Commentary RESEARCH

Open economy fuels rural vitalization


2019-12-24 08:31

Wang Xiaohong
Chinese Social Sciences Today

Speaking at the opening ceremony of the second China International Import Expo (CIIE) Nov. 5, Chinese President Xi Jinping said the country is committed to opening up at an even higher level.

Continuously expanding opening up improves the level of urbanization, enriches the significance of rural industries and helps realize integrated urban-rural development, which promotes rural vitalization.

An open economy is an important driving force for urbanization. Since the reform and opening up, China has continuously expanded its opening up to the outside world and developed an open economy. It has achieved rapid economic growth and deep integration into the global division of labor. China has become the world’s second largest economy and the largest manufacturing country, and its urbanization has accelerated.

In the early stage of the reform and opening up, through developing processing trade, China came to be “the world’s factory.” Meanwhile, massive rural labor flowed to cities, and many migrant workers were integrated into the process of urbanization, industrialization and internationalization, thus sharing the dividends of China’s opening up. Through developing processing trade, China has transformed a large proportion of agricultural land into factories, rural areas into cities, and farmers into industrial workers, thus successfully transforming from a traditional agricultural country to an industrial country.

As such, in the last round of China’s participation in economic globalization, rural people are important participants and beneficiaries. Processing trade absorbs a large amount of rural labor. In China’s processing and manufacturing enterprises, about 80% of workers come from rural areas. The processing trade enterprises established by multinationals have bolstered numerous matching township and village enterprises, which have been quickly embedded into the international industrial chain, supply chain and value chain led by multinationals. In addition, the processing trade has driven farmers to start businesses.

The high level of opening up in the new era is a process of achieving coordinated urban and rural opening up. Enhancing the synergistic effect of openness is an inherent requirement for realizing a new pattern of comprehensive opening up. This entails four important aspects: First, the market must be coordinated and open, which is to say constructing an industrial chain, supply chain and value chain system that is dominated by China and coordinated internally and externally through the deep integration of international and domestic markets. Second, the value chain must be upgraded with a focus on expanding the opening up of the high-end service industry, thus achieving coordinated industrial opening up. Third, we must facilitate coordinated regional opening up. Fourth, it is important to ensure that the dividends of a new round of high-level opening up benefit the vast rural areas, so that the majority of rural people can share the fruits of open development and so the quality of new-type urbanization can be enhanced.

Several solutions need to be considered to develop an open economy to bolster rural vitalization. First, it is advisable to make full use of the advantages of such digital trade as cross-border e-commerce to promote the export of rural specialty products and featured industries.

Second, it is recommendable to promote the transfer of processing trade to underdeveloped regions and rural areas. At present, most of China’s cities have entered a period of structural adjustment and transformation. Due to the rising costs in labor, land and resources as well as environmental costs, the backbone of the industrial structure has shifted from manufacturing to the service industry. Promoting the transfer of processing trade enterprises to rural areas not only makes room for the development of the service industry in urban areas, but also facilitates the employment of local rural people and alleviates the ailments of the cities.

Third, it is important to improve the level of rural tourism service trade. Vigorously developing rural tourism including agricultural sightseeing tours, agritainment (or agri-tourism) and B&B villages, especially expanding such new formats and modes as Internet Plus and Digital Plus, will drive exports of agricultural specialty products, cultural tourism products and tourism services, and extend the industrial chain, supply chain, service chain, innovation chain and value chain of featured rural products, giving birth to a new rural economic structure driven by the new economy and digital trade.

Fourth, we should encourage farmers to engage in labor export and engineering contracting. Business areas including commerce, catering, security, housekeeping and construction engineering are industries that extensively absorb labor. Developed economies and countries along the Belt and Road have broad space in the traditional service market, which is an important market for China to increase labor export and project contracting.

Last but not least, it is vital to increase public finance investment and develop farmers’ skills, education and training. Most of the rural labor force in China receives a low level of education, and the illiterate are mainly concentrated in rural areas. As such, it is imperative to prioritize improving the cultural integrity of farmers when implementing the rural vitalization strategy and to establish a compulsory education and training system for farmers based on public finance, especially to strengthen standardized and professional training in the areas of housekeeping, security, commerce, catering, tourism and cross-border e-commerce.

Wang Xiaohong is a professor from the China Center for International Economic Exchanges.


2019-12-24 04:31
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