such as“exploring the establishment of a nationwide cross-regional trading mechanism for construction land and supplementary cultivated land indicators”，“relaxing restrictions on household registration in nonmegacities，and piloting the household registration system with habitual residence”，are conducive to improving the mobility of factors and guiding the pooling of various factors into advanced productive forces.The market-oriented reform of relevant factors needs to be vigorously promoted in accordance with the policies and measures of the central government.
Eighth，the domestic and international circulations of state-owned capital need to be opened up.In 2020，the assets of state-owned enterprises in China totaled CNY 268.5 trillion，and the rights and interests of state-owned capital totaled CNY 76 trillion.99% of the equity capitals are industrial and commercial capitals，and the total return on capital and total factor productivity are not high.In accordance with the requirements set forth in the Third Plenary Session of the 18 th Central Committee of the Communist Party of China，which emphasizes the reform of state-owned enterprises from managing assets to managing capital and the promotion of mixed ownership by establishing a number of capital investment and operation companies，if we transfer equity assets valuing about CNY 10 trillion from existing state-owned capital to establish several state-owned capital operation companies，and make these operation companies specially engage in alternative investment and equity investment like Temasek or equity funds，and decide to advance and retreat according to the benefits of invested enterprises，it will not only revitalize state-owned capital，but also promote mixed ownership，boost the smooth circulation of state-owned capital in the national economy，and expand the influence，driving force and control of state-owned capital in the national economy.
Opening-up encompasses various aspects，with the implementation of the RCEP being the current focus.It is recommended that local governments deepen the promotion and application of RCEP policies through the following measures.
First，local governments should prioritize the implementation of rules in RCEP at the policy and institutional levels.It is imperative to conduct a comprehensive review of local regulations and systems to ensure the effective implementation of the mandatory obligations of RCEP in areas such as enhancing the business environment，promoting the opening-up of the service trade and investment sectors while focusing on fostering a market-oriented，law-based，and internationalized business environment.
Second，local governments should support and facilitate the expansion of trade in goods.Enterprises should be encouraged to enhance the application of RCEP Cumulative Rules of Origin，and professional social organizations should be supported to provide key enterprises with tailored services under RCEP Cumulative Rules of Origin，including country-specific tariff planning，identification of products subject to high tax differentials，integration of rules of origin into production management，assessment of situations where import tariff preferences that should be enjoyed are not enjoyed，and guidance on the utilization of switching protocols.Enterprises should be encouraged to explore the import demand of RCEP countries in greater detail.They should be guided to prioritize purchasing products from RCEP countries，provided that the products are of comparable quality and price.Additionally，enterprises should be encouraged to focus on developing new products and exploring new markets based on the consumption characteristics of RCEP countries.Local governments should play an active role in promoting the facilitation of customs clearance procedures for goods，improving the customs clearance model，and streamlining product pre-qualification procedures.Additionally，efforts should be made to cultivate“approved exporters”complying with the rules in RCEP.
Third，local governments should expand the opening-up of service sectors and support the development of service trades.The access thresholds should be further relaxed for sectors such as education and training，health care，logistics and distribution，cultural creativity，scientific research and innovation，and intellectual property services，and for financial sectors such as banking，securities，insurance，industrial chain finance，and for producer services such as cross-border logistics and distribution，after-sales services，as well as for all types of service trades associated with the import and export of goods，so as to pursue a comprehensive，extensive，and diverse opening-up of service sectors.Efforts should be made to accelerate the development of various businesses associated with trade in goods，including banking，securities，insurance，factoring，leasing，financial settlement，cross-border bond issuance and financing，investment，mergers，and acquisitions，as well as the centralized operation of cross-border funds.Moreover，the logistics system among RCEP member countries should be further optimized and a RECP-oriented public service platform system should be built，which should encompass a service trade information platform，a technical service platform，a training service platform，a financing service platform，and the like.The principles of a“simplified tax system”and a“low tax rate”should be implemented within the pilot free trade zone to attract a multitude of high-end producer service enterprises and highly skilled professionals with exceptional expertise and profitability.
Fourth，local governments should support the development of offshore trade，carrying trade，digital trade，etc.Enterprises should be provided with support to apply the rules established under RCEP to carry out service outsourcing and develop new service trades such as offshore trade，carrying trade，digital trade，and cross-border e-commerce.In the case of a legitimate offshore resale business，the customs office can separately review the trade contract invoice，trade settlement tax invoice，as well as logistics and warehousing delivery note following international practices.These policies should be used to accelerate the development of bonded exhibition import trade，carrying trade，offshore trade，cross-border e-commerce trade，digital trade，service trade，etc.With the precondition of ensuring national security，the access thresholds in the fields of big data，cloud computing，AI，and their corresponding data processing centers should be relaxed to reduce the scope of restrictions.
Fifth，support two-way investment.In terms of“bringing in”，we should attract investment from the whole industrial chain，focusing on attracting multinational companies that master the“three chains”，and at the same time make good use of the opening-up policy to bring in their upper and lower reaches，striving to build an industrial chain cluster with high spatial concentration，close coordination between upper and lower reaches，and an intensive and efficient supply chain within a radius of 100 kilometers.Meanwhile，we should attract famous universities and R&D institutions from RCEP countries and Fortune 500 multinational enterprises to establish independent R&D institutions in China.In terms of“going global”，on the one hand，we must make good use of RCEP Cumulative Rules of Origin to optimize the regional industrial structure.While promoting the advantageous production capacity to go global，we should make full use of tax incentives to encourage enterprises to retain the value chain settlement link in China.On the other hand，we should vigorously support Chinese enterprises to invest in RCEP member countries and acquire sci-tech innovation-oriented enterprises，well-known brands and high-quality mineral resources projects.
To maintain sustained，stable and healthy economic growth in China，we need to make every effort to improve the TFP.In addition to unswervingly deepening reform，expanding opening-up to the outside world and improving the efficiency of resource allocation in the domestic and international circulations，we must unswervingly strengthen innovation：we should not only emphasize sci-tech innovation，but also focus on institutional innovation and industrial organization innovation.We need to make new iterative upgrades at the industrial organization level such as industrial chain，supply chain and innovation chain.Only with a higher quality industrial system can we take the initiative in the new round of sci-tech revolution and industrial transformation，and give full play to China's advantages as the largest single market，with domestic and international circulations facilitating each other.We should focus on the following three aspects：
First，continuously increase investment in basic research.This is the“0-1”stage of innovation，which is necessary to realize original innovation，basic innovation and sci-tech innovation out of nothing.We have great shortcomings in this respect：although the R&D investment of the whole society in China has accounted for 2.44%of GDP，with the total amount ranking second in the world，but the investment is relatively scattered；the investment in some basic research fields that need long-term investment account for 5%-6% of the total R&D expenses for a long time，which is significantly lower than those of the major innovation-driven countries in the world（15%-20%）. Outline of the 14 th Five-Year Plan has proposed to increase the above proportion to 8% at the end of the 14 th Five-Year Plan period.On that basis，we expect to gradually increase the proportion of basic research investment in R&D funds to about 15% in another ten years.
Second，cultivate specialized and sophisticated small and medium-sized enterprises that produce new and unique products.Entering a new stage of development，China's small and medium-sized enterprises should not still be“miscellaneous，scattered and small”，and we should focus on cultivating the following three types of specialized and sophisticated small and medium-sized enterprises that produce new and unique products.The first type is the enterprises that play a defining role in the industrial chain，with outstanding main business，strong competitiveness and solid growth in the fields of core basic components and elements，key basic materials，advanced basic technology and industrial technology foundation，which is the key to forming a more resilient and safer industrial system in China and building China into a manufacturing power.The second type is the invisible champion enterprises in various industries，which have been focusing on certain sub-fields for a long time，taking the lead in production technology or process globally，ranking among the top in the world in market shares，playing a core guiding role in the industry，often holding the pricing power of a certain industry，controlling 30% or even 40% of the output value of the whole industrial chain，and able to affect the profit level of the whole industry.The third type is enterprises specializing in producer services.Most of the leading international manufacturing enterprises have transformed into service-oriented manufacturing，and their service revenues have accounted for a quarter of the total revenue of the world's top 500 manufacturing enterprises.
Third，cultivate China's own ecological-oriented“chain leader”enterprises.These enterprises often organize their global value chains based on intellectual property rights and have evolved into special business organizations.Currently，such enterprises have emerged in certain sectors of China，and we must cherish them.First，China's big market should be leveraged to provide robust support for such enterprises，enabling them to promote their applications and iterate their technologies.Second，encourage such enterprises to adopt a global perspective，root in globalization，and help them to lay out their intellectual property rights and professional standards globally by establishing platforms for international exchange，project cooperation and market development.Third，strengthen the protection of intellectual property rights.The common feature of ecologicaloriented“chain leader”enterprises is that they have developed independent intellectual property rights in underlying technologies.Supporting the development and growth of such enterprises and strengthening the protection of their intellectual property rights are effective measures to protect their competitiveness at the root，which must be fortified with continuous efforts.
The Chinese path to modernization is a modernization of peaceful rise and a modernization of mutual benefit and common development of a community with a shared future for mankind.As China moves towards modernization，six types of development systems should be established.First，a high-standard market system should be established.It includes two levels of market systems：one is the high-standard commodity market system that covers the entire process of production，distribution，circulation，and consumption of goods.The other is the factor market system，which encompasses the allocation，pricing，and circulation of factors.Second，a complete industrial system should be established，where the real economy should be the mainstay and the manufacturing industry the center.Third，a complete sci-tech innovation system should be established.For any given society，sci-tech innovation consists of three aspects：first，0-1，original innovation and basic innovation；second，1-100，transformation and incubation of sci-tech achievements into productivity；and third，100-1，000，000，sci-tech achievements after large-scale application.Subsequently，through large-scale production and industrialization，unicorn and emerging industry systems are established.All of these three aspects are indispensable.Fourth，coastal and inland city clusters characterized by healthy，harmonious，and benign development should be established.The“Belt and Road Initiative”has transformed the global trade patterns.With the shift from maritime civilization over three hundred years ago to the two-way development of both maritime and land civilizations，coastal seaport city clusters have continued to maintain their traditional development patterns，while inland land port city clusters have developed along with the development of the“Belt and Road Initiative”，which is the framework of China's modern city clusters.Fifth，address the issues related to rural vitalization，rural prosperity，and reduction of urban-rural disparities.Sixth，establish a new pattern of development with the domestic circulation as the mainstay while the domestic and international circulations mutually promoting each other，working towards broader and higher-level opening up.
We are in a new period in which the timeframes of the Two Centenary Goals converge and a new stage to build China into a major modern country and a powerful modern country following a well-off society in an all-round way，which is the key stage to move towards the goal of building a century-old powerful country.In this century，one might say history accumulates year by year，with each year possessing its significance，making each year significant in its own right.As quantitative changes lead to qualitative changes，each year in the hundred-year span contributes incrementally towards progress.However，certain years stand as inflection points or qualitative turning points towards a new milestone，wherein quantitative changes lead to qualitative breakthroughs.From now until 2035，it will be a crucial 12 years.These 12 years mark a significant period for China on its path towards a modern socialist country，and also the period where major changes unseen in a century“take place”.China will embrace a new era，new stage，new strategies，and a new pattern，all of which are reflected in these three milestone and turning point steps.
StepⅠ，by 2025，China will surpass the upper limit of middle-income countries and join the ranks of high-income countries in the world.From 2021 to 2025，that is，during the 14 th Five-Year Plan period，China's per capita gross national income will increase from USD 11，300 in 2020 to USD 14，000 or USD 15，000 in 2025.In other words，after more than forty years of reform and opening-up，China has entered the ranks of high-income countries，and has doubled the population of high-income countries in the world，which is a milestone achievement.
StepⅡ，by around 2030，China will become the largest economy in the world，with its GDP surpassing that of the United States.It is estimated that China's economy will maintain an average annual growth rate of at least 5% over the next decade.By 2030，its GDP measured in constant prices is expected to reach over CNY 160 trillion.Taking inflation into account，its GDP at current prices will reach CNY 180 trillion，equivalent to about USD 28 trillion.Meanwhile，the United States is also expected to achieve a growth rate of about 2% per year，and projected to reach approximately USD 28 trillion in ten years.During the 15 th Five-Year Plan period，that is，by 2030，China will become the largest economy in the world，with its GDP catching up with and surpassing that of the United States.After more than two hundred years of development，China's economic aggregate has once again become the world's largest，which is of milestone significance.
StepⅢ，by 2035，China will enter the ranks of moderately developed countries，achieving its“three-step”strategic goal 15 years ahead of schedule.This is a qualitative statement in the“2035 Vision”proposed in Report on the Work of the Government presented by the State Council.There are several implications here.First，the income criterion for high-income countries is a per capita GDP of over USD 40，000.Second，by 2035，China's income level will reach the average level of high-income countries and the level of moderately developed countries，namely，with a per capita GDP of between USD 26，000 and USD 30，000，which is conceivable.Fifteen years ahead of schedule，we have achieved the third step of the“three-step”strategic goal put forward by Comrade Deng Xiaoping（reaching the level of moderately developed countries by the middle of the 21 st century），and the future of China is bright and inspiring.
The major changes unseen in a century present unprecedented opportunities.The period from now until 2035 marks the pivotal stage of these historic changes.As long as we firmly seize this great opportunity，concentrate our efforts on our own affairs，and resolutely pursue the three major tasks of reform，opening-up，and innovation，the immediate impact of the COVID-19 pandemic，the conflict between Russia and Ukraine，geopolitical competition，and the suppression of a few individual countries，will gradually dissipate.We must adhere to the general principle of pursuing progress while ensuring stability，fully and accurately implement the new development philosophy in a comprehensive manner，accelerate the establishment of a new pattern of development，and focus on promoting high-quality development.We must act on the requirements of responding effectively to the COVID-19 pandemic，maintaining economic stability，and ensuring security in development；we must consolidate the economic upturn and positive trend，focus on stabilizing employment and prices，keep the economy running in a reasonable range and strive for the best possible result.We must persist in advancing the great rejuvenation of the Chinese Nation on all fronts through a Chinese path to modernization，and contribute Chinese strength to global development.We should not be distracted by temporary problems，instead，we should stay focused on deepening reforms，expanding opening-up，and pursuing concrete innovations to further propel the national economy to new heights.
Wenling CHEN
The year 2022 marked the prologue of a new era，where major changes unseen in a century intersected with the once-in-a-century pandemic.The world is now propelled into a period of turbulence and transformation：the old order is shattered，and a new one is emerging from it；the global supply chains are undergoing fundamental restructuring；the world's major powers are realigning their spheres of influence；the geopolitical landscape is undergoing reshaping；and a multitude of conflicts and risks are intensifying and becoming increasingly apparent.As noted by Guterres，UN Secretary-General，“We are on the edge of an abyss—and moving in the wrong direction.Our world has never been more threatened，or more divided.We face the greatest cascade of crises in our lifetimes.”During the year，the ongoing pandemic has continued to wreak havoc.Amidst it，we have witnessed a significant shift in the international landscape，a striking escalation in strategic competition among major powers，the emergence of conflicts in many hotspots，and a world economy that strives to forge ahead despite confronting twists and turns.Also in the year，China's economy achieved steady growth in the face of persistent challenges from the triple pressures of shrinking demand，disrupted supply，and weakening expectations.Moreover，the 20 th National Congress of the Communist Party of China（CPC）was held successfully，and China，with its holistic approach to development and security，presented the Global Development Initiative，aiming to infuse greater stability and certainty into the global landscape while steadfastly advancing on the new journey of building a modern socialist country.As the world's second-largest economy and the largest trading nation，China is actively propelling high-quality economic development through the deepening of sci-tech innovation，institutional innovation，and innovation in business forms and patterns.In light of the rapid changes and evolutions taking place both domestically and internationally，however，it becomes imperative for us to heighten our awareness of risks and opportunities，and through the exploration of the Chinese path to modernization，to get hold of the global development landscape and the underlying principles of economic and social progress，thereby facilitating the promotion of a community with a shared future for mankind，while realizing the great rejuvenation of the Chinese nation and collectively creating a brighter and more prosperous future for mankind.
The current situation indicates that international economic globalization is at a historical crossroads.The international landscape is being affected by numerous variables，which can be primarily categorized into the following eleven areas.
The first variable is the sudden increase in the risk of war.The Russia-Ukraine conflict represents a significant variable that affects the current international landscape.Despite being a continuation of the Cold War between East and West，it also signifies a concentrated outbreak of competition，gaming，and recalibration in the relationships among major powers，and reflects the competition as well as growth and decline of various forces around the world.The conflict still shows no sign of stopping.The increase in global commodity prices has triggered hyperinflation in certain countries.The conflict has become a major variable affecting many aspects，including global food，energy，supply chains，logistics and transportation，and has profound implications for the global economy and geopolitical relations.
The second variable is the rampage of the ongoing the COVID-19 pandemic.As of December 28 th ，2022，the cumulative number of confirmed cases of COVID-19 has surpassed 600 million worldwide，with a death toll exceeding 6.5 million and a mortality rate of 1.1%.The pandemic remains far from over，with new omicron subvariants continuing to emerge.The COVID-19 pandemic has taken its toll on all aspects of the sustainable development goals.Its impact，which is far from subsiding，leaves many problems to be reflected upon.China faces a formidable challenge and a large variable in effectively controlling the pandemic while simultaneously engaging with an openingup world，and interacting and collaborating with other countries.
The third variable is the global economic recession.The high inflation，high debt，and high leverage on a global scale，as well as the energy crisis，food crisis，and refugee crisis triggered by the Russia-Ukraine conflict，compounded by the public health crisis caused by the pandemic，and the disruptions in industrial and supply chains，have placed an unparalleled burden on the world economy.The Chinese economy is confronted with an ongoing challenge arising from the pressures of shrinking demand，disrupted supply，and weakening expectations.The sluggish growth in the U.S.economy，coupled with inflation and debt，is elevating the risk of a potential financial crisis.Along with the repercussions resulting from the six rate hikes of the U.S.dollar in 2022，emerging economies and developing countries，particularly those reliant on the U.S.dollar，are at risk of experiencing significant negative impacts，including currency devaluation，surging prices，outflows of the U.S.dollars，and economic downturn，which could have severe consequences for many countries.
The fourth variable is the heightened risk of a financial crisis.The abrupt shift in the U.S.monetary policy and its subsequent spillover effects pose financial risks to the world and have the potential to lead to a financial crisis.The U.S.is currently experiencing the highest inflation in 40 years.As inflation continues to rise，the U.S.Federal Reserve，in an attempt to curb the persistent high inflation，has raised its benchmark interest rate at a cumulative rate of 425 basis points，a record-high pace in the past 40 years.The assertive rate hikes have sparked a global“wave”of interest rate increases，with numerous major economies following suit.In the first three quarters of the year，25 major central banks worldwide chose to raise interest rates，and the central banks of Argentina and two other countries even raised their benchmark rates nine times.In October 2022，the European Central Bank（ECB）announced another 75-basis-point rate hike with regard to the main refinancing operations and the marginal lending facility，and the deposit facility，which was set to take effect from November 2 nd ，2022.Accordingly，the three key interest rates，after an accumulative increase of 200 basis points across three consecutive adjustments in the year，reached 2.00%，2.25% and 1.50% respectively.The rate hikes have resulted in an upward trajectory of U.S.national debt yields and have intensified the overall debt pressure.Consequently，global asset prices must be revalued.With the U.S.dollar entering an upward cycle，certain national currencies would inevitably be put in a downward cycle.In this context，emerging economies with imperfect financial systems and high financial account openness once again face challenges such as currency devaluation，capital outflows，and heightened volatility in financial markets.Currently，the U.S.Federal Reserve's balance sheet has reached USD 8.77 trillion，and the U.S.national debt has topped USD 30 trillion，posing a high risk.The current tightening of monetary policy is unlikely to resolve the issue of U.S.debt；instead，it will significantly impact global capital flows.The U.S.10-year national debt has surpassed the critical threshold of 2%，compelling the U.S.to resort to various means，including potential wars，to export the crisis and channel the flow of the U.S.dollar back into the U.S.market.Consequently，there exists both a risk of currency and a risk of the eruption of a financial crisis.Meanwhile，the U.S.has continued to accumulate debt，leading to the expansion of the debt ceiling to USD 31.4 trillion，along with its extension for an additional two years，and the U.S.has continued to print money.Therefore，the risks and variables of the international financial crisis could have an important impact on the world economy at any time.Furthermore，in the event of a U.S.debt crisis，there is a possibility that the U.S.Department of the Treasury may impose restrictions on private ownership of physical gold，leading to the monetization of gold.Given that the United States currently holds over 8，000 tons of gold reserves，which accounts for over 40% of the world's total，a crisis of this nature，compounded with the risks associated with the U.S.dollar，would have a significant impact on the global financial markets.
The fifth variable is the heightened risk of disruptions in the global supply chain.Two factors contribute to this situation：first，the ongoing pandemic has disrupted the production and distribution of countries severely affected by it，and their recovery has not been fully realized；second，the United States，along with Europe and Japan，has continued to promote the shortening and restructuring of the supply chains，aiming to cut off the industrial chain and reduce reliance on Chinese manufacturing，and these efforts have now entered a critical phase of implementation，which will result in the disintegration of the semiconductor sector that heavily relies on complex transnational divisions of labor.While it will take some time for the U.S.to restructure the industrial chain，the risk of disruptions in the supply chain is indeed escalating.
The sixth variable is the risk of debt and debt crisis.High debt represents a pervasive and structural issue.The current global debt level is overall at an all-time high.According to the Institute of International Finance（IIF），the total global debt reached a record of USD 303 trillion in 2021；in the first quarter of 2022，it further rose to USD 305 trillion，equivalent to 348% of global GDP，and then decreased by USD 5.5 trillion in the second quarter compared to the previous quarter，primarily due to the appreciation of the US dollar.In fact，the second quarter witnessed a higher global debt-to-GDP ratio compared to the first quarter，reaching 350%.In 2022，a distinct division emerged between developed economies and emerging markets and developing economies in terms of their financial performance.As IMF estimated，the government deficit-to-GDP ratio in developed economies further shrank to 3.6% in 2022，while increasing by 0.8 percentage points to 6.1% in emerging markets and developing economies.There was then a distinction in the changes in public debt levels between the two.The IMF estimated that the total government debt-to-GDP ratio in developed economies would be 112.4% in 2022，representing a decrease of 5.5 percentage points compared to 2021.Specifically，the United States and the eurozone were projected to have total government debt-to-GDP ratios of 122.1% and 93.0%，respectively，representing declines of 6.0 and 2.3 percentage points compared to 2021，and Japan's government debt-to-GDP ratio was expected to reach 263.9% in 2022，representing an increase of 1.4 percentage points compared to 2021.Over the same period，the total government debt-to-GDP ratio in emerging markets and developing economies was 64.5%，representing an increase of 0.8 percentage points from 2021.Specifically，the ratio rose by 5.4 percentage points to 76.9% in China，declined by 4.8 percentage points to 88.2% in Brazil，and decreased by 0.8 percentage points to 83.4% in India.These figures indicate that the global debt risk has reached a heightened level.
The seventh variable is the potential for regime change and political turmoil.The year 2022 marked a critical juncture in the shift of global political cycles.Since the outbreak of the pandemic three years ago，issues such as the growing wealth gap in many countries and regions，as well as the employment imbalance caused by the disruption in the supply chain，have resulted in a compelling demand for political reform among voters.The change of regime plays a decisive role in a country's political and economic development.In the case of a major economic and political power，however，such a change will not only impact the domestic economy but also influence policy direction and economic development of related countries，and even have an effect on the stability of the international community.Countries that would have substantial ramifications in the event of a regime change include the United States，Germany，France，South Korea，the Philippines，Ethiopia and Iran.Countries experiencing political turmoil，such as Afghanistan，Myanmar and Ukraine，will also have significant implications for the global economy.
The eighth variable is the occurrence of frequent disasters and the deterioration of the ecological environment.Ecological environment crises，including extremely cold weather，and extremely hot weather，as well as floods，fires，droughts，wind damage，snow disaster，and locust plague，will have a great impact on the global economy，world politics，and the human environment as a whole.The world has experienced many extreme weather disasters in recent years.Mankind has also faced many disasters in 2022，including Typhoon Haiyan that struck the Philippines，floods in Pakistan，heatwaves and floods in India，floods in the Sichuan Basin and Northwest and North China，as well as the Lushan earthquake in Sichuan，China.The natural environment that human beings live in has suffered serious damage due to generations of development practices.The climate problem and the COVID-19 pandemic became the two major concerns of the international community.In the coming decade，humans are expected to witness frequent extreme weather，the near-extinction of many species，and an ecosystem that is in danger of collapse.All these will have a great impact on the global economy，world politics，and the human environment as a whole.
The ninth variable is the profound restructuring and evolution of the geopolitical landscape.The geopolitical landscape has undergone significant adjustments as the United States，upholding a self-interested and exclusive approach，accelerates its pace in restructuring its alliance system，and actively promotes the values such as west-centered theory，white supremacy，America first，and Make America Great Again.Following the historical trajectory of“Pax Romana”，“Pax Britannica”and“Pax Americana”，as well as a Cold War mindset of a“new Rome”，new empire，and new hegemony，the transfer of hegemony continues to unfold across different nations.Over the centuries，the establishment and selection of the world order have been consistently influenced by the dominant role of the Western powers in shaping and evolving the world order.In recent years，there has been a decline in the prominence of democratic politics in Western values and Western political systems.To establish a normal international order for the world and create a fair，just，transparent，and sustainable world order for the future，it is necessary to compete with the Western-led notions of“universal values”，“civilizational values”and“democracy”.It can be said that the United States，which is currently in a hegemonic position，is the source of turmoil，war，and suffering in the world.The change in the geopolitical landscape is either a reconfiguration of geopolitical，economic，and diplomatic relations centered on the United States or the rise of a group of developing countries and small and medium-sized countries，which plays a significant role in driving the change in the international landscape.
The tenth variable is China-U.S.relations，the most important variable shaping the international landscape.The United States and China are the world's largest and secondlargest economies，contributing almost over 90% of the global economic growth.China now accounts for an average of 30% of the global economic growth，while the U.S.accounts for 24% of the total global economy.Therefore，China-U.S.relations go beyond a bilateral context and have a global spillover effect，which has a significant influence on the world economy，world peace and development，and the future of humanity.The trend of China-U.S.relations is one of the most important variables shaping the international landscape.Cooperative efforts between the two nations can generate positive momentum for the world economy，while confrontations can profoundly impact the world economy.Currently，the United States is encouraging other countries and regions to reduce their engagement with China.If the world divides into two separate systems or camps，it would effectively fragment the global community and lead to a return to a Cold War-like state，and economic globalization will be dismembered because of the confrontation between the two great powers.
The eleventh variable is extreme poverty.The Food and Agriculture Organization of the United Nations has issued a warning，stating that 1.7 billion people worldwide will be caught in food crisis，financial crisis and social unrest.According to Sustainable Development Goals Report 2022 released by the United Nations，more than four years of progress in alleviating poverty have been wiped out，pushing 93 million more people worldwide into extreme poverty in 2020.An estimated 147 million children missed their in-person instruction over the past two years.COVID-19，climate change，and conflicts around the world have put all the 17 Sustainable Development Goals（SDGs）of the UN at risk.The Report highlights the severity and magnitude of the challenges before us.The confluence of crises is creating spin-off impacts on food and nutrition，health，education，the environment，and peace and security.The world has witnessed the largest number of violent conflicts since 1946，with a quarter of the global population living in conflict-affected countries.
The variables impacting the global economy and the world landscape in the present and future periods consist of both longstanding，accumulated contradictions and newly emerged，abrupt or gradual contradictions.Together，they pose the gravest challenge to the international community since the conclusion of World WarⅡ.Given these circumstances，there is an urgent need to follow the Chinese views proposed by President Xi Jinping in the Global Development Initiative and the Global Security Initiative，in order to address the deficits in governance，trust，peace，and development on a global scale，build a community with a shared future for mankind，and find the path to the common prosperity and development of all countries in the world.We must prioritize peace over war，opting for cooperation instead of confrontation，mutual benefits rather than exclusion，and multilateralism over unilateralism.We strongly reject the division of the world into two camps，two systems，and two sets of standards.Such a scenario would dismantle economic globalization and regress human history.The five key trends shaping the global landscape in the medium to long term are as follows.
First，global power dynamics are undergoing an ongoing rapid shift and evolution，with emerging economies and developing countries collectively rising in prominence.The paradigm of a dominant West and a weaker East has become a thing of the past，a historical legacy，and a current reality，while the rise of the East and the decline of the West signify a prevailing trend，a future trajectory，and an undeniable course of history.The legacies formed in the past have transformed into variables that shape the future，redirecting the course of the international landscape in this direction.There may be setbacks at the moment and the development of developing countries may therefore be impeded，but the general trend remains a historical course that is undeniable.
Second，the interconnected progress of a new wave of ideological revolution，scitech revolution，and industrial revolution，coupled with the forthcoming breakthroughs in the information revolution，digital revolution，and quantum revolution，will have a subversive influence on human society and important fields.This is also a long-term evolutionary process that carries over both the evolution of historical legacies from the past and extends into the future.
Third，the global economic landscape will undergo fundamental changes，and properly handling the relationship between the real economy and the virtual economy，as well as that between the real society and the virtual space，will be an important focus for us to understand the development of the world economy and human society.The basic economic form of the contemporary era has moved beyond the dominance of the industrial revolution and become intertwined with the information revolution or the age of information，the age of knowledge，and the age of data.The modern economy encompasses two basic forms：the real economy and the virtual economy.Dealing with the relationship between the two will become a norm in the world economy in the future.Triple relations have emerged between the real economy and the virtual economy.First，the virtual economy represents the spillover value of the real economy.Second，the virtual economy and virtual form are based on but relatively separate from the real economy，which may be displayed together with the real economy in two parallel spaces，or maybe a virtualized manifestation of physical money and physical goods.Third，it is a virtual creation that goes beyond the limit of the virtual realm or a complete detachment from reality.Currently，a substantial imbalance between the real economy and the virtual economy exists globally，posing a significant challenge.While the understanding of the virtual economy and the real economy may not be groundbreaking at present，it is expected to become the norm in the future.
Fourth，the current ecological crisis and environmental changes affect not only the present generation but also the reproduction and survival of future generations.The survival of humanity will suffer a great challenge if environmental degradation persists.As 2,500 square meters of forest are lost every minute worldwide，and 80 billion square meters of forest have been deforested each year over the last 30 years，the forests are disappearing globally at an average rate of 4 billion square meters per year.In recent years，cases of extreme weather have been on the rise.As the environment deteriorates，the world is on the brink of climate catastrophe，the aftermath of which has already had an impact on billions of individuals.Energy-related CO 2 emissions rose by 6% in 2021，reaching a record high.The issue of nuclear contamination in Japan also poses a significant threat to the ecology，and we must express the concerns of the Chinese government and its people to the Japanese government in a clear and direct manner.According to the plan outlined by Tokyo and Tokyo Electric Power Company（TEPCO），the discharge of nuclear-contaminated wastewater is expected to continue for 30-40 years starting from 2023.Japan will be the first country to be directly impacted，followed by neighboring countries such as China and South Korea.The global marine ecosystem will also be affected.
Fifth，the strategy for building a more reasonable，progressive，and sustainable global governance system and global rules has become both a stringent issue at present and a long-standing issue for the future.For example，how to effectively address matters pertaining to international institutions，international order，international rules，international governance，international systems like security systems，trade systems，monetary systems，financial systems，etc.，as well as geopolitical，economic，diplomatic，and military relations？There used to be a lot of rules as to how great nations or nuclear powers should get along with each other，but some of them were undermined by certain countries.Many rules remain unaddressed，such as those for the governance of cyberspace，the establishment of laws for the operation of the meta-universe，and the need for development strategies that prioritize the well-being of humanity rather than undermining its survival and security.It is now imperative to take a resolute stance against the fragmentation of globalization，the deliberate division of the world into two camps or systems，and the manipulation of international rules and standards as the private tool or political instrument of a specific country.The world should aim for further decolonization，de-camping，depoliticization，and denazification.As emphasized in the Global Development Initiative proposed by President Xi Jinping at the 76 th UN Conference，the promotion of common human development should be the master key to solving all global problems.
First，we should prioritize stability while pursuing progress.During the Central Economic Working Conference held on December 16 th ，2022，the Political Bureau of the Central Committee of the CPC established the key focus for economic endeavors in 2023：“prioritizing stability while pursuing progress.”Under the general principle of“prioritizing stability while pursuing progress”，five major policies and six overall plans will be implemented.The five major policies encompass fiscal，monetary，industrial，science and technology，and social policies.The fiscal policy for the upcoming year aims to enhance strength and efficiency.It is proposed to moderately expand fiscal policies and further improve their effectiveness and give better play to the role of the government in leveraging social funds.The monetary policy is expected to be precise and powerful，aiming to maintain a reasonable level of liquidity and ensure that the growth rate of the broad money supply and social financing scale aligns with the nominal economic growth rate.The investment direction structure needs to be precise，with a particular focus on supporting small and micro enterprises，sci-tech innovation，green development，and other areas.The“six overall plans”are designed with a strong focus on addressing annual challenges and specific problems.From the perspective of both internal and external demands，the Central Economic Working Conference has identified“expanding domestic demand”as the primary focus and major task for economic endeavors in the next year.“Efforts are required to give priority to the recovery and expansion of consumption”.A prudent monetary policy should be precise and strong to maintain a reasonable level of liquidity.“Guide financial institutions to ramp up support for small and micro enterprises，sci-tech innovation and green development.”The fiscal and monetary policies should be coordinated and interlinked，ensuring an organic combination of cross-cycle and counter-cycle macro policies.We should implement the strategy of expanding domestic demand，promoting the sustained recovery of consumption，and actively expanding effective investment，with a focus on sustaining growth，facilitating structural adjustments，and benefiting the people.We should pursue moderate advancements in infrastructure construction while increasing investments in pollution reduction，carbon reduction，new energy，new technologies，and new industrial clusters，so as to stimulate short-term demand and enhance long-term economic momentum.
Second，we should prioritize major policies and seek future opportunities.The target for the economic growth rate in 2023 has been set at a minimum of 5%.To identify the appropriate investment direction，it is crucial to align with the major policies of the central government and closely examine the policy orientation for potential investment opportunities.For example，the government outlined eight key tasks in The 14 th Five-Year Plan for Digital Economy Development .Another crucial investment direction to prioritize is the attainment of carbon peak by 2030 and carbon neutrality by 2060.Moreover，investors should also pay attention to factors mentioned in the factor market reforms，including land elements，particularly about how they are transitioned into a market，and the mechanisms for trading them.We maintain a positive outlook on the future of China，and successful investment in the country necessitates a bullish market sentiment，strategic industry selection，and the ability to capitalize on emerging opportunities.For instance，in recent years，the central government has placed unprecedented emphasis on sci-tech innovation，enhancing policy efforts in various aspects.We should execute the three-year action plan for the reform of the science and technology system，establish and implement a ten-year plan for basic research，and reinforce the national strategic science and technology capabilities，so as to ensure continuous advancements in China's key core technology research.
Third，we should implement the regional coordinated development strategy to promote the coordinated development of East，West，and Northeast China.Regarding regional development，the country puts forward the objective of strengthening the strategic depth of China's economic development，enhancing the balance and coordination of regional growth，and establishing a regional economic layout that facilitates high-quality development.This approach aims to provide a significant impetus for China's development.We should thoroughly implement major regional strategies by promoting the coordinated development of the Beijing-Tianjin-Hebei region，the development of the Yangtze River Economic Belt and the Guangdong-Hong Kong-Macao Greater Bay Area，integrated development in the Yangtze River Delta，ecological protection and high-quality development in the Yellow River basin，and supporting the high-quality development of Beijing's sub-centers，and the high-standard and highquality development of Xiong'an New Area，in order to harness the potential of these regions as growth poles and powerhouses for high-quality development.We should implement the strategy of coordinated regional development，promote the coordinated development of the East，West，and Northeast regions，comprehensively advance rural vitalization and enhance the quality of new urbanization construction.
Fourth，we should leverage the BRI and make connectivity the mainstream of our times.The year 2023 marks the 10 th anniversary of the Belt and Road Initiative，an endeavor which，by fostering global connectivity，facilitating knowledge exchange，and fostering mutually beneficial cooperation，has evolved into a well-received global public good and a pragmatic platform for international cooperation.At the heart of the BRI lies the concept of“Five Connectivities”，namely，policy coordination，facilities connectivity，financial integration，unimpeded trade，and people-to-people bonds.It plays a major role in providing individual countries with opportunities for development by enhancing economic connectivity among them.Since the launch of the BRI，China has so far signed more than 200 cooperation documents with 150 countries and 32 international organizations for Belt and Road cooperation.As of the end of August 2022，China's accumulative volume of trade with Belt and Road countries exceeded USD 12 trillion，with non-financial direct investment surpassing USD 140 billion.Through the BRI and the connectivity it fosters，the marginal areas and underdeveloped regions can be transformed into rapidly developing or rising economic zones，forming the center or key nodes in the world network system.Connectivity enables all countries to realize extensive consultation，joint contribution，shared benefits，and win-win cooperation，promoting equity and inclusiveness.
Fifth，we must steadfastly advance the great rejuvenation of the Chinese nation on all fronts through the Chinese path to modernization.The Chinese path to modernization presents a new option for human society to attain modernization.It represents the Chinese wisdom，solutions，and strength offered by the Communist Party of China（CPC）and Chinese people in the new era，in addressing the shared challenges and issues faced by mankind.This path underscores the strong leadership of the CPC and the remarkable achievements of the Chinese people.The Chinese path to modernization is in essence a new form of human civilization that strives to forge a community with a shared future for mankind，which is rooted in the general rules of modernization and carries distinctive Chinese characteristics.The Chinese path to modernization signifies an ongoing process，an upward spiral，and an upward trajectory along which China progresses from one stage to the next.The next five years will be a crucial period for building a modern socialist country in an all-around way，and it will also be the most important period for accelerated development after the prelude of the Chinese path to modernization.To pursue the Chinese path to modernization，①we must start from the fundamental reality of vast population size，and continue to harness the potential of demographic dividend，advancing national modernization by promoting the modernization of people；②we should enable the gains of reform and development to benefit all our people in a fair way by eliminating relative poverty and strive to achieve common prosperity through optimal institutional arrangements while maintaining the passion and momentum for creating wealth；③we must enhance the social construction of ideological infrastructure，adhere to the socialist core value system，and promote fine traditional Chinese culture while promoting economic development and material enrichment，with the aim of enhancing the spiritual well-being of the people and ensuring that material and cultural progress are mutually reinforcing and complementary；④we must persist in green development，and adhere to the“Five-in-One”framework to promote socialist modernization and the construction of ecological civilization，thus ensuring harmony between humanity and nature；⑤we should uphold the principle of mutually beneficial cooperation with all countries in the world，foster the establishment of a new paradigm for international relations，advocate for the creation of a more equitable and rational global governance system，work towards building a community with a shared future for mankind，and offer fresh opportunities to the world through China's progressive development.
Future economic development and economic connections continue to underpin the evolution of the international landscape.A nation's economic strength remains at the heart of its core competitiveness，while the competitive dynamics among major powers，driven by their comprehensive strengths，remain the foremost variable shaping longerterm cycles in the future.Therefore，in the face of the challenging international environment and the formidable task of reform，development，and stability，we should make the following efforts：deeply analyze and understand the dynamics and evolution of the world economy，consistently grasp the general direction and trends of the world economy and China's economic development，and maintain our strategic focus and strategic endurance；coordinate the domestic and international situations，balance pandemic prevention and control with economic and social development，and coordinate development with security；adhere to the general principle of pursuing progress while maintaining stability，implement the new vision for development in a complete，accurate and comprehensive manner，continue to advance the great rejuvenation of the Chinese nation on all fronts through the Chinese path to modernization，accelerate the establishment of a new pattern of development，strive to promote high-quality development，and unite and lead the people from all ethnic groups to collectively overcome challenges with firm confidence.We are confident in our ability to overcome the arduous difficulties and challenges in economic operations，and with the guidance of modernization with Chinese characteristics，we are sure to navigate the Chinese economy，akin to a mighty vessel，through the turbulent waves of changes unseen in a century towards a future of greater prosperity.
Hailin YE
In 2022，the major changes unseen in a century coupled with a once-in-a-century pandemic，have taken a heavy toll on the world economy.As the world stepped into 2023，the global economy remained under pressure，grappling with significant challenges including energy and food crises，high inflation，supply chain disruptions，and the resurgence of deglobalization，with growth rates set to slow further.Although all parties are urgently searching for solutions to lift the global economy out of its current gloom，the global economy remains fraught with complex risks and challenges，and it becomes imperative for all nations to strengthen macro policy coordination and enhance international cooperation，so as to foster a synergistic approach that will effectively drive economic recovery.The ravages of the COVID-19 pandemic underscored the criticality of global cooperation.As the UN put it in its released report World Economic Situation and Prospects 2023，international cooperation has never been more important than now to face multiple global crises and bring the world back on track to achieve the 2030 Sustainable Development Goals（SDGs）.As international cooperation is bound to become more difficult in the foreseeable future，the promotion of multilateral international cooperation，multilateral regional cooperation，and bilateral regional cooperation will become the main approach to international cooperation.We should recognize that the world is at a critical turning point and that stronger international cooperation is a solid choice to address the common challenges facing humanity.Therefore，we urge all nations to enhance dialogue and cooperation，confront challenges through multilateralism，safeguard against the emergence of isolationism，and seek solutions to avert economic recession.As we pursue the Chinese path to modernization and strive for selfdevelopment，we should also forge stronger cooperation with various countries in the world for mutual benefits，and collaborate with all parties for high-quality Belt and Road cooperation，offering Chinese wisdom and solutions that contribute to the world peace and development and creating broader prospects for cooperation.
The global economic growth rate will slow down in 2023 due to the energy and food crises，high inflation，supply chain disruptions，and the resurgence of deglobalization.It was predicted in World Economic Situation and Prospects 2023 released by UN that the global economic growth would be projected to slow to 1.9% in 2023 from about 3% in 2022.A slower global economic growth affects both developed countries and developing countries，putting many nations at risk of recession in 2023.Among them，developed countries are experiencing a more rapid decline in economic growth rate compared to developing countries.The decline in growth in 2023 can be attributed to the lagged effect of continuously tight monetary policies and high inflation from the previous period，as well as disruptions in supply chains.Furthermore，certain developing countries are grappling with the challenge of mounting debt burdens and other risks.The decelerating growth momentum in the U.S.，EU，and other developed economies has had a detrimental impact on the global economy in many ways.
It was anticipated that the divergence in global economic development would likely further escalate throughout the course of 2023.In addition to economies implementing tight monetary policies，the majority of developing and least developed countries are expected to face immense economic pressure.The economic outlook is primarily influenced by factors such as the dynamics and evolution of geopolitical conflicts，the policy actions taken by major economies，and the alignment of business innovation with market entities'actions.The evolution of multilateral economic and trade governance also plays a significant role.
The intensification of the strategic competition between China and the U.S.has brought about significant complexities in China's strategic environment，regional economic cooperation，and security framework.From the Trump administration to the Biden administration，the U.S.has formulated a systematic policy framework toward China，anchored in the“Indo-Pacific Strategy”after years of careful deliberation.This system encompasses various dimensions，including diplomacy，economy，security and culture，with the objective of countering China's rise and imposing strategic constraints on China both temporally and spatially，thus safeguarding U.S.global preeminence.
Even amidst the ongoing Russia-Ukraine conflict，the United States continues to view China as its“primary adversary”.China-U.S.relations have undergone profound changes since the Biden administration took office.In terms of strategy，the U.S.accelerates the implementation of the“Indo-Pacific Strategy”and related mechanisms to counter China's influence，and builds multiple multilateral networks under its leadership to contain China's rise；in terms of economy，the U.S.has launched the“Indo-Pacific Economic Framework for Prosperity”（IPEF）to influence and persuade participants to distance themselves from China；in terms of security，the U.S.has increased arms sales to Chinese Taiwan，stroked the tension across the Chinese Taiwan Straits，intensified U.S.military activities in the South China Sea under the guise of“free navigation”，and utilized the“Indo-Pacific Maritime Pillar”to force ASEAN countries to choose sides.Following Biden's visit to the Asia-Pacific region in May 2022，the Biden administration unveiled its long-awaited policy toward China，which was marked by Secretary of State Blinken's speech on May 26 th .Although Blinken emphasized in his speech，“We are not looking for conflict or a new Cold War.To the contrary，we're determined to avoid both.”Undoubtedly，however，a strategic consensus has taken shape within the U.S.government，identifying China as the perceived“greatest threat”to American hegemony.Despite Russia's“special military action”in Ukraine and its open challenge to U.S.and Western hegemony in Europe，the U.S.still views China as its“primary adversary”and continues to advance its containment strategies against China，with the“Indo-Pacific Strategy”as its core framework.
First of all，we have to acknowledge that as we confront a pandemic that may persist for a prolonged period，overcoming the current crisis and transitioning into a postpandemic era will prove exceedingly challenging if we simply rely on a select few countries to normalize their social management without the international community making substantial progress in combating the pandemic.The pandemic continues to persist.In countries like India，and the U.S.where we see the worst situations of the pandemic in the world，the post-pandemic era remains a distant prospect.We must recognize that the COVID-19 pandemic is unparalleled in that no place or country in the world has escaped it by shutting itself off from the outside world.
Second，we must recognize that the COVID-19 pandemic has exacerbated international disputes.Some significant changes had already taken place in the international community even before the outbreak of the pandemic.Some of the concerns we perceived in the international community during the pandemic，such as the decoupling，strategic mistrust，and even mutual repulsion among the world's major economies，were exacerbated rather than caused by the COVID-19 pandemic.Furthermore，we see no indications that the international community will return to its previous tendency in the post-pandemic era，or that the international community will return to the path of solidarity and cooperation because of the pandemic.
The pursuit of international cooperation will face mounting challenges in the postpandemic world，not only because international mechanisms and organizations failed to play their role，but more importantly because of major countries，regional powers，and superpowers in the international community.In fact，the superpowers have not fully embraced their roles as leaders of international regional cooperation and product providers in the fight against the COVID-19 pandemic.Despite their proclamations as primary actors in the pandemic response，their actual performance has fallen short of expectations.Such trends are unlikely to be changed in the near future，and the inclination towards self-serving isolationism in their foreign policies，coupled with their practice of leveraging the pandemic for geopolitical purposes，will persist in the post-pandemic era.
Urgent action is required from the international community to intensify efforts in providing financial assistance to developing countries and alleviating their debt burden.The United Nations Development Programme（UNDP）has recently emphasized through its social media that global challenges require global solutions，and multilateralism and development cooperation have never been more important.Cooperation is an important approach to maximizing the benefits of development in an uncertain environment with limited resources.As the theme of the World Economic Forum suggests，cooperation should extend beyond major economies to encompass all types of economies.Cooperation among major economies plays a crucial and leading role in restoring confidence in global markets.All parties should strive to collaboratively push for economic development in 2023 in an open and cooperative rather than confrontational manner，sending positive signals to the market and creating a more stable long-term development environment through institutional frameworks such as agreements，so as to propel the global economy in a positive direction，with efforts focused on improving regional and global supply chain networks through structural optimization and innovation adaptation.
Based on the understanding of the essence of the U.S.strategy toward China，China should adopt a more confident approach in addressing the“Indo-Pacific Strategy”pursued by the U.S.government.Despite the existing disparity in national strength between China and the U.S.，China is still likely to effectively withstand the pressure exerted in all aspects by the U.S.through its Indo-Pacific Strategy，as long as it persists in its steadfast perseverance，resolute determination，and the maintenance of a strategic equivalence posture.Faced with the threatening“all-out competition”rooted in the framework of the U.S.Indo-Pacific Strategy，the key for China，which is in a comparatively weaker position，to address its strategic pressure and lift it out from the strategic dilemma is to identify and carefully leverage the strategic weaknesses.Below are five specific aspects through which China can address the Indo-Pacific Strategy of the U.S.
First，in the field of strategy and diplomacy，China should pursue a differentiated and strategic approach to address the U.S.Indo-Pacific Alliance system，leveraging its own strengths based on its specific circumstances.China should align its relevant working principles with Mao Zedong's fundamental principle of winning over the middle forces in the Anti-Japanese National United Front.Those principles are：“that we（progressive forces）have ample strength；that we respect their（middle forces'）interests；and that we are resolute in our struggle against the die-hards and steadily win victories.”It is righteous to make such a judgment that China-U.S.relations are of crucial importance in shaping and managing China's regional environment，but the primary consideration should not revolve around whether China can bring benefits to its neighboring countries.China should recognize that for staunch U.S.allies like Australia and Japan，pragmatic and opportunistic nations like India，and Southeast Asian countries adopting a wait-and-see approach，the determining factor in their choices between China and the U.S.is not based on the benefits China can offer them.Instead，the pivotal factor lies in who can gain the upper hand in the competition between China and the U.S.within the region.
Second，in the realm of security，China should employ a combination of military and non-military measures to effectively address new operational pattern-based military deterrence of the United States.The United States is developing and implementing a new operational pattern-based military guidance known as the“innovative American war mode”.It is emphasized in the new U.S.military doctrine that the enemy's regime can be dismantled in combination with military and non-military means，by leveraging various domains such as satellite，radio，and cyberspace，in addition to conventional domains like air，land and sea，to extend beyond the traditional front and rear borders，and collaborating with the separatist forces within the enemy's territory.For this strategy，China should，on the one hand，demonstrate its resolve to employ force if necessary by enhancing the development and utilization of its military power.Meanwhile，it should clearly communicate to the United States not only its unwavering commitment to the reunification of the motherland，preservation of territorial integrity，and protection of core interests，but also the strategic determination that the Taiwan question will be resolved，and emphasize that China retains the right to choose the timing and method of resolution，so as to dispel any illusions the United States may have about intimidating China through the“Ukrainization”of Chinese Taiwan.On the other hand，China should intensify its efforts to counter domestic forces that propagate pro-U.S.sentiments and fears and remove individuals and groups that act as“pawns”in the U.S.'s containment strategy against China.It should also recognize the significance of removing the spokespersons advocating for the U.S.interests from the perspective of countering the threat posed by the new U.S.war mode.
Third，in the realm of science and technology，it is crucial to acknowledge the inherent structural contradictions between the two countries and be prepared for a potential complete rupture in high-tech cooperation.The primary objective of the U.S.strategy toward China is to impede China's further rise，with a particular emphasis on technology blockade as a key component.In this regard，it is highly unlikely for China and the United States to reach a consensus.The U.S.is bound to intensify its efforts to hinder China's access to advanced technology in the future，employing methods that are becoming less constrained by existing international mechanisms and less influenced by the few U.S.enterprises and groups with close ties to Chinese interests.Unlike traditional manufacturing industries in the United States，the development of high-tech industries does not necessarily require mutual contact with Chinese industrial and value chains.China should be prepared for the growing technological isolation measures implemented by the U.S.in the future.It should build a“de-Americanized”Chinese high-tech industrial and value chains，relying primarily on the domestic market.In addition，it should actively pursue regional cooperation networks in overseas high-tech markets that are independent of the U.S.and led by China.
Fourth，in the economic sphere，it is crucial to uphold the principle of inclusivity within the“Indo-Pacific Economic Framework”，deepen the existing framework of open regional cooperation，and promote healthy competition in the economic and trade fields.It is imperative to actively advance the implementation and enhancement of Regional Comprehensive Economic Partnership （RCEP）and the accession to Comprehensive and Progressive Agreement for Trans-Pacific Partnership （CPTPP）and Digital Economy Partnership Agreement （DEPA）.Moreover，the development of the Version 3.0 China-ASEAN Free Trade Area（FTA）should be initiated as soon as possible.
Fifth，in the realm of external communication，it is crucial to fearlessly articulate China's ideas and clarify its stance.Currently and for the foreseeable future，ideological confrontation will become the focus of the competition between China and the United States.China should take a decisive approach to confronting ideological conflicts.On the one hand，it should utilize the U.S.discourse system to expose the“double standards”employed by the U.S.，openly criticizing the U.S.and its allies on international communication platforms regarding issues such as the COVID-19 pandemic，racial conflicts，and overseas war crimes，and holding them accountable for their actions.On the other hand，China should prioritize its public diplomacy efforts in the Asia-Pacific region，emphasizing the shared cultural heritage between China and most Asia-Pacific nations，promoting the values and ideology of an Asia-Pacific community with a shared future and employing Eastern ethics to explain its initiatives，including the BRI.
The COVID-19 pandemic serves as a stark reminder of the critical importance of global cooperation.The collaborative efforts between China and Pakistan during the pandemic further reinforce the notion that the BRI stands as the best practice platform for building a community with a shared future for mankind.The solidarity demonstrated by Asian countries throughout the COVID-19 pandemic played a pivotal role in enabling the region to effectively emerge as a leader in recovery.Our perception of the pandemic largely derives from the lessons we have learned from past experience and our comprehension of the pre-pandemic international landscape.The outbreak of SARS has imparted a profound lesson regarding the importance of early response and international collaboration in tackling such outbreaks.Asian countries have once again demonstrated remarkable solidarity in their response to the COVID-19 pandemic，reminiscent of the collective effort witnessed during the fight against SARS in 2003.Regrettably，international cooperation has been lacking in many other regions.Even the regional integration organizations that were once considered examples of collaboration，such as the European Union and the North American Free Trade Area，have failed to demonstrate the necessary goodwill and capacity for country-to-country cooperation in addressing the pandemic，which has fallen short of our expectations.This underscores a critical lesson and highlights a significant institutional advantage that has empowered the Asian region to get out of the pandemic more effectively.Furthermore，it is essential to acknowledge the diverse national contexts of countries worldwide，which render a one-size-fits-all approach to combating the pandemic impractical.Only through the comprehensive mobilization of resources tailored to each nation's specific circumstances and the bolstering of international cooperation can we hope to secure a triumph in the global fight against COVID-19.
We witnessed both crises and challenges in the year 2022.From the Russia-Ukraine conflict to the competition among major countries，the blockade and sanctions，and the pandemic and disasters，a multitude of challenges and conflicts have intersected and been projected across different dimensions of the international landscape.As the major changes unseen in a century evolve in depth，the world grapples with escalating risks and challenges，while the international order seeks a new equilibrium amidst a backdrop of turbulent upheaval.Despite the intricate nature of the international situation，the fundamental multipolar pattern has remained intact，with a multitude of developing countries and forces opposing hegemony steadfastly committed to solidarity and cooperation.Nevertheless，the year 2022 carried with it the promise of reforms and hopes.The 20 th National Congress of the CPC was held，the various endeavors of the Party and the nation have been pushing forward with resolute determination，and the“Chinese path to modernization”has emerged as an important keyword in deciphering China's development.Confronted with a turbulent international landscape，Chinese diplomacy，by navigating through the waves of change and forging ahead with unwavering courage amidst the chaos，has been constantly breaking new ground for majorcountry diplomacy with Chinese characteristics，demonstrating the mission and responsibility of major-country diplomacy.The year 2023 marks the 10 th anniversary of the BRI.Over the past decade，the BRI has yielded fruitful outcomes.While advancing the Chinese path to modernization，China has also extended its support to numerous countries worldwide，particularly developing countries，facilitating their economic progress and offering Chinese wisdom and solutions for world peace and development.From a global development perspective，the value of Chinese solutions goes beyond the mere progress of individual projects.It offers a fresh reference and alternative for numerous developing countries striving to enhance their economic conditions and propel their own modernization efforts.In response to the intricate and constantly evolving international landscape，China has collaborated with various parties in the high-quality Belt and Road cooperation，which has opened up wider prospects for cooperation and injected vitality into global development.Moving forward，China will place greater emphasis on enhancing cooperation and mutual benefits with other countries worldwide，while steadfastly pursuing its own high-quality development.Furthermore，China will uphold the principle of extensive consultation，joint contribution and shared benefits in global governance，actively promoting the establishment of a community with a shared future for mankind and striving to steer the global governance system towards a more equitable and rational direction.In the future，China will steadfastly advance the highquality Belt and Road cooperation，creating and seeking new opportunities and momentum for development，and expanding space for further development through equal participation，inclusiveness，and openness.This commitment reflects not only the shared aspirations of people around the world but also the imperative demands of our times.
The year 2023 is the first year to fully implement the guiding principles of the 20 th CPC National Congress.The report to the 20 th National Congress of the CPC has effectively conveyed to the world the Chinese solutions to addressing the challenges faced in global development，namely，the pursuit of the great rejuvenation of the Chinese nation through the Chinese path to modernization.The real economy is the very foundation of a country's economy and the fundamental source of wealth creation.Finance，serving as the blood vessel of the real economy，plays a crucial role in promoting highquality economic development and advancing the great rejuvenation of the Chinese nation.“In pursuing economic growth，we must continue to focus on the real economy.”The report to the 20 th National Congress of the CPC reaffirmed the significance of the real economy.It presented higher and more modern requirements for financial endeavors，offering essential principles for establishing a financial system adapted to the Chinese path to modernization and delineating the trend and objectives of its development.The report also put forward the crucial objective of“promoting the deep integration of the digital economy and the real economy”.As structural reform deepens，China's financial sector is swiftly refocusing on its roots in the real economy to facilitate economic restructuring.A proper understanding of the relationship between finance and the real economy is a fundamental prerequisite for a healthy and stable economy，as well as the foundation for the economy to maintain resilience and withstand external pressures.When it comes to financial services for the real economy，quantity is important，while quality holds even greater significance.Enhancing the capability and level of financial services for the real economy can lead to an improvement in the marginal utility of capital and capital factors，which can generate greater economic output with relatively less financial input，thereby boosting China's total factor productivity.Hence，as we embark on a new phase of development，it is crucial to seek a breakthrough point in financial services for the real economy and explore innovative approaches to financial services for the real economy，in order to address the pressing problem of our times of how to enhance the capability and level of financial services for the real economy.
To enhance the capacity and level of financial services for the real economy，it is imperative to maintain the implementation of a proactive fiscal policy and a prudent monetary policy and strategically combine these two policy approaches.The Report to the 20 th National Congress of the CPC pointed out，“We will enhance coordination between fiscal and monetary policies and will work to expand domestic demand.”On one hand，it highlights the potential of fiscal and monetary policies to stimulate domestic demand and ensure economic stability.On the other hand，it emphasizes the imperative of enhancing coordination between these policies to enhance the quality and effectiveness of macroeconomic governance.As for financial services for the real economy，it is imperative to implement a prudent monetary policy and enhance the monetary policy transmission mechanism under the framework of regulation underpinned by monetary policy and macro-prudential policy，so as to create a favorable monetary and financial environment conducive to the high-quality development of the economy.China is among the few major economies that have persisted in implementing a normal monetary policy in recent years.The prudent monetary policy has created a favorable financial environment conducive to the stability of economic growth，prices，employment，and the balance of payments.As for financial services for the real economy，it is essential to properly handle the relationship between policy regulation and market regulation，improve the formation and transmission mechanism of interest rate of marketing，and prevent the implementation of policies from influencing the decisive role of market resource allocation.Additionally，it is also necessary to make timely improvements while enhancing financial macro-controls and strive for a dynamic equilibrium while pursuing multiple objectives.
To enhance the capacity and level of financial services for the real economy，boosting private investment represents a potential breaking point in terms of macro policy.Since 2019，the outbreak of the pandemic，alongside geopolitical conflicts，has magnified the adverse effects of economic restructuring at the micro level.Private enterprises have experienced greater operational challenges，resulting in a decline in both the capacity and willingness of private investment.As a result of the double impact from the pandemic and geopolitics on the real economy，private investment has hit rock bottom，exhibiting a downward trend in new private investments.The significant slowdown in private investment has to a large extent mirrored the challenges encountered by private enterprises during economic transformation and upgradation：earning profits has become arduous，and identifying new and suitable investment prospects has become even more challenging.To address this situation，the next step should be the implementation of diverse policy measures aimed at encouraging the growth of private investment.Marketoriented approaches and reform initiatives should be utilized to invigorate the vitality of private investment，thereby bolstering the long-term investment confidence of private enterprises.
To invigorate the vitality of private investment，the first is to utilize fiscal and financial policy tools to provide support for the construction of major projects，as well as equipment renewal and renovation，and to form more physical workload.Efforts should be made to speed up the construction of the projects while ensuring the quality of the works.It is necessary to accelerate the lending for equipment renewal and renovation，provide equitable support of lending for the procurement of both domestic and foreign equipment，expand manufacturing demand and guide public expectations.Efforts shall be made to support private investment in major projects，while also creating opportunities for private capital to flow into sectors such as infrastructure and transportation.Supporting private investment in major projects could，on one hand，promote the diversification of investment funds and provide access to a wider range of financing channels，and on the other hand，it also provides private enterprises a better path forward and alternative channels for investment，helping to alleviate the operating pressures they face.Second，it is necessary to promote the recovery of consumption and establish it as a primary driver of the economy.It is important to expand work-relief programs to promote employment，increase income and drive consumption，and the renewal and renovation of consumer equipment should be included in the scope of re-lending facilities and finance discounts.City-specific measures should be taken to support firm and rational demand for housing.
Since 2020，the implementation of a series of national policies and initiatives aimed at stabilizing the economy，promoting growth，expanding investment，and boosting consumption has gradually alleviated the pressure and risks posed by external factors to the sustained growth of the domestic economy.This has resulted in the promotion of private investment and further stabilization and upward movement of the economy.
Promoting digital innovation is a breakthrough point in the development strategy to improve the capability and level of financial services for the real economy.The most important economic significance of digital innovation lies in the following aspects：①it enables industrial digitalization and digital industrialization；②it expands the credit discovery of the long-tail group and the credit transmission of supply chain，thereby making inclusive finance more accessible.
To realize industrial digitalization and digital industrialization，we need to collaboratively promote the development of the real economy，network economy and metaverse economy.Based on the current statistical scope，China attributes“digital industrialization”to the output from core industries of digital economy in the narrow scope，including digital product manufacturing，digital product service industry，digital technology application industry and digital factor-driven industry；additionally，it attributes“industrial digitalization”to the output from digitalized economy in the broad scope，covering the output increase and efficiency improvement brought by the application of digital technology and data resources to traditional industries.With data emerging as a new factor of production，digital technology has become a new productive force，serving as an important engine for transforming traditional production methods，upgrading traditional industries and building a modern economic system.The deep integration of digital economy and real economy can produce a doubled economic driving force.China is now a great power in manufacturing and infrastructure construction.Digitalization allows us to advance new industrialization and move faster to boost China's strength in manufacturing，product quality，aerospace，transportation，cyberspace，and digital development，and enables us to grasp the decisive opportunities in sci-tech revolution and industrial transformation，seize the initiative for future development，and help us develop new strengths for international competition.Digital innovation can serve as a new driving force for stabilizing economy and stimulating economic growth.Analysis and study on the economic development of all provinces and cities in the first half of the year indicated that Zhejiang Province ranked the forefront of the country in terms of the core economic indicators，owing primarily to its digital innovation.
To realize industrial digitalization and digital industrialization，it is necessary to continue promoting the healthy and sustainable development of network economy.As the Internet becomes more intelligent，the network economy is undergoing continuous iteration，expanding from the life service fields，such as e-commerce，payment and logistics，to the production-and operation-oriented supply chain business circle，as well as cultural exchange and other fields.The supply chain platform facilitates seamless integration of supply，logistics，and financial services.The cloud conference platform enables a seamless connection between the online and offline worlds.The latest trends in network economy primarily revolve around eyeball effect and traffic effect，with the logic being：topics attract attention，attention generates scenes，scenes drives traffic，traffic generates data，and data creates value.From January to September 2022，the national online retail sales increased by 4% year-on-year，and the total retail sales of consumer goods increased by 0.7% year-on-year，3.3 percentage points higher.In the first half of 2022，mobile data traffic increased by more than 20%.The number of network users reached 995 million，close to 1 billion，with that of short video users hitting 962 million，ranking first in the world，which fully stimulated the economic driving force.
To realize industrial digitalization and digital industrialization，it is necessary to promote the development of metaverse economy.Metaverse is a brand new concept.In a meeting held by China National Committee for Terms in Sciences and Technologies on September 13 th ，2022，it is defined as：a virtual world constructed by human beings with digital technology，which is mapped from or extends beyond the real world and can interact with the real world.At present，the economic significance of metaverse is still unclear，but the potential explosive power of metaverse deserves attention.Effective application of metaverse can generate a new driving force that stimulates the economic output of the tertiary industry.
Inclusive finance refers to providing appropriate and effective financial services to all social groups in need of financial services at an affordable cost based on the principle of equal opportunity and business sustainability.It has always been a worldwide problem.The difficulty lies in the fact that the challenges related to the credit discovery of the long-tail group，high risk cost，and the commercial sustainability of inclusive finance.In the digital economy era，there is a new solution to the problem：expand the credit discovery of the long-tail group and the credit transmission of supply chain，thereby making inclusive finance more accessible.
Over the years，joint efforts have been made by the large commercial banks and small and medium-sized commercial banks in China to apply digital technology to eliminate the pain points existing in inclusive finance and address the financial service needs of the long-tail group，which have achieved remarkable results.Digital innovation makes inclusive finance commercially feasible：the problem of information asymmetry between banks and customers is mitigated with the use of big data risk control technology，reducing the risk to a bearable level；the problem of high labor service cost is addressed via online business model；high-elasticity and low trial-and-error cost is realized and cost structure is optimized cost based on the new system architecture；quick response can be made to market demands through Internet product design；the whole growth cycle of small and micro enterprises is covered through digital fine operation；the financing convenience of small and micro enterprises is improved through digital precision marketing.The development of digital inclusive finance has clearly defined the direction for finance to serve the growth of the real economy and the achievement of common prosperity in the process of high-quality development.
The pandemic has posed a comprehensive test not only for financial institutions but also for digital financial services.Undoubtedly，financial institutions with strong digital capabilities have a quick response to the pandemic，with high coverage and significant results.The pandemic reminds us that there is an urgent need to accelerate progress in the following two aspects.
First，we should accelerate technological innovation and promote the digital finance to be fully implemented.Financial institutions should place financial technology in a more important position.We should apply digital technologies such as blockchain，big data，artificial intelligence and cloud computing to create an end-to-end and point-to-point three-dimensional interactive financial service system and a trans-space financial management and operation model with cloud-based office and supervision.Financial regulators should not only actively control the potential financial risks caused by technological innovation and business innovation，but also consciously avoid the regulatory gap caused by backward regulatory technology and lagging regulatory system.
Second，we should accelerate institutional innovation and promote the comprehensive implementation of inclusive finance.By applying big data and blockchain technologies，we should build a digital trust mechanism and create a technology platform for inclusive finance.Furthermore，close attention should be paid to solving the problems of credit mechanism and long-term mechanism.Policy support for small and micro enterprises should give birth to immediate effects，while institutional innovation should be based on improving the mechanism and achieving long-term results，so as to fundamentally solve the unbalanced allocation of financial resources.Financing cost and risk cost are the core costs of commercial banks'credit business.Only when the market financing cost is reduced can commercial banks further reduce the price of credit for small and micro enterprises.The People's Bank of China should，in terms of its monetary policy，not only control the total amount of money supply and adjusting market liquidity，but also reduce the overall financing cost of the financial market.Over the years，the application of monetary policy has achieved remarkable results in liquidity adjustment.It is hoped that in a certain period of time in the future，the People's Bank of China will leave more room for commercial banks to control market financing costs.In terms of risk cost management，we should adhere to the market-oriented pricing mechanism，and financial regulators can control the average spread of commercial banks'loans to small and micro enterprises，instead of limiting the maximum interest rate level.It is difficult to achieve continuous development for credit pricing if it can't cover financing cost and risk cost.It is also necessary for the fiscal and tax system to provide tax reduction and exemption for the small and micro enterprise financing business of financial institutions，and support financial institutions to provide all-round financial services for small and micro enterprises.
When it comes to financial services for the real economy，quantity is important，but quality holds even greater significance.Efforts should be made to improve the effectiveness of capital and capital elements，bolster the level of the real economy to address its weak links，and drive relatively more economic output with relatively little financial input.Therefore，in the context of an ever-changing economic landscape，new ideas should be introduced for financial services for the real economy：adhere to a more proactive fiscal policy and prudent financial principles，and enable efficiency with digital innovation.
First，we should adhere to a proactive fiscal policy.Compared with other countries and economies，China has a more integrated economic structure，which enhances its flexibility and resilience，besides，China's supply-side production capacity is much higher than local demand，providing more room for maneuvering.Therefore，conditions are available for implementing a more proactive fiscal policy.For example，moderately increase the financial deficit ratio to 4%-5% in a short period；increase the issuance of long-term government bonds and special bonds，and raise funds for either major project investment or replacement of local government bonds to activate the financial impetus of local governments；maintain the continuity of policies to cut taxes and fees for a few years，and support enterprises，especially small and medium-sized enterprises，to tide over difficulties and regain their vitality.
Second，we should adhere to prudent financial principles.We should maintain an appropriate scale of social financing，steadily increase financial investment，and further optimize the financing structure；support the construction of key national projects and state-owned enterprise investment and private investment，and increase credit loan placement to small and medium-sized enterprises.It should be noted that the difference between financial resource allocation and financial resource allocation is that deposit and loan are hard balanced，term is moderately mismatched，and loans must be repaid.Therefore，even in the stage of stabilizing economy and stimulating economic growth，we should adhere to prudent financial principles to avoid ineffective credit loan placement and new nonperforming assets caused by a deluge of strong stimulus policies.
Third，we should digitalize financial instruments.For example，improve the digitalization level of supply chain finance，apply artificial intelligence，blockchain，5G network and other technologies，build a supply chain platform that can seamlessly link supply，demand，logistics and finance，expand the credit transmission of supply chain，and realize the integration of logistics，information flow and capital flow，thereby reducing the overall financing risk of supply chain and the financing cost of enterprises contained in supply chain，and improving the efficiency of financial services.Another example is the establishment of a system for the integration and application of data factors of financial sector，which shall ensure that the data available but not visible，allow for data sharing while protecting data privacy，and enhance the value of data resources while protecting data security.Another example is to establish a digital asset market platform to register，certify，bargain and trade digital patent technologies，so as to promote the efficient circulation and paid sharing of technical patent data among market entities，the practical application of sci-tech innovation achievements and industrial upgrading and efficiency，and realize the rational allocation and value maximization of technical information resources.
Implementing efficient financial regulation is essential to improve the level of financial services for the real economy.Digital technology innovation is changing the mode of financial services，gradually forming a new financial business form that is interactive，crossed and intersecting.Financial innovation calls for the innovation of financial regulation.A comprehensive digital financial regulation system should be established，the main purpose of which is to improve financial infrastructure and reduce the costs of both regulators and regulated entities.Such a system should be jointly constructed by and shared among financial regulators.It should cover all financial institutions，reach to financial markets and financial businesses across different fields，facilitate the sharing of regulatory data among multiple parties and ensure the implementation of consistent compliance standards to realize whole-process and all-round intelligence of financial regulation，surpassing the complex resource-intensive on-site regulation.To establish a comprehensive digital financial regulation system，we should pay attention to the following two aspects.
First，we should break the institutional isolated data islands.The current problem lies in the dispersion of credit data related to enterprises across different local systems such as financial regulators，financial institutions，industrial and commercial administration，taxation and customs，and lack of high-level openness and sharing affects the discovery of value from public data resources.The“administration ownership”of public data should be changed through legislation and administrative instructions.A standardized and unified public statistical system，a centralized and unified public database and an interconnected and shared public data application system to form an infrastructure that can support the development of digital economy should be established in China.
Second，we should protect personal data privacy and data security.The Internet of Everything（IoE）means the collection of data，but the collection alone cannot automatically address the issue of isolated data islands，and may even lead to data monopoly.Technical isolated data islands can certainly provide resource and competitive advantages for data collectors.However，from the standpoint of the nation，data monopolies may prevent public data from playing its due social value，and may also lead to infringement of personal privacy due to commercial interests or security omissions.Therefore，it becomes even more crucial to effectively protect data privacy in the digital economy era.China's national conditions are different from those of western countries，so we should not blindly adopt the specific provisions of Western laws，but should emphasize the basic rights of data owners over their private data.We are in urgent need to update the security definition，security technology and security system and build a brand-new digital security system to effectively protect the security of data resources.
The development of the real economy relies heavily on the strong support from financial sector，and the high-quality development of the financial sector is also an important prerequisite for better serving the real economy.The origin of finance must be inherited，and innovation must be made in financial services.In the digital economy era，people from all walks of life are exploring new opportunities in digital transformation.China should seize this opportunity to accelerate the construction of digital financial systems，lose no time in formulating digital financial systems，such as digital financial regulation system，digital currency regulation system and statutory digital currency issuance system，actively participate in and actively strive for the right to speak in the construction of global digital financial systems and rules，strengthen the coordination of international regulation，promote a consensus on regulation，strive to establish a unified standards for international digital finance regulation，and make efforts to improve the quality and efficiency of financial services for the real economy.Looking ahead，the finance and the real economy will become even more interconnected，and the financial support for the real economy will be further enhanced.We should continuously improve the capability and level of financial services for the high-quality development of the real economy，do a good job in stabilizing growth，employment and prices，effectively prevent and resolve major financial risks，and further promote the reform and opening-up of the financial sector.We should actively explore new paths and measures for China's financial development in the next five years or even longer，build a financial system adapted to Chinese path to modernization，realize a virtuous circle between financial development and real economy development，and pave the way for building a modern socialist country in all respects.
At present，the international security and economic order are undergoing significant adjustments.The coexistence of development and conflict has become a critical global issue.Some important changes are expected to occur in the process of economic globalization and regional economic integration，and the path to modernization is once again approaching a critical turning point in history.Against this backdrop，giving full play to the role of RCEP as the world's largest free trade zone and strengthening the cooperation process between China and RCEP-covered regions such as ASEAN is of strategic significance and carries overall importance and urgency.Hainan，with its unique geographical advantages，holds a prominent position as a strategic hub in RCEP and China's vast market.Seizing the significant opportunity presented by the entry into force of RCEP，Hainan Free Trade Port should advance a higher level of opening-up in serving the overall situation and grasping the general trend，so that it can play a special strategic role in the major changes unseen in a century and contribute Hainan's strength to the realization of the Chinese path to modernization.
At present，ASEAN-China relations have entered a new stage of comprehensive strategic partnership.Hainan Free Trade Port，which aims to be an important open gateway，enjoys geographical advantages and advantages of high-level open-up policies and systems.On the 30 th Anniversary of ASEAN-China Dialogue Relations，the two sides formally announced the establishment of comprehensive strategic partnership.ASEANChina cooperation and exchanges have entered a new stage，where there is great potential in the economic and trade cooperation between the two sides，and which will also play a greater role in promoting regional economic integration in Asia and global economic governance reform and safeguarding the multilateral trading system.
In addition，Hainan Free Trade Port has the potential to become an important hub for comprehensive strategic cooperation between ASEAN and China.Owing to its close geographic proximity and traditional friendship with ASEAN countries，Hainan not only has the advantages of locating at the forefront of ASEAN，being at the center of RCEP and having a super-sized Chinese mainland market behind，but also benefits from the implementation of highest-level open-up policies and systems.To build a free trade port with global influence in Hainan is to leverage its unique role and transform it into a free economic zone for economic and trade cooperation between ASEAN and China，a demonstration zone for public health and sanitation cooperation，a core zone for blue partnership and a special zone for comprehensive people-to-people exchanges.
Finally，Hainan Free Trade Port has the potential to serve as an important connection point between ASEAN and China markets，attracting high-level domestic enterprises to establish ASEAN-oriented headquarters bases in Hainan，and helping ASEAN enterprises to explore China's domestic market；it has the potential to become a major channel for the two-way flow of goods and factors between ASEAN and China，enhancing its promotion and service role in the development of China ASEAN cross-border supply chain，as well as its service functions for the industrial chain，value chain，and innovation chain；it has the potential to become a regional international people-to-people exchange center between ASEAN and China，making it possible to carry out people-topeople exchange activities with ASEAN countries in all directions.
First，we should strengthen economic and trade cooperation and people-to-people exchanges with ASEAN.It is a major national strategy to strengthen economic and trade cooperation and exchanges with ASEAN，which concerns the overall situation of China's high-level opening-up.As one of the regions with the strongest economic vitality in the world，ASEAN's status and role in building a new pattern of development with a high level of opening-up in China have been significantly enhanced.It is estimated that the GDP of ASEAN will reach USD 4.5 trillion by 2030 and it will become the fourth largest economy in the world.Especially in the case that the existing international political，economic and security order is likely to be broken and reconstructed in some aspects and deglobalization will become more prominent，seizing the great benefits of RCEP's entry into force，pragmatically promoting the comprehensive strategic partnership between ASEAN and China，strengthening economic and trade cooperation and people-to-people exchanges with ASEAN，and expanding the economic and trade integration and the intersection of interests within the region are the strategic priorities for China to win new advantages in international cooperation and competition under the great changes.
Second，we should build Hainan Free Trade Port into a strategic hub for cooperation and exchange between ASEAN and China in the context of RCEP.Located in the center of RCEP，Hainan is the forefront of China facing ASEAN.Relying on the location advantage，we should do a good job of overlapping and integrating RECP and the policy systems for the free trade port，so that Hainan Free Trade Port can play a hub role in market connectivity，industrial integration，rule convergence and factor allocation between ASEAN and China，and become an important intersection of the two markets.This is a starting point for building Hainan Free Trade Port into an“important open gateway”under the major changes.
Third，efforts should be made to build Hainan Free Trade Port into an important platform for high-level cooperation and exchanges between ASEAN and China.A free trade port represents the highest-level of opening up in the world today.The policy arrangements for Hainan Free Trade Port are generally superior to the relevant rules in RCEP.As for Hainan Free Trade Port，we should not only advance the implementation of rules in RCEP，but also give full play to the flexibility and initiative of one-way opening-up，and engage in higher-level bilateral and regional cooperation with CPTPP member countries such as Singapore，Malaysia and Vietnam，so as to transform it a pioneering area for high-level cooperation and exchange in RECP-covered regions.In this regard，Hainan has the conditions and possibilities.The key is to grasp the general trend，free the mind，boldly carry out reform and innovation，and launch relevant important initiatives as soon as possible by benchmarking against CPTPP.
Fourth，we should give full play to the unique role of Hainan Free Trade Port in promoting regional economic，trade and security cooperation in the South China Sea.Taking Hainan Free Trade Port as an important platform，carrying out greater twoway opening-up with countries within the South China Sea with mature conditions and implementing more flexible free trade policies with regard to industries are not only conducive to promoting the consolidation and development of ASEAN-China economic and trade cooperation，but also conducive to the long-term peace and development of the South China Sea.For example，build a common oil and gas production circle and a common marine environmental protection circle.
First，building“two headquarters”should be taken as a major task in the development of Hainan Free Trade Port.Facing the new situation of changes in the international political and economic pattern，Hainan Free Trade Port should adapt to the general trend，and accelerate the development of relevant policy and institutional environment with the goal of building two“headquarters”.One“headquarters”，that is，the ASEAN marketoriented headquarters of domestic enterprises.This requires the development of more attractive relevant policies and institutional designs.Another“headquarters”，that is，China market-oriented regional headquarters established in Hainan Free Trade Port by non-RCEP member enterprises to be attracted，making the Port a significant platform for global investors to share dividends brought by RCEP.Reasons for doing these are as follows：first，under the new situation and new background，domestic enterprises，especially manufacturing enterprises，digital economy enterprises and related tourism and cultural enterprises，should be guided and encouraged to invest in ASEAN countries with Hainan Free Trade Port as their headquarters base as soon as possible，so as to enhance the cohesion of economic，trade and people-to-people exchanges and cooperation between ASEAN and China as soon as possible and promote the integration of industrial chain and supply chain between ASEAN and China.This is the overall situation and the general trend，which is of great strategic importance and requires urgent attention.Second，building Hainan Free Trade Port into a strategic hub for cooperation and exchange between ASEAN and China needs to rely on global and regional production，sales and cooperation networks，and be supported by international services，talents and platforms.From the development experience of such free trade ports as Singapore and Hong Kong，China，gathering a group of global or regional headquarters enterprises has become an important condition for improving the position and role of those ports in regional cooperation.For example，there are currently about 26，000 international companies based in Singapore，and one-third of Fortune 500 companies have established their Asian headquarters in Singapore；in 2020，there were 1，504 regional headquarters enterprises established in Hong Kong，primarily involved in trade，finance，and professional services sectors.The gathering of a large number of global or regional headquarters enterprises not only generates huge demands for cooperation，but also provides an efficient and convenient cooperation network and an internationalized service system.
Second，we should make good use of RCEP policy to build“two headquarters bases”.RCEP promotes the liberalization and facilitation of investment in the region by means of negative list system for market access in non-service sectors，and advances the overall opening-up of service trade in the region by combining positive list with negative list，which not only significantly improves the stability and transparency of the trade and investment environment in RECP-covered regions，but also drives the adjustment of industrial chain integration in the regions.In this regard，more innovative opening-up initiatives and policy arrangements should be implemented for Hainan Free Trade Port as soon as possible.At present，the primary focus lies in the construction of“headquarters”for domestic enterprises orienting cooperation with ASEAN.Starting from the need for this“headquarters”，we should support Hainan to issue a series of attractive related policies.For example，the“Double 15%”income tax policy should be fully popularized.
Third，we should，with building“two headquarters bases”as guide，form a corresponding policy system.For example，make the policy of“full convertibility under the foreign debts of non-financial enterprises”in Master Plan for the Development of Hainan Free Trade Port concrete as soon as possible，and institutionalize the“policy of exemption of corporate income tax on income from new overseas direct investment by enterprises”to stabilize the medium and long-term expectations of enterprises；at the same time，considering that the agricultural added values of RCEP members account for about 43% of the global ones，and the agricultural products of ASEAN countries are highly overlapped with those of Hainan，it is suggested to speed up attracting domestic leading enterprises to take Hainan as the regional headquarters base towards ASEAN，accelerate the layout of agricultural manufacturing projects focusing on processing，packaging，preservation，logistics and research and development in Hainan，and import agricultural products from Southeast Asian countries for deep processing in Hainan through zero-tariff policy and origin policy.
First，special initiatives are essential to establish a special area for exchanges between China and the international community，especially ASEAN，under the pandemic situation.First of all，make the Port an important platform for communication and ability training among RCEP members as soon as possible；secondly，make the Port a“special zone”for international exchanges and contacts in China under the pandemic situation with the support of Boao Forum for Asia（BFA）.In this regard，Beijing Winter Olympics has provided a management mode for holding large-scale events during the pandemic.
Second，it is necessary to liberalize the ASEAN-oriented labor market in due time.The Philippines，Indonesia and Cambodia are major countries in labor dispatch services in the world.It is necessary to meet the needs of all parties and liberalize the ASEAN-oriented labor market in due time.For example，Hainan takes the lead in introducing skilled foreign workers such as Filipino maids through quota management and improving the social security management system，so as to provide high-quality domestic services for international talents and middle-and high-income families in Hainan；it pays more attention to youth exchanges，opens a green channel for overseas students from Southeast Asian countries to study，practice and obtain employment，and invites young entrepreneurs and opinion leaders from RCEP member countries to enhance communication and mutual trust among young people in the RECP-covered regions by dint of participating in research，on-site experiences，and holding youth forums.
Third，it is necessary to speed up the establishment of regional international peopleto-people exchange centers.We should leverage the advantages of Hainan Free Trade Port's relatively open talent policies，as well as its policies regarding stay and residence，promote people-to-people exchange activities with ASEAN countries in an all-round way，and establish a mechanism for people-to-people exchanges that covers both government and non-governmental entities，and encourages participation from various parties.At the same time，we should，relying on important platforms such as Boao Forum for Asia（BFA），conduct high-end dialogues and joint research with a focus on practical cooperation in the South China Sea，and promote the international cooperation with neighboring countries in marine science and technology，environmental protection and disaster prevention and mitigation.
Building a new dual-circulation development pattern is an important strategic measure taken by China in response to changes in international and domestic situations.What is the orientation of Hainan Free Trade Port in this process？How should Hainan be built into an important intersection of the domestic and international circulations and achieve a high level of opening-up under the background of accelerating the construction of a new pattern of development with domestic circulation as the main body and domestic and international circulations promoting each other？Hainan Free Trade Port should become a strategic hub and an intersection of domestic and international circulations.An ASEAN-oriented regional market should be established in Hainan.
First，Hainan can achieve an important breakthrough in cooperation with ASEAN by quickly establishing commodity market，factor market and tourism market.In terms of tourism market，ASEAN has a great demand for China's vast tourism market after the pandemic.In terms of commodity market，Hainan can establish a bird's nest trading market targeting on domestic consumers.At present，bird's nest is mainly produced in Southeast Asia，with an annual turnover of CNY 100 billion.In terms of factor market，it is expected that many property rights markets and carbon-sink markets as well as financial markets including cross-border private wealth management will first be developed in Hainan.In summary，within a new dual-circulation development pattern，the primary task for Hainan Free Trade Port is to connect with ASEAN market.
Second，the connection between Hainan Free Trade Port and ASEAN market is of special significance.It is a breakthrough point and a key move to give full play to Hainan's unique geographical advantages and to build an important open gateway to the Pacific Ocean and Indian Ocean.The strategic goal of the central government in building a free trade port in Hainan is to make Hainan a prominent symbol and an important open gateway for China's opening to the outside world in the new era.This gateway is mainly open to ASEAN，and Hainan should play an important role in this regard.
Third，from a practical perspective，tourism consumption stands out an important part of supporting in building a new dual-circulation development pattern.As required in Master Plan for the Development of Hainan Free Trade Port by the central government，Hainan should become an international tourism and consumption destination.In the future，with the development of luxury goods market and duty-free goods market，more and more people will be willing to travel to Hainan for tourism and consumption purposes.Hainan should cooperate with Hong Kong to establish connectivity in the duty-free goods market.This will not only be conducive to enriching the products of Hainan's duty-free goods market but，more importantly，can enable Hainan to gradually establish a duty-free goods market service system with consumer protection as the core.
Fourth，Hainan should benchmark itself against the highest level of opening-up in the world.Practice has proved that the higher the level of opening-up，the more competitive it becomes.What is the highest level of opening-up？In my opinion，the highest level of opening-up is to promote institutional opening-up，achieving alignment in rules，regulations，governance，and standards with a focus on service trade，thereby driving the comprehensive deepening of reform.
Fifth，Hainan should promote the innovation of institutional integration.Not only should we innovate in some operational mechanisms，but more importantly，we should achieve significant breakthroughs in establishing an efficient administrative system，a professional and efficient legislative system and an efficient and authoritative judicial system，thus greatly enhancing the internationalization and legalization level of Hainan.
Sixth，Hainan should free the mind to make bold innovations.In particular，it is necessary to improve the business environment with emphasis on strengthening the service system，which faces many new issues.
Seventh，Hainan requires various types of professionals and management talents.On the one hand，we need to enhance training；on the other hand，we should introduce international talents.Hainan Free Trade Port has vast potential for future development.It has become a fertile ground for innovation and entrepreneurship.I hope every young person can devote themselves to this land and contribute their own value.
Facing the major changes unseen in a century，accelerating the construction of Hainan Free Trade Port is an important measure taken by China to proactively open up and open wider to the outside world，and has become one of the focal points attracting the eye of the international community regarding China's proactive opening-up.Located in the center of RCEP，Hainan is the forefront of China facing ASEAN.Relying on the location advantage，we should do a good job of overlapping and integrating RECP and the policy systems for the free trade port，so that Hainan Free Trade Port can play a hub role in market connectivity，industrial integration，rule convergence and factor allocation between ASEAN and China，and become an important intersection of the two markets.This is a starting point for building Hainan Free Trade Port into an“important open gateway”under the major changes.Hainan should seize the important opportunity presented by the official implementation of RCEP，advance a higher level of openingup in serving the overall situation and grasping the general trend，so that it can play a special strategic role in the major changes unseen in a century and contribute its strength to the realization of the Chinese path to modernization.
[1] Qifan HUANG,Vice Chair of the 12 th NPC Financial and Economic Affairs Committee,Former Mayor of Chongqing,and Co-Chair of Advisory Committee of RDI.
[2] From President Xi's remarks at the meeting attended by private entrepreneurs on November 1 st ,2018.https://language.chinadaily.com.cn/a/201811/02/WS5bdbad3ea310eff3032861d4.html.
[3] Lihui LI,Member of the 12 th NPC Financial and Economic Affairs Committee,Former President of Bank of China（BOC）,Head of the Blockchain Research Working Group of National Internet Finance Association of China,and Member of Advisory Committee of RDI.
[4] Fulin CHI,Member of the 11 th and 12 th National Committee of the Chinese People's Political Consultative Conference,President of China Institute for Reform and Development（CIRD）,President of the Expert Committee for China Association of Trade in Services,Vice President of China Society of Economic Reform,and Member of Advisory Committee of RDI.