Source: Jibo
Why Do We Hold the China International Import Expo?
Ji Lude
November 21, 2018
The first China International Import Expo successfully concluded. In the huge venue, the national exhibition area was still open for public visits. Staff who had worked hard for a long time rubbed their sore muscles and raised a small celebratory drink. The organizers began selecting advanced performers. The media counted the various figures of the CIIE and wrote articles that were either passionate or quietly reflective. Speakers drew slide after slide, presenting the splendor of the CIIE.
This was only the first CIIE, and it will continue in the future. It is like stopping at the first post station on a long march toward the distance. When people pause to recover from fatigue and prepare to continue forward, they naturally think: why are we taking this road, and what is our destination?
Thinking about why we hold the CIIE is not only to soothe the fatigue caused by the first stage of work, but also to clarify the direction ahead. A wise reminder has often been given to us: do not forget why we set out just because we have traveled far.
In my view, the reason for holding the CIIE should be understood from four aspects.
1. Supporting the overall national diplomatic strategy
The CIIE was personally planned and promoted by the country's top leader. There is no doubt that its significance goes far beyond international trade. This is a very important starting point for analysis. We cannot discuss it only as an isolated trade exhibition; we must place it within China's overall diplomatic strategy.
China's diplomatic strategy depends on its judgment of the international situation. In the past, the United States and the Soviet Union contended for hegemony, and China stood among its friends in the Third World. Now the situation has changed: rivalry between the United States and the Soviet Union has become dominance by the United States, and the world has entered a multipolar state. China has always been a major country. As China's national strength rises, the international community has begun to pay close attention to China's performance. This is of course progress. Yet a tall tree catches the wind, and brightness is easily stained. China's development inevitably causes vigilance among major and wealthy countries and concern among smaller and poorer countries. Therefore, China's overall diplomatic strategy is prudence, including keeping a low profile and handling China-US relations, China-Europe relations, and relations with neighboring countries well.
Relations among countries are extremely complex. Although China has repeatedly emphasized that it will never seek hegemony, and although the top leader has explained that there is no gene for invading others in the blood of the Chinese nation, politicians in many countries, and many ordinary people as well, still remain half-convinced. I recently encountered a similar situation myself. I made a joke in a group where I was not very familiar with everyone, and several senior members misunderstood it. Although the group owner was a good friend of mine, I left the group as a form of self-punishment so as not to embarrass him. If this can happen among individuals, how much more complex is a country made up of tens or hundreds of millions of people? When analyzing China-US trade friction, Long Yongtu said that the most serious challenge would be mishandling it and allowing friction to turn into confrontation. Therefore, if other countries look at every move China makes with suspicion, we must be sincere at all times, speak with honesty, and handle matters thoroughly.
Seen from this angle, the personal presence and support of state leaders at the CIIE was not merely for commodity transactions. It emphasized China's desire for peace and represented one move on the broader diplomatic chessboard. If others accuse China of manipulating exchange rates, expanding exports, and creating trade deficits with China, then China holds an exhibition that only buys and does not sell, and it keeps holding it. If others worry that the Chinese government interferes with the market and may close itself off and return to the old path, then China's president personally announces that China's door of opening up will not close; it will only open wider. China's steps toward higher-level opening up will not stop. China's steps toward building an open world economy will not stop.
Eight days after the CIIE closed, President Xi again emphasized four commitments at the 26th APEC meeting: continuing to advance regional economic integration, continuing innovation-driven growth, continuing to improve connectivity networks, and continuing to deepen partnerships. These are consistent with the core message conveyed by the CIIE: cooperation, continued opening up, wider friendship, and mutual exchange.
At this CIIE, the governments of the United States and Japan did not participate in the national exhibition, but enterprises from both countries were highly enthusiastic and many exhibitors took part. This should be the appeal of the CIIE. Even when governments have differences, enterprises ultimately use their actions to agree with China's position of opening up.
Therefore, I believe the CIIE should not be viewed in isolation. It should be observed against a broader background.
2. Accelerating Shanghai's development as an international trade center
As is well known, cities originally arose from trade. In the age of agricultural civilization, when people had surplus products, they chose a day to gather and exchange with one another. Over time, physical gathering points gradually formed. Post stations, inns, taverns, and people related to trade increased. Shops gave rise to markets, markets gave rise to more shops, and cities emerged.
Seen on a larger scale, the whole earth is similar. When large volumes of goods are exchanged between countries in one place over a long period, changes occur and an international marketplace eventually forms.
These changes include, first, recognized prices. If the CIIE continues to be held, it is quite possible that the international market price of a certain commodity in the future will refer to the price of similar goods at the CIIE. Second, there is a dispute resolution mechanism. This is like a fair scale and a place for complaints in a market today, which is more effective than going to court afterward. Although the WTO has formulated rules, if large transactions at the CIIE give rise to international disputes, including intellectual property disputes, and these can be resolved on site, people will not have to turn to the WTO. Third, business names and brands will gather. If the CIIE is held over the long term, it can accelerate the gathering of multinational companies in Shanghai to conduct business nearby, and it will accordingly improve enterprise chains in many industries. Fourth, it will drive the service sector. When more business is done, professional services such as finance, transport, commerce, hotels, labor recruitment, market research, law, finance, and interpreting will grow increasingly vibrant. Fifth, it will build the physical foundation. It is now hard for us to imagine what Qingpu Xujing will become ten or twenty years later if the CIIE is always held there, but we can believe that, as Shanghai's western gateway, it may well become another Pudong.
This is the goal of Shanghai as an international trade center. The completion of an international trade center will in turn produce chain reactions and promote the construction of an international financial center and an international shipping center.
The foundation of trade and finance is integrity. The country now encourages consumption, but the deep reason affecting consumption is not that goods are unsuitable; it is integrity. Think about it: if false contracts in the production process of film and television works need to be exposed by Cui Yongyuan alone, and if service chaos in China's five-star hotels needs to be filmed and evidenced by one person known as Hua Zong, when can the consumption environment for ordinary Chinese people truly be established? If Shanghai can become an international marketplace, it must have an orderly market environment. We cannot be satisfied only with how many foreign merchants came or how many contracts were signed in the first one or two sessions. Because the CIIE involves international business, improper conduct must be punished. Only by working to form a business environment that values integrity can foreign governments and enterprises continue to come and exhibit. At the first CIIE, some elderly visitors crowded forward to grab free food. In essence, this reflected a petty urban mentality of not following rules and taking small advantages, and it clashed with modern commercial civilization. If people who rush to take petty advantages are merchants, they may also sell counterfeit or inferior goods. Therefore, in the long run, continuing to hold the CIIE and making it better and better will consolidate Shanghai's position as an international trade center at both the physical and psychological levels, and will help build modern commercial civilization.
This meaning may not rise to the level of national diplomatic strategy, but it is still very great.
3. Promoting the upgrading of China's domestic economic structure
China has announced that over the coming 15 years it expects to import USD 30 trillion in goods and USD 10 trillion in services, or roughly USD 2.67 trillion each year.
What does that mean? The signed contracts at the first CIIE included both long-term and short-term deals. Calculated by contracts to be performed within one year, the amount was less than USD 60 billion. After the CIIE, Tmall sold RMB 213.5 billion and JD.com sold RMB 159.8 billion during Double 11; together, converted into US dollars, that was also a little over USD 60 billion.
In other words, annual imports of goods and services would equal about 46 CIIEs. This raises questions.
The first question is this: with so many imported goods, what will we use to pay? If we only import and do not export, where will the US dollars come from? Some may say that RMB settlement is now possible. Then why would others be willing to accept RMB?
Whether in dollars or RMB, the underlying logic is the same: the right to issue an international currency is determined by comprehensive national strength. The reason the US dollar was recognized by the international community was first the military position of the United States. After World War II, the Bretton Woods Conference decided that member-country currencies would be linked to the US dollar and the US dollar to gold, creating an adjustable fixed exchange-rate system and thus an international monetary system centered on the dollar. Later, it was due to the United States' advantage in high technology. As former World Bank vice president Joseph Stiglitz said, China's urbanization and America's high-tech development will be two major events affecting the development of human society in the 21st century. Because some high-tech products are available only from the United States, other countries must buy them from the United States. This gives the United States the qualification to print money for export, allowing others to hold dollars to buy high technology. In other words, young people from China, India, and other countries who flock to Silicon Valley have replaced gold as the foundation for the United States to issue currency. If China wants other countries to use RMB to pay for more than USD 2 trillion of imported goods each year, it must upgrade its industrial structure and raise the technological content of its products. Otherwise, China must earn a large amount of foreign exchange through exports every year in order to fulfill the commitment to import USD 40 trillion over 15 years.
The second question is this: what impact will so many imports each year have on China's economy?
At this CIIE, provinces and municipalities organized purchasing delegations. Imagine that if the goods bought back are not very meaningful for a province, can it be guaranteed that so much will be purchased every year? After all, the government cannot replace the market. It is impossible for the government to organize purchasing delegations every year to complete such a large procurement amount.
The largest and heaviest exhibit at this CIIE, the Taurus gantry milling machine from Waldrich Coburg of Germany, was purchased by a private enterprise that did not wish to be named. This news was deeply thought-provoking. A while ago, someone claimed that the historical mission of the private economy had been completed and that it should leave the stage. Once the article appeared online, it caused great alarm, and the central authorities had to emphasize the importance of the private economy. Now this private enterprise's purchase carries two important meanings. First, private enterprises are indeed a very important force in the real economy. Second, products at the CIIE will gradually transform our equipment capabilities and thereby influence the level of our economic development.
Putting the two questions together, we can say that if the CIIE continues, and if every province and municipality can truly purchase according to its own needs for industrial transformation rather than merely following national requirements, then the many imported products will, like dominoes, gradually but irreversibly influence China's industrial structure. This will improve the structure of our export products, raise the international status of the RMB, and ultimately lay the foundation for RMB use in international settlement. At the same time, large volumes of imported consumer goods will gradually influence Chinese consumption patterns and improve our quality of life.
4. Promoting development of the exhibition industry
As someone who once worked in the exhibition industry, I must think about the significance of the CIIE for the industry.
To be fair, this CIIE did not produce the phenomenon of one project giving rise to an industry or one project bringing springtime to enterprises. However, when we introduce the dimension of time into our observation of the CIIE, given enough time, its influence on the exhibition industry is still noteworthy.
First is the government's management model for specific projects.
Some experts believe the government should not have so-called industrial policies to support particular industries, because whoever the government supports may fail to develop. Very well; we will not discuss industrial policy here. But there is no doubt that the government has an unavoidable responsibility for economic development. Apart from industrial policy, what can the government do?
In industry development, the government provides two things: management and services. For some matters, the government decides and enterprises must comply; this is management. In the case of the CIIE, examples include pricing, customs clearance, inspection and quarantine, security, and intellectual property protection. For other matters, the government provides support that enterprises may choose to accept; this is service. In the case of the CIIE, examples include transport, commerce, and information. The CIIE is a major project with a government background and enterprise operation. There are other exhibitions of this kind around the country. For this CIIE, Shanghai established an urban support leading group, and together with the China International Import Expo Bureau formed by the Ministry of Commerce, it created a government-enterprise cooperation system for the project. This system reflected management and also provided services. If it is sustained and gradually improved, it can form a replicable management model and service environment for large exhibition projects that can serve as a reference for other projects.
In fact, some experts have already noticed this point. Recently, Liu Haiying proposed that making customized policies broadly applicable is the CIIE's greatest contribution to the internationalization of China's exhibition industry. This means normalizing the inclusive policies formulated by the government during CIIE preparation so that future projects with a government background and enterprise operation can apply them.
This is the CIIE's first contribution to China's exhibition industry.
Second, it can raise the social status of the exhibition discipline.
The exhibition industry is an emerging industry with a short history. The exhibition major appeared only in 2003. Its theoretical system is still immature, and students and parents who apply for the major sometimes do not clearly understand what exhibitions are. Even today, the exhibition major still needs to remain under the protection of tourism-related disciplines. What should be taught and examined still needs to be discussed by the Ministry of Education's Teaching Guidance Committee for Tourism Management Majors in Higher Education.
At this CIIE, President Xi pointed out that it was an extraordinary exhibition. In China's social environment, attention from the top leader to an exhibition project should gradually raise the status of the exhibition industry and the exhibition major. I believe that in the future more people will apply for exhibition-related majors, theoretical research in the exhibition discipline will become deeper, the system will become more mature, and one day the exhibition discipline will become independent.
Third, it will improve the comprehensive competitiveness of the exhibition industry itself.
As the CIIE is held year after year, if relations between the government and enterprises become increasingly smooth and society as a whole places more importance on the exhibition industry, we will see the industry itself continuously gaining positive momentum.
For example, as real estate and other industries enter a more stable period, more funds spilling over from those industries may enter more exhibition projects. As major enterprises take on CIIE projects on a normalized basis, a large number of stable supporting service enterprises will form around these leading companies, and the exhibition enterprise chain will become more complete. Related cooperation networks among exhibition enterprises in the Yangtze River Delta and across the country will also form and develop. As the CIIE raises its exhibition requirements, the display service capabilities of individual enterprises will become stronger and closer to international standards. As large numbers of practitioners continue to participate in the CIIE, more exhibition professionals with an international perspective will emerge.
Of course, the question of why we hold the CIIE is built on two other questions: what kind of CIIE we want to create, and how we hold it. Otherwise, if the CIIE is not well run, or even if it succeeds but at high cost, with much disturbance to residents and without public understanding and support, then the values in these four aspects will still fail to materialize.