China's accession to the WTO is a milestone in China's opening up to the outside world and a landmark event in the process of economic globalization. Jiang Xiaojuan, member of the Standing Committee of the National People's Congress, dean of the School of Public Policy and Management of Tsinghua University, and dean of the Institute of Service Economy and Digital Governance of Tsinghua University, believes that China has joined the World Economic and Trade Organization (WTO) for 20 years and has achieved sustained and rapid economic growth. The rapid growth of imports, exports, and economies reflect China's real development, reflect the overall changes in the economic system, increase employment, optimize the industrial structure, rapidly improve technology, and continuously improve people's living standards.
In recent years, digital globalization has developed strongly, and a new round of global industrial chain restructuring is imperative. Jiang Xiaojuan believes that digital technology links massive data and huge users, and there is no additional cost of digital services across borders, so globalization has become inevitable.
How can China adapt to the trend of digital globalization? Jiang Xiaojuan suggested that China must promote a high level of opening up. "China's industry must be more open, connect more resources and markets, and improve the efficiency of resource allocation, so as to enhance the global competitiveness of the digital age." She said that with China's size and position, it can become an important shaper of the international economic and trade environment in the digital age and produce increasingly prominent international influence, and we need to create a good international environment for ourselves and the world through further high-level opening up.
Jiang Xiaojuan expressed the above views at the 2022 annual meeting held by the Institute of Service Economy and Digital Governance of Tsinghua University on January 10, "The New Pattern of China's Opening Up in the New Century: Division of Labor and Governance from the Perspective of Global Value Chain".
The following is the full text of Jiang Xiaojuan's keynote speech, which has been reviewed and approved by myself and authorized to be published by The Paper.
Jiang Xiaojuan, member of the Standing Committee of the National People's Congress, dean of the School of Public Policy and Management of Tsinghua University, and dean of the Institute of Service Economy and Digital Governance of Tsinghua University
Just now Governor Ogawa, Minister Deming, and Vice Minister Xiao Zhun talked a lot of historical and knowledgeable content, including the rapid development that China has achieved since its accession to the WTO, China's performance in the global value chain, and how to better expand opening up and support the global trading system in the current environment. I am particularly pleased that several of them have talked about digital technology, the digital economy, and digital trade. Indeed, digital technology is a natural global technology that can be linked to the ends of the earth and has a very low marginal cost, so digital globalization is a very dynamic new round of globalization.
Let me give you a recent example. At the end of 2021, a new American comedy film "Don't Look Up" was released worldwide. After the offline theater was released on December 8, the audience watched 200,000 hours, that is, more than 80,000 people entered the theater to watch the movie. After the film was launched on Netflix, the world's largest film and television product streaming platform, it was launched on December 24 and in the week of the New Year, and the global broadcast volume exceeded 152 million hours, setting a new record for online film playback. Netflix is the world's largest streaming service provider, currently connected to more than 200 countries and regions, with a total global membership of more than 200 million in 2021, and two-thirds of its operating income comes from outside North America. Such digital platforms enable global consumer connectivity at a low marginal cost. The huge gap between online and offline consumption has the impact of the epidemic, but it is fundamentally a change brought about by the rapid development of digital technology. This digital consumption habit will continue after the epidemic, and online and offline consumption must be very different from before.
Figure 1 Digital + Epidemic The global online consumer market is huge: Take Netflix, a media broadcast service provider
Below I will report to you mainly from three aspects: first, globalization promotes the optimal allocation of global resources, China benefits, and all countries also benefit; second, the development of digital globalization is strong, and global industrial and market restructuring is imperative; third, we must adapt to the trend of digital globalization and promote high-level opening up.
First, globalization promotes the optimal allocation of global resources, and China and other countries benefit together
China's accession to the WTO is a milestone in China's development process. We use two charts to intuitively understand how China has benefited from expanding opening up and global cooperative governance after joining the WTO from two aspects, namely, the scale of exports and its growth performance.
The first chart shows that in the first two decades of reform and opening up, the growth of our export volume of goods was relatively flat, that is, from the year of china's accession to the WTO, the scale of exports of goods increased rapidly. From 2001 to 2020, China's exports of goods increased from US$266.098 billion to US$2.59 trillion. Over the same period, U.S. exports of goods rose from $729.1 billion to $1.43 trillion. In 20 years, the ratio of Sino-US exports of goods increased from 0.36 to 1.81. After entering the 21st century, China's exports of goods surpassed that of the United Kingdom in 2002, Japan in 2004, the United States in 2007, and Germany in 2009, becoming the world's largest exporter. At the same time, China's export share increased from 4.29% in 2001 to 14.7% in 2020. The gap between the U.S.-China share changed from 10.4 percentage points lower than the U.S. to 6.58 percentage points higher.
The second chart shows the rapid growth of China's economy after china's accession to the WTO. China's GDP accounted for 1.73% of the world's GDP in 1978, 4% when it joined the WTO in 2001, 16.33% in 2019, and 17.41% in 2020. The share of U.S. GDP in the world has fallen from 40% volatility in the 1960s to 24.51% in 2019. In the 20 years since China's accession to the WTO, the economy has achieved sustained and rapid economic growth. The rapid growth of imports, exports, and economies reflect China's real development, reflect the overall changes in the economic system, increase employment, optimize the industrial structure, rapidly improve technology, and continuously improve people's living standards.
These figures also reflect China's outstanding contribution to the world. Global consumers can enjoy high-quality and inexpensive Chinese products, which increases the welfare of global consumers and helps to maintain low global inflation. The past 20 years have been a period of low global inflation, and there are many factors, and China's exports are an important factor. China also provides a huge market for many primary commodity exporters, providing more competitive production locations and consumer markets for foreign investment. These are not only the results of our expanded opening up and use of two resources and two markets, but also the benefits of multinational policy coordination, joint compliance with rules, and the formation of stable and expected global governance cooperation.
Figure 2: Exports of goods from the five countries from 1980 to 2020
Figure 3 The global share of GDP of the five countries from 1978 to 2020
Although there are many views that the recent international environment is not good and international trade will be affected, globalization has continued to develop after the epidemic, and one indicator is that trade growth is significantly faster than economic growth. Figure 4 below shows that compared with the first half of 2021 and the first half of 2019, the import and export volume of goods from the world, China and the United States has been significantly faster than the recovery of their respective domestic economies.
Figure 4 Imports and exports of goods from the world, China and the United States in the first half of 2021 and the first half of 2019
Second, the development of digital globalization is strong, and a new round of global industrial chain restructuring is imperative
Digital technology links massive amounts of data and huge numbers of users, and digital services cross borders at no additional cost, so globalization is inevitable. Digital products and services are insensible at hand and the end of the earth, and the digital economy is inherently global. We understand it from several sets of data and a few typical cases.
The first point is the growth of trade in digital delivery services (trade in digital services). This is one of the most rigorous, measurable definitions of digital trade, the growth level and stabilizer of trade. The first is the scale and share, and the growth volume and proportion of digital service trade have increased rapidly after the epidemic.
Figure 5 Global digital trade in services, trade in services and trade in digital services accounted for the proportion of trade in services from 2005 to 2020
Then we look at where the growth is coming from both dimensions. First, we can see that the proportion of productive service trade in digital delivery service trade accounts for the main position, of course, service trade also includes traditional productive service trade, traditional life service trade and digital life service trade. The blue line pointed to by the arrow is digital productive trade in services, which can be seen growing rapidly and the proportion continues to rise. But this does not mean that the trade in services for life is completely unprogrammed, but that they are difficult to measure. The digital productive service trade is a single single money, can be counted, so the proportion of the fastest growth.
Second, at the industry level, the fastest growing part of digital trade in services is ICT services, which has risen from 9.31% in 2005 to the current one-third. This change in weight indicates that the share of trade in ICT services, most closely related to digital technologies, has grown the fastest.
Figure 6 China's subdivided service trade exports and their proportion in total service exports from 2005 to 2020
Figure 7 The import and export volume of China's sub-sectors accounted for the proportion of total import and export of digital service trade from 2005 to 2020
Second, we look at a digital age that is typical of and important characteristics of service production activities: global collaborative research and development and co-innovation. Now in the midst of globalization, we must strengthen the independent innovation power of science and technology, especially in some key areas and card neck fields. We should also pay attention to the fundamental innovation trend, that is, global cooperative research and development and co-innovation in the digital age.
Here is an example of an industry, the ICT industry. The leftmost one in the picture is China, the blue is the export, and the yellow is the import. China and India are both exporting STRONGER THAN importing ICT, and we may feel pretty good that our technology is exported. But the U.S. on the far right of the chart imports and exports almost equally, but we don't think that the U.S. is less competitive in this industry than China and India. This shows that in a high-tech industry like ICT, the technology is complex and rapidly iterative, which country wants to produce the world's latest, highest level of technology products, it is unlikely to rely entirely on itself, the production of a most competitive product needs to integrate the world's best technology, so there will be a large number of imports, and then combined with the domestic part, in order to make the world's most powerful industry.
Figure 8 Import and export volume of ICT industries in China, India and the United States
In the digital age, there is a large number of cross-border flows of global technology. As technology becomes more complex, technology iterations become faster, and innovation frontiers become more collaborative. In 2000, the global individual technological invention and the teamwork invention accounted for roughly half of each; in 2010, 38.7% of the world's technological inventions came from individual inventors, 61.3% of the inventions came from teamwork inventions; in 2017, the proportion of individual inventions in global inventions fell to 32.3%, and 67.7% of inventions came from collaborative innovation. At present, most of the cutting-edge technologies are jointly developed by many countries, jointly registered patents, and share benefits. In the transnational joint R&D network, China's contribution is growing rapidly.
In recent years, some Western countries such as the United States have repeatedly advocated the development of technology and the exclusion of China at home and within their own circles of friends. We are also passively forced to strengthen our relatively independent technology system development, which is one aspect of the problem. On the other hand, due to the nature of digital technologies, many technology developments are carried out more in the form of international cooperation. Further, the open source of digital technologies has become the mainstream, and cloud computing, big data and artificial intelligence are all using open source models to develop, share and innovate. This is because the application of digital technology needs to connect people, machines and things as widely as possible, obtain massive data, connect huge products, enterprises and industries, and form a networked industrial ecology, which is the new technology development model brought about by the new nature of technology.
Figures 9 and 10 below are WIPO reports that highlight how innovation is intertwined on a global scale, especially in the digital age. What is the situation in China? China's share of the advanced technologies co-created by the world continues to grow, and the second part from top to bottom is China's share, which is rising rapidly. Now that we, together with South Korea, account for 20% of the world's transnational co-inventions, we should have a positive assessment of our role in global innovation networks.
What are the benefits of global co-innovation? Let me give you an example. It turns out that long-distance research and development is a tandem mode, you do a little, I do a little, we take the last head of the enterprise to go, no way to feedback back. Now, in the digital space, R&D personnel work together on digital platforms and test together, and R&D becomes a parallel process. Communicate feedback synchronously to improve efficiency and design levels.
Figure 9 World Intellectual Property Report Perspective: Rapid advancement of global co-innovation products
Figure 10 Distribution and changes in countries of transnational joint invention patents worldwide
Third, let's look at the globalization of digital consumption. As can be seen from the previous Figure 6, the proportion of digital consumer services trade is very low, almost a flat line at the bottom. But in reality, cross-border digital consumption is extremely common and abundant. The previous "Don't Look Up" is an example, music services, news services, film and television services and other digital consumer services are highly globalized. However, it is difficult to calculate the value of these consumptions. Domestic digital service platforms mainly improve services for free, relying on advertising to maintain operations, foreign digital platforms mainly rely on the annual fees and monthly fees of paying audiences to maintain, and it is difficult to count the benefits brought by each service product. Therefore, the multi-habitat, reuse, and cross-border nature of services in the digital age have brought many challenges to theory and statistics.
Third, adapt to the trend of digital globalization and promote a high level of openness
To adapt to the trend of digital globalization, we must promote a high level of openness. Digital technology is promoting the deep division of labor in the whole chain of the global industry. We have unique competitiveness in scientific research, innovation, manufacturing, service, head enterprises, etc., and there are many opportunities and challenges in digital globalization.
First, in scientific research and technological development, we all have a strong ability to cooperate. Figure 11 below is our position in the middle of a global network of collaborative research and co-development. The figure on the left is the global technology innovation network of the ICT industry, with ten largest co-creation nodes, with Shanghai at six points and Beijing at eight points. The figure on the right is a scientific publishing cooperative publishing network in the field of biotechnology, the size of the circle indicates the size of the contribution, it can be seen that Tokyo and Beijing have ranked in the top two in the ranking of original scientific papers jointly published by many countries, and the contribution is very large and powerful.
Figure 11 Ict industry global innovation network and biotechnology cluster field scientific publishing cooperation publishing network
The second is the innovation of the digital R&D platform in the form of R&D organization. This is a global joint R&D and design platform in China. The world's latest technology development tools software is expensive and iterative, and this platform puts these R&D and design digital tools on the platform to share, and there are more than 200,000 engineers and technicians around the world on the platform. After the platform receives the R&D demand, it decomposes the main tasks of R&D, and selects the most suitable R&D designers and the most professional experts at home and abroad for each task, so that the R&D level is improved and the R&D speed is accelerated.
Figure 12 Domestic global joint R&D and design platform
The third is the growth of head enterprises. This is the World Economic Forum and Boston Information, two global lighthouse factories that have been doing in the digital age, based on the degree of intelligent production of the factory. This is the latest list, a total of 90, 90 of the top companies in the global digital 4.0 era, 31 are in China, which is the orange proportion, indicating that our companies are also very competitive in the world.
Figure 13 31 of the 90 digital lighthouse factories in China
The fourth is the cross-border autonomy of our platform in the digital age. Recently we are doing a study, the global governance of the digital age will shift from the previous intergovernmental governance to the two orders of intergovernmental governance and platform autonomy in parallel, because the large digital platforms are global platforms, and it will be autonomous before the government cannot reach an agreement for a long time, such as the recognition of electronic signatures, the recognition of digital payments, the protection of consumer rights and interests, the protection of intellectual property rights, etc., forming a complete cross-border platform trade rules. With the wider adoption of digital technologies, the platform autonomy order will play a role in a wider range of fields, forming a global governance order in the digital age together with intergovernmental agreements.
Fifth, we have actively joined high-level trade agreements. Since 2018, some high-standard free trade agreements have been signed internationally, such as the Japan-EU EPA, the US-Mexico-Canada Agreement, the EU-Canada FTA, the CPTPP, etc. These trade agreements, which cover zero tariffs, service liberalization, trade in services, e-commerce and market access, intellectual property protection, environmental protection, data flow rules, etc., will cover more than 55% of international trade and international investment after they enter into force, and promote a new round of globalization in related fields. Our positive attitude towards joining high-level trade agreements and digital-related trade agreements demonstrates our firm belief and unremitting efforts in opening up to the outside world.
Figure 14 China has acceded to or applied for high-level trade agreements
Finally, a summary:
First, the cost of "cross-border link" and "cross-border link" in the digital era has been greatly reduced, the benefits have been significantly improved, the era of digital globalization has arrived, and a new round of dividends for the allocation of resources and industrial division of labor on a global scale has emerged, and this dividend is relatively durable and extensive, and the driving force is also very strong.
Second, our industry must be more open, connect more resources and markets, and improve the efficiency of resource allocation, so as to enhance the global competitiveness of the digital age.
Third, with China's size and position, it can become an important shaper of the international economic and trade environment in the digital age and produce increasingly prominent international influence, and we need to create a good international environment for ourselves and the world through further high-level opening up.