Chinese Ambassador Xie Feng gives interview to Newsweek on the 20th third plenum of the CPC Central Committee

Chinese Ambassador to the United States Xie Feng gave an exclusive interview to Senior Foreign Policy Writer Tom O'Connor from Newsweek on August 2, to elaborate on the recent Third Plenary Session of the 20th Central Committee of the Communist Party of China.

Explaining the themes and messages of the latest third plenum, Chinese Ambassador Xie Feng said: The overriding theme of the 20th third plenum of the CPC Central Committee is further deepening reform comprehensively to advance Chinese modernization. The adopted resolution, its most important outcome, is exactly a blueprint for this. In the resolution, "reform" as a keyword appeared 145 times, and "opening-up" 35 times.

Since the start of China's reform and opening-up, there have been two third plenums with epoch-making importance: one is the 11th in 1978, which ushered in a new period of reform, opening up, and socialist modernization; the other is the 18th in 2013, which marked the start of comprehensively deepening reform in the new era with systemic and holistic planning.

The 20th third plenum is also a landmark event. The message is clear: China's efforts in reform and opening-up will never stop. As Chinese President Xi Jinping pointed out, "If we are to break new ground in advancing Chinese modernization on the new journey in the new era, we must continue to rely on reform and opening up."

The world today is a fluid and turbulent one. The outlook for the global economy looks increasingly uncertain. Every country is facing its own challenge. How should we respond? While some countries resort to scapegoating others with a beggar-thy-neighbor approach, China's choice is to reform itself on all fronts, defuse risks through better institution-building, and seek win-win results.

At this plenum, over 300 reform measures were rolled out, all involving reforms of systems, mechanisms, and institutions. We also set for ourselves the goal of completing all these reform tasks by the time the People's Republic of China celebrates its 80th anniversary in 2029. How many countries are ready to launch such large-scale reforms with the same commitment and grit?

It is worth bearing in mind that 46 years have passed since China started its reform and opening-up. In the past, we often "crossed the river by feeling for stones," and reforms were mostly focused on specific areas. But today, the low-hanging fruits have been reaped, the good meat has been eaten, and all that is left are hard bones to chew. Every policy decision in the Chinese economy, which now contributes over 30% to world growth, has global implications and thus should be made with extra prudence.

Also, what our people care about now is no longer getting enough to eat, but how to eat well; not just making the pie bigger but dividing it more fairly. So, reforms have to be more targeted, systemic and comprehensive. Only in this way can we live up to the expectations of the people and the world.

Addressing the challenges facing China’s economy, the ambassador said: China is at a pivotal stage for transforming its growth model and optimizing its economic structure. It is only natural that there will be some growing pains. All these issues have arisen in the course of development and transformation, and there is no reason why they cannot be overcome. In fact, the history of China's reform and opening-up is exactly one of spotting and resolving problems.

So, what is China's solution? This plenum has made it clear: we will advance high-standard opening-up and pursue high-quality development. We will continue to invigorate growth through reform, unleash productivity, and create stronger impetus for Chinese modernization. We will boost both the supply and the demand. Developing new quality productive forces will be a priority. This means making traditional sectors higher-end, smarter and greener, fostering new industries such as artificial intelligence, aerospace and biomedicine, and further integrating digital technology into the real economy.

At the same time, China's consumer market keeps expanding and upgrading. Last year, consumption contributed 82.5% of China's economic growth. Our middle-income group, 400-million-strong now, will double in the coming decade. It is estimated that every one percentage point increase in the proportion of the group will drive up consumer spending by over $150 billion annually. Also, China's urbanization rate, now at around 66%, is about 14 percentage points lower than the average level of the developed countries. Every one percentage point increase in the number can generate around $140 billion of investment and $28 billion of consumer spending, which will be a strong boost to the property market as well.

We will continue to promote integrated urban-rural development, coordinate regional development, and improve the people's wellbeing, so as to further bring out the potential of domestic demand. Several days ago, China's State Council released a five-year action plan for people-centered new urbanization, under which we will move faster to grant permanent urban residency to people who move to cities from rural areas. This means the nearly 300 million rural migrant workers will enjoy equal access to basic public services as urban residents.

We see ensuring stable growth in the short term and sustaining the momentum in the long run both important. This month, we will allocate 300 billion yuan ($41.4 billion) in ultra-long treasury bonds to support large-scale equipment upgrades and consumer goods trade-ins. In light of the supply and demand changes in the housing market, we are fostering a new development model for the real estate sector. With a focus on meeting people's demand for both essential and better housing, we will provide more government-subsidized housing, and give municipal governments greater decision-making powers to regulate the property market.

To defuse local government debt risks, we will expand the sources of tax revenue at the local level, so as to place more fiscal resources at the disposal of local governments. For instance, we have set the direction for reforming excise tax collection, and will grant greater authority to local governments for tax management, and expand the scope of use for funds raised from the sale of local government special-purpose bonds as appropriate. Meanwhile, we will establish a monitoring and oversight system to better manage all local government debt.

Sharing his optimistic view on China’s economic growth, Ambassador Xie Feng stated: China's economy is now on a path of higher-quality development that is more efficient, equitable and sustainable. In the first half of this year (H1), it rebounded in both quantity and quality. The GDP grew 5% year over year, outpacing many other major economies. The quarter-on-quarter GDP growth rate moved up for eight consecutive quarters. Altogether, 39 out of the 41 major industrial categories recorded an increase in the added value.

China's industries are also more innovative and greener. Investment in high-tech sectors grew 10.6% in H1. New growth engines are booming, with the output of smart, green products including integrated circuits, service robots, electric vehicles and solar cells all growing in double digits. Bloomberg projected China's tech industries to account for 23% of GDP by 2026. A number of international institutions including the IMF [International Monetary Fund] have revised China's growth forecast for 2024 to 5% or above.

Undoubtedly, the Chinese economy is still facing many challenges. But the fundamentals sustaining its steady and long-term economic growth will not change. The expanding manufacturing industry will bolster the supply. Summer travel, school reopening, the National Day holiday, as well as investment to shore up weak links and in new arenas will all unlock robust demand. The upgrading of traditional sectors and the rise of emerging ones will create strong impetus. And measures like ultra-long special treasury bonds and special-purpose bonds will provide policy support.

So, we are confident that we will not only accomplish the targets for economic and social development this year, but also build momentum for sustainable development in the long run.

On the relationship between the government and the market, China’s ambassador to the U.S. explained China’s approach: How to strike a balance between the government and the market is a universal challenge. China's approach is to promote both an efficient market and an effective government. We give full play to the decisive role of the market, as the "invisible hand," in allocating resources, so that the allocation will be as efficient and productive as possible. Meanwhile, we also seek to better leverage the "visible hand" of the government by improving macroeconomic governance, so as to better maintain order in the market, remedy market failures, and unleash creativity across society.

This plenum reaffirmed we will see that the market plays the decisive role in resource allocation and that the government better fulfills its role. It also outlined plans to remove barriers to market access, promote market-oriented reform of production factors, and refine the systems underpinning the market economy. In line with the resolution, we will deepen reform of state capital and SOEs, and advance market-oriented reform in the competitive areas of sectors including energy, railway, telecommunications, water conservancy, and public utilities. We will also create more opportunities for the non-public sector, formulate a private sector promotion law, and ensure that economic entities under all forms of ownership have equal access to production factors, compete on an equal footing, and are protected by the law equally.

All these speak volumes about China's commitment to market-oriented reform. We will continue to promote better interplay between the two "hands" to unlock development potential.

On China’s efforts to reform and open up, Ambassador Xie Feng said: As some countries keep closing doors, building walls and seeking decoupling, openness is in short supply globally. But China is opening up more doors, building more bridges, and reaching out to share reform and development benefits with the world. To quote a Chinese poem that describes the bamboo, "It is strong and firm though struck and beaten without rest; careless of the wind from north or south, east or west." No matter how the world may change, China will continue to do the right thing. We are committed to embracing the world with open arms, and we expect the world to open up to us alike.

Opening-up is the hallmark of Chinese modernization. This plenum introduced many concrete measures in this regard. Restrictions will be reduced. We will further shorten the negative list for foreign investment, remove all market access restrictions in the manufacturing sector, and fully apply the negative list for cross-border trade in services. More areas will be opened up. We will steadily expand institutional opening-up, and create an institutional environment that is transparent, stable, and predictable in alignment with high-standard international economic and trade rules. We will, on our own initiative, open up wider in sectors including telecommunications, the internet, education, culture and medical services. We will also further level the playing field. Domestic and foreign-invested enterprises will be treated equally, and we will ensure national treatment for the latter in terms of access to production factors, license application, and government procurement.

A more open China will bring more market and growth opportunities to the world. International investors are seizing the momentum and voting with their feet. In H1, 26,870 new foreign-invested companies were set up in China, up by 14.2%. Foreign investment in actual use reached nearly 500 billion yuan ($69.8 billion), a relatively high level over the past decade.

Tesla is building another factory in Shanghai, and it took only a month to negotiate and conclude the deal. Apple has established R&D centers in Beijing, Shanghai, Shenzhen and Suzhou, and doubled the number of its R&D staff in China over the past five years. BMW's largest production base and second-largest R&D system are both in China. According to a recent report by the China Council for the Promotion of International Trade, over 40% of the surveyed foreign-invested companies see China's market as more attractive, and nearly 50% expect their profit margins to increase in the next five years, with American companies being the most optimistic.

All these have proven that China is not only the world's factory, but also the world's market. In addition to "made in China," we are seeing more "smartly made in China." China continues to be a major engine of global growth, and also an unparalleled investment destination that remains undervalued. We welcome more businesses to invest in China, stay committed to China, and grow with China.

In the end of the interview, Chinese Ambassador Xie Feng welcomed more Americans to visit China. He said: Seeing is believing. The best way to understand a country is to be there. In recent years, China is offering visa-free entry to more and more countries and regions. Citizens from 54 countries, including the United States, can now enjoy the 72/144-hour visa-free transit policy. Many foreign friends have seized the opportunity to experience China. In H1, foreign nationals made a total of 14.63 million inbound trips to China, up by 152.7% from the same period last year, among which the number of visa-free entries surged 190%.

As many may have noticed, "city or not city (meaning "isn't this cool or not")," a catchphrase coined by an American vlogger when touring China, has gone viral, and "China Travel" videos have been a big hit on social media. The tourists dived into a food spree at local night markets, went on a city walk, took a cruise trip, and rode the high-speed rail. Some also joined in square dancing, tried a self-driving taxi, and had food delivered by drones. What they have seen is an open, safe, vibrant, welcoming and dynamic China. Many marveled "China is not at all what I expected," and recorded through their lens "the China Western media won't show you." A comment under one of the videos said that "China isn't our enemy...We share the planet and we need to learn how to do it peacefully as co-citizens."

We welcome more Americans to visit, study, live and work in China. A lot has been done to facilitate this: American applicants for the tourist visa no longer need to provide flight tickets, hotel bookings, itinerary and invitation letters. Those eligible for a ten-year multi-entry visa can be allowed a longer duration of stay. And it takes only four working days for qualified applicants to get their visas.

The resolution of this plenum also called for making it easier for overseas visitors to live, receive medical services, and make payments on China's mainland. Shortly after the plenum, the Ministry of Commerce and six other government departments issued a circular on further facilitating accommodation for overseas travelers in China. We will do more to encourage people-to-people exchanges, and give foreign tourists a better experience in China.

To all American friends, you are most welcome to embark on an on-a-whim trip to China, and meet an amazing country beyond your imagination!