State Department and U.S.-China Relations

Secretary Tillerson’s Meeting With State Councilor of the People’s Republic of China (PRC) Yang Jiechi

Readout

Office of the Spokesperson
Washington, DC
February 28, 2017

The below is attributable to Acting Spokesperson Mark Toner:

United States Secretary of State Rex Tillerson met today with Chinese State Councilor Yang Jiechi and affirmed the importance of a constructive bilateral relationship and of regular high-level engagement between the United States and China. The Secretary and the State Councilor discussed the importance of improving and maintaining a mutually beneficial economic relationship between the two largest economies in the world. They also discussed areas of mutual concern, including North Korea’s nuclear programs. The State Councilor extended an invitation for the Secretary to visit Beijing, and the Secretary thanked the State Councilor and indicated an interest in such a visit in the near future.

中外合作经营企业法 2016

中华人民共和国中外合作经营企业法
(1988年4月13日第七届全国人民代表大会第一次会议通过 根据2000年10月31日第九届全国人民代表大会常务委员会第十八次会议《关于修改〈中华人民共和国中外合作经营企业法〉的决定》第一次修正 根据2016年9月3日第十二届全国人民代表大会常务委员会第二十二次会议《关于修改〈中华人民共和国外资企业法〉等四部法律的决定》第二次修正)

浏览字号: 大 中 小 来源: 中国人大网 2016年9月6日
第一条 为了扩大对外经济合作和技术交流,促进外国的企业和其他经济组织或者个人(以下简称外国合作者)按照平等互利的原则,同中华人民共和国的企业或者其他经济组织(以下简称中国合作者)在中国境内共同举办中外合作经营企业(以下简称合作企业),特制定本法。
第二条 中外合作者举办合作企业,应当依照本法的规定,在合作企业合同中约定投资或者合作条件、收益或者产品的分配、风险和亏损的分担、经营管理的方式和合作企业终止时财产的归属等事项。
合作企业符合中国法律关于法人条件的规定的,依法取得中国法人资格。
第三条 国家依法保护合作企业和中外合作者的合法权益。
合作企业必须遵守中国的法律、法规,不得损害中国的社会公共利益。
国家有关机关依法对合作企业实行监督。
第四条 国家鼓励举办产品出口的或者技术先进的生产型合作企业。
第五条 申请设立合作企业,应当将中外合作者签订的协议、合同、章程等文件报国务院对外经济贸易主管部门或者国务院授权的部门和地方政府(以下简称审查批准机关)审查批准。审查批准机关应当自接到申请之日起四十五天内决定批准或者不批准。
第六条 设立合作企业的申请经批准后,应当自接到批准证书之日起三十天内向工商行政管理机关申请登记,领取营业执照。合作企业的营业执照签发日期,为该企业的成立日期。
合作企业应当自成立之日起三十天内向税务机关办理税务登记。
第七条 中外合作者在合作期限内协商同意对合作企业合同作重大变更的,应当报审查批准机关批准;变更内容涉及法定工商登记项目、税务登记项目的,应当向工商行政管理机关、税务机关办理变更登记手续。
第八条 中外合作者的投资或者提供的合作条件可以是现金、实物、土地使用权、工业产权、非专利技术和其他财产权利。
第九条 中外合作者应当依照法律、法规的规定和合作企业合同的约定,如期履行缴足投资、提供合作条件的义务。逾期不履行的,由工商行政管理机关限期履行;限期届满仍未履行的,由审查批准机关和工商行政管理机关依照国家有关规定处理。
中外合作者的投资或者提供的合作条件,由中国注册会计师或者有关机构验证并出具证明。
第十条 中外合作者的一方转让其在合作企业合同中的全部或者部分权利、义务的,必须经他方同意,并报审查批准机关批准。
第十一条 合作企业依照经批准的合作企业合同、章程进行经营管理活动。合作企业的经营管理自主权不受干涉。
第十二条 合作企业应当设立董事会或者联合管理机构,依照合作企业合同或者章程的规定,决定合作企业的重大问题。中外合作者的一方担任董事会的董事长、联合管理机构的主任的,由他方担任副董事长、副主任。董事会或者联合管理机构可以决定任命或者聘请总经理负责合作企业的日常经营管理工作。总经理对董事会或者联合管理机构负责。
合作企业成立后改为委托中外合作者以外的他人经营管理的,必须经董事会或者联合管理机构一致同意,报审查批准机关批准,并向工商行政管理机关办理变更登记手续。
第十三条 合作企业职工的录用、辞退、报酬、福利、劳动保护、劳动保险等事项,应当依法通过订立合同加以规定。
第十四条 合作企业的职工依法建立工会组织,开展工会活动,维护职工的合法权益。
合作企业应当为本企业工会提供必要的活动条件。
第十五条 合作企业必须在中国境内设置会计帐簿,依照规定报送会计报表,并接受财政税务机关的监督。
合作企业违反前款规定,不在中国境内设置会计帐簿的,财政税务机关可以处以罚款,工商行政管理机关可以责令停止营业或者吊销其营业执照。
第十六条 合作企业应当凭营业执照在国家外汇管理机关允许经营外汇业务的银行或者其他金融机构开立外汇帐户。
合作企业的外汇事宜,依照国家有关外汇管理的规定办理。
第十七条 合作企业可以向中国境内的金融机构借款,也可以在中国境外借款。
中外合作者用作投资或者合作条件的借款及其担保,由各方自行解决。
第十八条 合作企业的各项保险应当向中国境内的保险机构投保。
第十九条 合作企业可以在经批准的经营范围内,进口本企业需要的物资,出口本企业生产的产品。合作企业在经批准的经营范围内所需的原材料、燃料等物资,按照公平、合理的原则,可以在国内市场或者在国际市场购买。
第二十条 合作企业依照国家有关税收的规定缴纳税款并可以享受减税、免税的优惠待遇。
第二十一条 中外合作者依照合作企业合同的约定,分配收益或者产品,承担风险和亏损。
中外合作者在合作企业合同中约定合作期满时合作企业的全部固定资产归中国合作者所有的,可以在合作企业合同中约定外国合作者在合作期限内先行回收投资的办法。合作企业合同约定外国合作者在缴纳所得税前回收投资的,必须向财政税务机关提出申请,由财政税务机关依照国家有关税收的规定审查批准。
依照前款规定外国合作者在合作期限内先行回收投资的,中外合作者应当依照有关法律的规定和合作企业合同的约定对合作企业的债务承担责任。
第二十二条 外国合作者在履行法律规定和合作企业合同约定的义务后分得的利润、其他合法收入和合作企业终止时分得的资金,可以依法汇往国外。
合作企业的外籍职工的工资收入和其他合法收入,依法缴纳个人所得税后,可以汇往国外。
第二十三条 合作企业期满或者提前终止时,应当依照法定程序对资产和债权、债务进行清算。中外合作者应当依照合作企业合同的约定确定合作企业财产的归属。
合作企业期满或者提前终止,应当向工商行政管理机关和税务机关办理注销登记手续。
第二十四条 合作企业的合作期限由中外合作者协商并在合作企业合同中订明。中外合作者同意延长合作期限的,应当在距合作期满一百八十天前向审查批准机关提出申请。审查批准机关应当自接到申请之日起三十天内决定批准或者不批准。
第二十五条 举办合作企业不涉及国家规定实施准入特别管理措施的,对本法第五条、第七条、第十条、第十二条第二款、第二十四条规定的审批事项,适用备案管理。国家规定的准入特别管理措施由国务院发布或者批准发布。
第二十六条 中外合作者履行合作企业合同、章程发生争议时,应当通过协商或者调解解决。中外合作者不愿通过协商、调解解决的,或者协商、调解不成的,可以依照合作企业合同中的仲裁条款或者事后达成的书面仲裁协议,提交中国仲裁机构或者其他仲裁机构仲裁。
中外合作者没有在合作企业合同中订立仲裁条款,事后又没有达成书面仲裁协议的,可以向中国法院起诉。
第二十七条 国务院对外经济贸易主管部门根据本法制定实施细则,报国务院批准后施行。
第二十八条 本法自公布之日起施行。

中外合资经营企业法 2016

中华人民共和国中外合资经营企业法
(1979年7月1日第五届全国人民代表大会第二次会议通过 根据1990年4月4日第七届全国人民代表大会第三次会议《关于修改〈中华人民共和国中外合资经营企业法〉的决定》第一次修正 根据2001年3月15日第九届全国人民代表大会第四次会议《关于修改〈中华人民共和国中外合资经营企业法〉的决定》第二次修正 根据2016年9月3日第十二届全国人民代表大会常务委员会第二十二次会议《关于修改〈中华人民共和国外资企业法〉等四部法律的决定》第三次修正)

 来源: 中国人大网 2016年9月6日
第一条 中华人民共和国为了扩大国际经济合作和技术交流,允许外国公司、企业和其它经济组织或个人(以下简称外国合营者),按照平等互利的原则,经中国政府批准,在中华人民共和国境内,同中国的公司、企业或其它经济组织(以下简称中国合营者)共同举办合营企业。
第二条 中国政府依法保护外国合营者按照经中国政府批准的协议、合同、章程在合营企业的投资、应分得的利润和其它合法权益。
合营企业的一切活动应遵守中华人民共和国法律、法规的规定。
国家对合营企业不实行国有化和征收;在特殊情况下,根据社会公共利益的需要,对合营企业可以依照法律程序实行征收,并给予相应的补偿。
第三条 合营各方签订的合营协议、合同、章程,应报国家对外经济贸易主管部门(以下称审查批准机关)审查批准。审查批准机关应在三个月内决定批准或不批准。合营企业经批准后,向国家工商行政管理主管部门登记,领取营业执照,开始营业。
第四条 合营企业的形式为有限责任公司。
在合营企业的注册资本中,外国合营者的投资比例一般不低于百分之二十五。
合营各方按注册资本比例分享利润和分担风险及亏损。
合营者的注册资本如果转让必须经合营各方同意。
第五条 合营企业各方可以现金、实物、工业产权等进行投资。
外国合营者作为投资的技术和设备,必须确实是适合我国需要的先进技术和设备。如果有意以落后的技术和设备进行欺骗,造成损失的,应赔偿损失。
中国合营者的投资可包括为合营企业经营期间提供的场地使用权。如果场地使用权未作为中国合营者投资的一部分,合营企业应向中国政府缴纳使用费。
上述各项投资应在合营企业的合同和章程中加以规定,其价格(场地除外)由合营各方评议商定。
第六条 合营企业设董事会,其人数组成由合营各方协商,在合同、章程中确定,并由合营各方委派和撤换。董事长和副董事长由合营各方协商确定或由董事会选举产生。中外合营者的一方担任董事长的,由他方担任副董事长。董事会根据平等互利的原则,决定合营企业的重大问题。
董事会的职权是按合营企业章程规定,讨论决定合营企业的一切重大问题:企业发展规划、生产经营活动方案、收支预算、利润分配、劳动工资计划、停业,以及总经理、副总经理、总工程师、总会计师、审计师的任命或聘请及其职权和待遇等。
正副总经理(或正副厂长)由合营各方分别担任。
合营企业职工的录用、辞退、报酬、福利、劳动保护、劳动保险等事项,应当依法通过订立合同加以规定。
第七条 合营企业的职工依法建立工会组织,开展工会活动,维护职工的合法权益。
合营企业应当为本企业工会提供必要的活动条件。
第八条 合营企业获得的毛利润,按中华人民共和国税法规定缴纳合营企业所得税后,扣除合营企业章程规定的储备基金、职工奖励及福利基金、企业发展基金,净利润根据合营各方注册资本的比例进行分配。
合营企业依照国家有关税收的法律和行政法规的规定,可以享受减税、免税的优惠待遇。
外国合营者将分得的净利润用于在中国境内再投资时,可申请退还已缴纳的部分所得税。
第九条 合营企业应凭营业执照在国家外汇管理机关允许经营外汇业务的银行或其它金融机构开立外汇帐户。
合营企业的有关外汇事宜,应遵照中华人民共和国外汇管理条例办理。
合营企业在其经营活动中,可直接向外国银行筹措资金。
合营企业的各项保险应向中国境内的保险公司投保。
第十条 合营企业在批准的经营范围内所需的原材料、燃料等物资,按照公平、合理的原则,可以在国内市场或者在国际市场购买。
鼓励合营企业向中国境外销售产品。出口产品可由合营企业直接或与其有关的委托机构向国外市场出售,也可通过中国的外贸机构出售。合营企业产品也可在中国市场销售。
合营企业需要时可在中国境外设立分支机构。
第十一条 外国合营者在履行法律和协议、合同规定的义务后分得的净利润,在合营企业期满或者中止时所分得的资金以及其它资金,可按合营企业合同规定的货币,按外汇管理条例汇往国外。
鼓励外国合营者将可汇出的外汇存入中国银行。
第十二条 合营企业的外籍职工的工资收入和其它正当收入,按中华人民共和国税法缴纳个人所得税后,可按外汇管理条例汇往国外。
第十三条 合营企业的合营期限,按不同行业、不同情况,作不同的约定。有的行业的合营企业,应当约定合营期限;有的行业的合营企业,可以约定合营期限,也可以不约定合营期限。约定合营期限的合营企业,合营各方同意延长合营期限的,应在距合营期满六个月前向审查批准机关提出申请。审查批准机关应自接到申请之日起一个月内决定批准或不批准。
第十四条 合营企业如发生严重亏损、一方不履行合同和章程规定的义务、不可抗力等,经合营各方协商同意,报请审查批准机关批准,并向国家工商行政管理主管部门登记,可终止合同。如果因违反合同而造成损失的,应由违反合同的一方承担经济责任。
第十五条 举办合营企业不涉及国家规定实施准入特别管理措施的,对本法第三条、第十三条、第十四条规定的审批事项,适用备案管理。国家规定的准入特别管理措施由国务院发布或者批准发布。
第十六条 合营各方发生纠纷,董事会不能协商解决时,由中国仲裁机构进行调解或仲裁,也可由合营各方协议在其它仲裁机构仲裁。
合营各方没有在合同中订有仲裁条款的或者事后没有达成书面仲裁协议的,可以向人民法院起诉。
第十七条 本法自公布之日起生效。

外资企业法2016

全国人民代表大会常务委员会关于修改《中华人民共和国外资企业法》等四部法律的决定

(2016年9月3日第十二届全国人民代表大会常务委员会第二十二次会议通过)来源: 中国人大网 2016年9月3日
第十二届全国人民代表大会常务委员会第二十二次会议决定:
一、对《中华人民共和国外资企业法》作出修改
增加一条,作为第二十三条:“举办外资企业不涉及国家规定实施准入特别管理措施的,对本法第六条、第十条、第二十条规定的审批事项,适用备案管理。国家规定的准入特别管理措施由国务院发布或者批准发布。”
二、对《中华人民共和国中外合资经营企业法》作出修改
增加一条,作为第十五条:“举办合营企业不涉及国家规定实施准入特别管理措施的,对本法第三条、第十三条、第十四条规定的审批事项,适用备案管理。国家规定的准入特别管理措施由国务院发布或者批准发布。”
三、对《中华人民共和国中外合作经营企业法》作出修改
增加一条,作为第二十五条:“举办合作企业不涉及国家规定实施准入特别管理措施的,对本法第五条、第七条、第十条、第十二条第二款、第二十四条规定的审批事项,适用备案管理。国家规定的准入特别管理措施由国务院发布或者批准发布。”
四、对《中华人民共和国台湾同胞投资保护法》作出修改
增加一条,作为第十四条:“举办台湾同胞投资企业不涉及国家规定实施准入特别管理措施的,对本法第八条第一款规定的审批事项,适用备案管理。国家规定的准入特别管理措施由国务院发布或者批准发布。”
本决定自2016年10月1日起施行。自本决定施行之日起,2013年8月30日第十二届全国人民代表大会常务委员会第四次会议通过的《全国人民代表大会常务委员会关于授权国务院在中国(上海)自由贸易试验区暂时调整有关法律规定的行政审批的决定》、2014年12月28日第十二届全国人民代表大会常务委员会第十二次会议通过的《全国人民代表大会常务委员会关于授权国务院在中国(广东)自由贸易试验区、中国(天津)自由贸易试验区、中国(福建)自由贸易试验区以及中国(上海)自由贸易试验区扩展区域暂时调整有关法律规定的行政审批的决定》的效力相应终止。
《中华人民共和国外资企业法》、《中华人民共和国中外合资经营企业法》、《中华人民共和国中外合作经营企业法》、《中华人民共和国台湾同胞投资保护法》根据本决定作相应修改,重新公布。

http://www.npc.gov.cn/npc/xinwen/2016-09/06/content_1997114.htm

中华人民共和国外资企业法

(1986年4月12日第六届全国人民代表大会第四次会议通过 根据2000年10月31日第九届全国人民代表大会常务委员会第十八次会议《关于修改〈中华人民共和国外资企业法〉的决定》第一次修正 根据2016年9月3日第十二届全国人民代表大会常务委员会第二十二次会议《关于修改〈中华人民共和国外资企业法〉等四部法律的决定》第二次修正)

来源: 中国人大网 2016年9月6日
第一条 为了扩大对外经济合作和技术交流,促进中国国民经济的发展,中华人民共和国允许外国的企业和其他经济组织或者个人(以下简称外国投资者)在中国境内举办外资企业,保护外资企业的合法权益。
第二条 本法所称的外资企业是指依照中国有关法律在中国境内设立的全部资本由外国投资者投资的企业,不包括外国的企业和其他经济组织在中国境内的分支机构。
第三条 设立外资企业,必须有利于中国国民经济的发展。国家鼓励举办产品出口或者技术先进的外资企业。
国家禁止或者限制设立外资企业的行业由国务院规定。
第四条 外国投资者在中国境内的投资、获得的利润和其他合法权益,受中国法律保护。
外资企业必须遵守中国的法律、法规,不得损害中国的社会公共利益。
第五条 国家对外资企业不实行国有化和征收;在特殊情况下,根据社会公共利益的需要,对外资企业可以依照法律程序实行征收,并给予相应的补偿。
第六条 设立外资企业的申请,由国务院对外经济贸易主管部门或者国务院授权的机关审查批准。审查批准机关应当在接到申请之日起九十天内决定批准或者不批准。
第七条 设立外资企业的申请经批准后,外国投资者应当在接到批准证书之日起三十天内向工商行政管理机关申请登记,领取营业执照。外资企业的营业执照签发日期,为该企业成立日期。
第八条 外资企业符合中国法律关于法人条件的规定的,依法取得中国法人资格。
第九条 外资企业应当在审查批准机关核准的期限内在中国境内投资;逾期不投资的,工商行政管理机关有权吊销营业执照。
工商行政管理机关对外资企业的投资情况进行检查和监督。
第十条 外资企业分立、合并或者其他重要事项变更,应当报审查批准机关批准,并向工商行政管理机关办理变更登记手续。
第十一条 外资企业依照经批准的章程进行经营管理活动,不受干涉。
第十二条 外资企业雇用中国职工应当依法签定合同,并在合同中订明雇用、解雇、报酬、福利、劳动保护、劳动保险等事项。
第十三条 外资企业的职工依法建立工会组织,开展工会活动,维护职工的合法权益。
外资企业应当为本企业工会提供必要的活动条件。
第十四条 外资企业必须在中国境内设置会计帐簿,进行独立核算,按照规定报送会计报表,并接受财政税务机关的监督。
外资企业拒绝在中国境内设置会计帐簿的,财政税务机关可以处以罚款,工商行政管理机关可以责令停止营业或者吊销营业执照。
第十五条 外资企业在批准的经营范围内所需的原材料、燃料等物资,按照公平、合理的原则,可以在国内市场或者在国际市场购买。
第十六条 外资企业的各项保险应当向中国境内的保险公司投保。
第十七条 外资企业依照国家有关税收的规定纳税并可以享受减税、免税的优惠待遇。
外资企业将缴纳所得税后的利润在中国境内再投资的,可以依照国家规定申请退还再投资部分已缴纳的部分所得税税款。
第十八条 外资企业的外汇事宜,依照国家外汇管理规定办理。
外资企业应当在中国银行或者国家外汇管理机关指定的银行开户。
第十九条 外国投资者从外资企业获得的合法利润、其他合法收入和清算后的资金,可以汇往国外。
外资企业的外籍职工的工资收入和其他正当收入,依法缴纳个人所得税后,可以汇往国外。
第二十条 外资企业的经营期限由外国投资者申报,由审查批准机关批准。期满需要延长的,应当在期满一百八十天以前向审查批准机关提出申请。审查批准机关应当在接到申请之日起三十天内决定批准或者不批准。
第二十一条 外资企业终止,应当及时公告,按照法定程序进行清算。
在清算完结前,除为了执行清算外,外国投资者对企业财产不得处理。
第二十二条 外资企业终止,应当向工商行政管理机关办理注销登记手续,缴销营业执照。
第二十三条 举办外资企业不涉及国家规定实施准入特别管理措施的,对本法第六条、第十条、第二十条规定的审批事项,适用备案管理。国家规定的准入特别管理措施由国务院发布或者批准发布。
第二十四条 国务院对外经济贸易主管部门根据本法制定实施细则,报国务院批准后施行。
第二十五条 本法自公布之日起施行。

《关于外商投资的公司审批登记管理法律适用若干问题的执行意见》解读

国家工商总局外资局发布《关于外商投资的公司审批登记管理法律适用若干问题的执行意见》重点条款解读

国家工商总局门户网站:www.saic.gov.cn 2006年09月22日 来源: 国家工商总局外商投资企业注册局

为了准确适用《公司法》、《公司登记管理条例》和有关外商投资的法律,保持我国利用外资法律和政策的连续性,进一步提高外商直接投资准入管理工作的质量和水平,国家工商行政管理总局、商务部、海关总署、国家外汇管理局于2006年4月24日联合印发了《关于外商投资的公司审批登记管理法律适用若干问题的执行意见》(工商外企字[2006]81号,以下简称《执行意见》)。《执行意见》适应新形势的要求,在明确外商投资的公司审批登记管理法律适用原则的基础上,对外商投资的公司的组织机构、设立形式、登记申请期限、审批和登记时需要提交的文件、出资方式、出资监管、境内投资、办事机构的地位、涉及出资的海关和外汇管理等问题提出了明确而具体的意见。《执行意见》是国家有关部门在贯彻实施新修订的《公司法》、《公司登记管理条例》和有关外商投资法律方面的有力举措,是国家有关执法部门转变职能、依法行政、协调配合、优化服务的具体体现,也是外资登记管理系统努力进取、开拓创新的积极成果。

最近一个时期以来,全国各地把《执行意见》的学习贯彻与《公司法》、《公司登记管理条例》的学习贯彻结合起来,与外资法律、法规的学习贯彻结合起来,认真履行职责,努力把外资登记管理工作规范到新的法律要求上来。与此同时,各地在学习贯彻过程中,也提出了一些问题,需要统一理解和认识。在此,我们结合对《公司法》和有关外商投资企业的法律的学习和理解,对各地提出问题比较多的《执行意见》条款进行以下解读,供各地在进一步学习贯彻《执行意见》过程中参考。

一、关于一人公司的规范问题。外商独资的公司适用《公司法》一人公司有关规定问题,对外商独资的公司影响较大。尤其在当前以外商独资公司的形式申请设立登记的比例越来越大的趋势下,地方工商局、外商独资企业对此问题尤为关注。一人公司形式的确定和相关限制性规定的配套措施,体现了我国《公司法》顺应时代发展趋势,鼓励投资和维护交易安全的双重立法目的。外商独资的公司适用《公司法》一人公司的有关规定,是法律适用原则的具体体现,也是对外资企业法的必要补充。据此,《执行意见》明确:以外商独资的形式依法设立一人有限公司的,其注册资本最低限额应当符合《公司法》关于一人有限公司的规定;外国自然人设立一人有限公司的,还应当符合《公司法》关于一人有限公司对外投资限制的规定。这一条款包含了以下几层涵义:一是最低注册资本不低于10万元人民币;二是外国自然人在中国设立一人公司的数量不受限制;三是外国自然人设立的一人公司对外投资时不得再采取一人公司的形式;四是一人有限公司的出资期限和其他有限责任公司一样实行分期缴付。根据法不溯及既往的原则,2006年1月1日以前已经依法设立的外商独资的公司维持不变,但其变更注册资本和对外投资时,应当符合上述规定。

二、关于外商投资的公司的组织机构问题。《执行意见》根据《公司法》和有关外商投资的法律,对不同类型的外商投资的公司的组织机构做了更为明确的区分:中外合资、中外合作的有限责任公司需按照有关规定设立董事会作为权力机构,公司的其他组织机构由公司章程依法规定;外商合资、外商独资的有限责任公司和外商投资的股份有限公司的组织机构应当符合《公司法》的规定,建立健全公司的组织机构。各地对这一条款是否要求外商投资的公司设立监事会理解不一致,需要重点加以说明。根据《公司法》的规定,有限责任公司和股份有限公司应当设立监事会,只有股东人数较少或者规模较小的有限责任公司可以设一至两名监事,不设监事会。由此可以看出,监事制度是《公司法》强制要求设立的,而有关外商投资的法律对此并没有另外规定,因此,根据法律适用原则,所有类型的外商投资的公司应当设立监事制度,而对于监事制度的组织形式(监事会还是监事)、产生方式(选举还是委派)、任期、职权等具体事宜可以由公司章程根据各自公司的情况进行规定。另外需要强调的是:根据法不溯及既往的原则,对于2006年1月1日以前已经设立的外商投资的公司是否对章程进行修改,公司登记机关不宜做强制要求,可由公司自行决定,如果修改则报审批机关批准和登记机关备案。

这一条款在实际执行过程中还需要明确公司登记机关对公司章程的审查职责以及与审批机关的协调问题。关于公司登记机关的审查职责,《公司法》、《公司登记管理条例》都有明确的规定:设立公司,应当向公司登记机关申请;对不符合《公司法》规定的设立条件的,不得登记为公司;依法制定公司章程并在公司章程中按照法律的要求规定公司的机构,是设立公司应当具备的条件;公司章程有违反法律、行政法规规定的内容的,公司登记机关有权要求公司做相应修改。由此可见,公司登记机关有权依法审查公司章程,而对公司组织机构的审查是公司登记机关对公司章程审查的组成部分。关于在实际工作中与审批机关的协调问题,我们认为:公司章程经审批机关批准后生效的规定,并不影响公司登记机关依法对已经审批的章程条款进行审查。公司登记机关在审查过程中发现公司章程有违反法律、行政法规内容的,公司的登记事项违法,不符合公司设立条件的,有权要求公司修改,否则不予受理;公司根据公司登记机关要求所做的修改不涉及审批机关批准证书载明事项的,可以不必申请重新审批,涉及审批机关批准证书载明事项的,还应当申请重新审批。

三、关于外国投资者的主体资格或身份证明的公证认证文件问题。《执行意见》对此仅做了原则规定,具体的公证认证渠道则通过修订后的《外商投资企业登记书式及规范要求》进行细化。根据各地在实际执行过程中反映,并经咨询外交部领事司,外国投资者的主体资格或身份证明根据不同情况可以通过不同渠道办理公证认证手续。申请人可以根据申请事项按照相应的规范要求提交证明文件。

(一)作为企业或其他经济组织的外国投资者的主体资格证明应经其本国主管机关公证后送我国驻该国使(领)馆认证。如其本国与我国没有外交关系,则应当经与我国有外交关系的第三国驻该国使(领)馆认证,再由我国驻该第三国使(领)馆认证。某些国家的海外属地出具的文书,应先在该属地办妥公证,再经该国外交机构认证,最后由我国驻该国使(领)馆认证。

(二)作为自然人的外国投资者的身份证明,是指投资者所持有的该国有权部门签发的具有自然人身份证明效力的文件。由于各国制度不同,《执行意见》对“身份证明”内容并无统一要件要求,但一般情况下,应具备姓名、性别、年龄、国籍、证件号码等足以确认自然人身份的基本内容。在实践中,护照作为国际通行的公民出入国境和在国外证明国籍和身份的证件证明,在持有人办妥签证和入境手续后,其提交的复印件经与原件核对无误,可以作为外国投资者的“身份证明”使用,无须公证、认证。对没有办妥签证和入境手续的外国投资者,其护照不能作为有效“身份证明”,仍应以经公证认证的该国有权部门签发的文件作为其身份证明。

(三)香港、澳门地区投资者的主体资格证明或身份证明应当按照司法部有关中国委托公证人管理的相关专项规定提供当地公证机构的公证文件,并经司法部派驻当地的机构签章转递后方可使用。

(四)台湾地区投资者的主体资格证明或身份证明比较复杂,需要根据国家有关规定和当地实际审验相应的证明文件。

四、关于公司类型问题。《执行意见》根据《公司法》和有关外商投资的法律,对外商投资的公司类型做了进一步划分,通过对“有限责任公司”和“股份有限公司”加注的方式列举了23种类型。近日,国家工商总局又印发了《市场准入与退出数据规范 市场主体分册》等十项标准(工商办字[2006]130号)。其中附件1《关于发布〈市场准入与退出数据规范 市场主体分册〉等十项工商行政管理信息化标准的说明》对《外资登记管理检测分析用数据规范》(以下简称“外资标准”)与新的数据标准之间关系作出了说明,要求在贯彻执行外资标准时,对于与新的数据标准不一致处,以新的标准为准。如在外资标准中“企业类型”规定的比较简单,而新的标准按《执行意见》进行了细化,在新旧两个标准中,按新发布的数据标准执行。各被授权局要按照新的标准及时对外商投资的公司类型划分进行调整,并按新的要求上报数据。

五、关于外商投资的公司境内投资资格审查问题。《执行意见》根据《行政许可法》和《公司法》明确:公司登记机关不再审查相应的投资资格证明。也就是说,《关于外商投资企业境内投资的暂行规定》第五条(注册资本已缴清、开始盈利、无违法记录)和第六条(不得超过自身净资产的50%)的限制性规定不再执行。

六、关于变更登记时需要审批机关先行审批的事项问题。《执行意见》根据《公司法》、《公司登记管理条例》和外资三法规定,明确列举了8项需要先行审批的事项。除此之外,公司名称、投资者名称、法定代表人、实收资本、不跨审批机关管辖的地址变更等事项可以先办理变更登记,并在变更登记后30日内办理公司章程修改的审批或备案手续。这里需要说明的是:本《执行意见》只具有行政规章效力等级,如果其他法律、行政法规明确规定的,还应当依照其规定,如外资金融机构的高级管理人员(包括法定代表人)的变更需要根据相应的行政法规规定取得金融监管部门的资格审查和审批,方可办理变更登记手续。

七、关于变更登记的申请期限问题。《执行意见》在重申《公司登记管理条例》期限的基础上,对经过审批的变更登记申请期限补充规定了30日内申请办理变更登记的要求。在实践中,特别是在增加注册资本须交付新增注册资本20%以上的出资时,需要办理外汇或海关手续以及相应的评估、验资、验证手续,这些时间耽搁有一定的合理性,应当在申请变更登记时作出合理性说明,以便公司登记机关在计算期限时予以刨除。

八、关于办事机构的登记和监管问题。关于办事机构的登记问题,《执行意见》已经明确:原已登记的办事机构,不再办理延期手续;期限届满以后,应当办理注销登记或根据需要申请设立分公司。需要说明的是,法律并未禁止公司办事机构的存在,外商投资企业可根据业务需要在公司住所地以外直接设立从事业务联络的办事机构,无须办理工商登记。

关于办事机构从事经营活动的认定和处罚问题,目前法律、法规尚没有明确具体的规定,需要各地在执法实践中进一步积累经验。在此过程中,需要强调的是:办事机构不再纳入工商登记后,外资登记管理机关应当继续对其监管,禁止其直接从事经营活动。各被授权局以及从事属地监管的基层工商行政管理机关在监管执法过程中,对于生产型公司的办事机构从事产品的筛选、加工、制造、销售以及与上述业务有关的采购、推销、仓储、配送、安装、调试、维修等活动,非生产型公司的办事机构直接承揽服务项目、提供相关服务的,可以认定其在住所地以外从事经营活动,应当疏导其依法办理分公司的登记;不办理分公司登记擅自从事上述活动的,可以认定为无照经营行为,按照《无照经营查处取缔办法》的相关规定对这类办事机构予以取缔。

China’s Mixed-Ownership Enterprise Model 混合所有制?

China’s Mixed-ownership Enterprise Model: Can the State Let Go? I came across this short essay published on the website of the Wharton School of Business of the University of Pennsylvania (Link: http://knowledge.wharton.upenn.edu/article/will-chinas-mixed-ownership-enterprise-model-work/). The essay introduces paper titled “Making Ownership Matter: Prospects for China’s Mixed Ownership Economy“. The paper was co-authored by Marshall W. Meyer and Wu Changqi. Some interesting points:

  • The mixed ownership model is introduced to attract private investments in its 113 centrally owned SOEs and numerous local SOEs. (WJY: Is this the only purpose? It is also intended for privatizing SOEs? And improve corporate governance of SOEs?)
  • This model is however not new. (王江雨: that’s very true). China created a “halfway house” or a hybrid structure called a “legal person entity” to allow the state to reduce its ownership but retain control of companies. (王江雨: but how?)
  • “To most observers, there will appear to be private companies, but Thye are state controlled entities – and when why are [state controlled] they might as well be state owned … It is a waffle”. (王江雨: Somebody should be arrested to disclosing state secrets, hahaha).
  • The current financial problems faced by Chinese SOEs today were resulted from teh 2008 stimulus programme. Really?
  • The paper cites a survey that found 90% of private business leaders felt they would have no confidence that the mixed ownership model would give them influence as board members of such SOEs. “No matter how many shares are privately owned, the decision lies with the state.”
  • Major highlight of the paper: Mismatch between the levels of ownership and control in mixe-ownership enterprises.
  • Alibaba: controlled by a group of minority shareholders (and executives). “People buying Alibaba shares listed in the US may not have control rights”.
  • Question of mentality: capitalism (you operate for your shareholders) vs. socialism (for the whole people).
  • The prospects for a mixed owenership economy will ultimately depend on the state’s willingness to cede control.
  • There is no time to lose …
Company Law and Economic Reform in China: Recent Developments

It is said that, to observe China, one always has to pay attention to the direction and trends. It is further generally regarded that the direction of China’s development since the end of the Cultural Revolution has been economic liberalization and market economy. China’s trading partners, especially the United States, have hoped that someday China will become a “normal country” which embraces capitalism, market economy, personal freedom, democracy, and American leadership.

The domestic policies of the XI Administration appear to be much more politically conservative than many observers originally expected. This is especially true with respect to the tightened control of press, speech, civil society, the legal profession, education, among others. It is fair to say that political reform has been scaled back significantly.

On the other hand, economic liberalization continues to advance at least in some aspects of the economic system. One such example is corporate law reform, which has been steadyfastly marching toward reducing governmental intervention and increasingly the autonomy of business Organisations.

The latest revision of the PRC Company Law in 2013 marks a further step in this regard. The following amendments were made to the Company Law in this round of revision:

  • Relaxed and Simplified Requirement on Registered Capital:
    (1) minimum registered capital for all forms of companies were removed;
    (2) No prescribed timeframe for shareholders to make full capital contribution;
    (3) Adoption of the capital subscription system: promised capital, not paid-up capita;
    (4) The 30% ratio on cash payment removed
  • Simplified Registration Procedure: Capital verification requirement removed.
Prospect of Trump tariffs unnerves Asian investors

Prospect of Trump tariffs unnerves Asian investors

Trade barriers against any one country would be felt across interconnected region

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JANUARY 19, 2017 by: Jennifer Hughes in Hong Kong Look out of the window as you fly into Singapore and hundreds of ships will be visible below. Situated near the Malacca Straits, this comes as no surprise and vividly illustrates the importance of shipping — and by extension trade — to Asia. The region connects with four of the world’s five busiest shipping routes and, led by China, is home to nine of the top 10 container ports. Singapore’s crowded moorings include long-term “parked” ships awaiting an upturn in global trade as well as those in transit. Now, with the inauguration of Donald Trump as US president looming on Friday, markets have begun to analyse the potential impact of his proposals for eye-popping tariffs as well as measures put forward by other Republicans. Asia’s reliance on trade means the region is highly vulnerable to any change in the world order.

Leader of Globalization. Does Xi Really Mean It?

Chinese President Xi Jin Ping spoke to defend globalization and advocated for free trade at the World Economic Forum in Davos.  While the speech has been hailed by many, commentators around the world also question whether Xi was sincere about it. See the following:

Forbes: Xi Jinping’s Davos Speech Defends Globalization But Does China Really Mean It?

http://www.forbes.com/sites/douglasbulloch/2017/01/18/xi-jinpings-davos-speech-defends-globalisation-but-does-china-really-mean-it/#36d44e787531

About this time of year, most years, journalists looking for inspiration can always turn their eyes towards the rarified atmosphere of a certain Swiss ski resort, find out what the assembled notaries are discussing, and produce a few thousand words of inconsequential burbling about technology, economics and social transformation. This year, however, the entire world is a target rich environment–excuse the pun–for the doleful hack in need of inspiration.

China’s President Xi Jinping delivers a speech on the opening day of the World Economic Forum, on January 17, 2017 in Davos.The global elite begin a week of earnest debate and Alpine partying in the Swiss ski resort of Davos on Tuesday, in a week bookended by two presidential speeches of historic import. / AFP / FABRICE COFFRINI (Photo credit should read FABRICE COFFRINI/AFP/Getty Images)

Fortunately, the organizers of the World Economic Forum meeting at Davos had the inspired idea of inviting Xi, President of the People’s Republic of China, who arrived to a red carpet welcome on Monday. As brand management strategies go, this is “Grade A,” ensuring the name Davos appeared on today’s front pages around the world, rather than in comment page reflection pieces entitled “Whatever happened to … ?”

Instead, Davos showed the world the urbane figure of Xi, quoting Dickens’ A Tale of Two Cities. “It was the best of times, it was the worst of times,” he said to a flutter of applause, laying an unambiguous claim on the sort of cosmopolitan sensibility that is de rigeur in these climesUnfortunately, Xi also suggested Dickens was portraying the industrial revolution, rather the much bloodier French revolution that informs the story and constructs a metaphor for a progressive, liberal country, rising to global prominence, while its old enemy descends into bloody strife.

There is no escaping, however, that Xi delivering the opening plenary speech at Davos is also a powerful metaphor, the only question is, of what? Many headlines will refer to Xi’s defence of globalisation in the face of endless challenges. Other’s will complement the emerging helmsman for his pragmatism while sneering at Trump’s bombast.

But behind it all is public diplomacy; it is China sounding reasonable, conciliatory, patient, ready to assume the mantle of leadership that so many are so eager to thrust upon it. And the Davos crowd seemed to love it. Xi’s joke about “Schwab-onomics”– after Klaus Schwab, the founder and guiding spirit of Davos–was wooden, but everyone laughed politely anyway. There were no interruptions. No activists bursting in to scream obscenities, no impertinent questions about his private wealth, no mention of the routine censorship and suppression of dissent in China. Just Xi, holding court to a roomful of forlorn globalization disciples, searching for new hope.

The speech itself contained little of substance, many selective embellishments and quite a few glaring omissions, but was what everyone has come to expect of a Chinese leader on the world stage. The real problems, he said, were threefold: Not enough ‘driving force’ for reform and development. Inadequate global governance, by which he really meant that China did not have enough say over the rules and institutions. And lastly, unequal global development.

What is required, apparently, is innovation, and a new economic model to encourage it. One might conclude from these words that capitalism would be worth a try, but no, each country must develop “according to their own conditions,” he said. Absent from the speech was any mention of global imbalances, or closed capital markets and a history of currency manipulation. These were, however, stern demands that countries “honour promises and obey rules.”

Two developments accompanied the speech suggest a degree of predictable choreography for a set-piece performance such as this. The State Council issued new policy guidelines to help foreign investors in China, which only served to remind people that these same promises have been made many times before, indeed they were among the many conditions of China’s WTO accession agreement in 2001, but clearly sticking to those promises and obeying those rules is not in accordance with China’s conditions.

Then it transpired that “state investors bought shares to steady” a declining Chinese stock market, which reminds everyone that the Chinese state maintains its ‘driving force’ for a reason, which is to make markets do what they are told.

The difficulty of interpreting a speech like this is not really in the content of the speech itself–Chinese speeches are always about reading between the lines in any case–so much as understanding reactions to it. China watchers are used to sifting through the dense web of self-justification and misdirection that comprise a major address like this, but such a speech is not really a positive contribution to global dialogue so much as another rehearsal of China’s global outlook.

The setting, however, is of crucial importance as it creates the impression that China is keen to support globalization. An impression Klaus Schwab and the Davos elite fell over themselves to endorse. And what this rapturous reception signifies is that globalization, increasingly abandoned in the West, thinks it has found a new champion in the East.

Towards the end of his address, Xi uttered one of those amusingly mistranslated aphorisms when he said “no pie falls from the sky” when he likely meant “no such thing as a free lunch,” a saying which the applauding dignitaries appeared keen to refute.

China’s Xi Jinping Seizes Role as Leader on Globalization

‘No one will emerge as a winner in a trade war,’ Chinese president says

The Wall Street Journal,

Chinese President Xi Jinping urged the world to “say no to protectionism” with a full-throated defense of free trade at the opening of the World Economic Forum in Davos, Switzerland. Photo: Gian Ehrenzeller/European Pressphoto Agency

Chinese President Xi Jinping issued a full-throated defense of international trade and economic integration before a packed hall here, as doubts about the merits of globalization mount in the U.S. and elsewhere in the West.

“No one will emerge as a winner in a trade war,” Mr. Xi, the leader of the world’s second-biggest economy, said in an hourlong speech on Tuesday to members of the world elite gathered for the annual World Economic Forum. “Pursuing protectionism is just like locking one’s self in a dark room. Wind and rain may be kept outside, but so are light and air.”

The Chinese leader’s message comes as the U.S. prepares to inaugurate President-elect Donald Trump, who has voiced skepticism about the benefits of free trade to the U.S.

Mr. Xi sought to portray Beijing as a benevolent power intent on upholding an international order that has boosted common prosperity. He exhorted world leaders to “join hands and rise to the challenge.”

The speech was portrayed by some who heard it as a response to politicians in the U.S. and Europe who are turning their focus inward.

“There is a vacuum in global leadership. Xi sees it and he seizes it,” said Carl Bildt, a former prime minister of Sweden, who was in the audience. “If the U.S. does take a more mercantilist route, overall the Asians and Europeans will have to combine to preserve global free trade.”

China has been one of the biggest beneficiaries of globalization, which opened the way for the country, with its vast and relatively low-wage workforce, to become the world’s factory floor. Inexpensive goods manufactured in China have flooded the planet.

That shift helped lift hundreds of millions of Chinese from poverty. But it was also a factor that contributed in costing millions of workers in the West their jobs, fueling mounting suspicion of transnational economic integration and the current antiestablishment backlash in politics in much of the developed world.

“Some people blame economic globalization for the chaos in our world,” Mr. Xi said. He dismissed the idea—and acknowledged that globalization had resulted in growing income inequality within many countries.

“It’s important that China is saying that there are important benefits of globalization and acknowledges that there are many problems that have to be worked through,” said David Lipton, first deputy managing director of the International Monetary Fund.

Xi Jinping is the first Chinese president to attend the World Economic Forum in Davos Switzerland; he has presented China as a benevolent global power amid differences with the incoming Trump administration. Photo: Getty

In many ways, Mr. Xi—and his government—are deeply ambivalent about globalization. Mr. Xi is an unabashed nationalist, who resents the West’s lecturing on human rights and democracy. He has sought to bulk up state-run companies and kept China’s internet isolated behind its Great Firewall.

Mr. Xi stressed that no power should attempt to dictate to other countries a specific path. Development, he said, is “of the people, by the people, and for the people,” borrowing a phrase from U.S. President Abraham Lincoln’s Gettysburg Address.

Some in the audience noted irony in the appeal from the leader of a country that has undermined competition.

Foreign companies and governments complain that China has moved to restrict foreign companies’ access to its markets, while buying up technology and assets from firms abroad. The U.S. and Europe also accuse China of selling goods from steel to solar panels at improperly low prices.

“Here, we have the global elite embracing Xi as the anti-Trump,” said Lawrence Freedman, emeritus professor of war studies at King’s College, London.

Donald Trump’s suggestion that he would use Taiwan as a negotiating chip with China to extract concessions over trade hit a raw nerve in Beijing. Photo: EPA/Reuters

Mr. Trump has pledged to defend American firms and workers against foreign competition and impose tariffs on imports from China and Mexico, among other countries. Mr. Trump also accused China of manipulating its currency to boost exports.

“China has no intention to boost its trade competitiveness by devaluing the renminbi, still less will it launch a currency war,” Mr. Xi said.

China’s yuan weakened almost 7% against the dollar last year, nearly double the drop in the year earlier. In recent weeks, China’s central bank has stepped up its effort to prop up the yuan as Beijing pledges to keep the currency largely stable.

In his speech, Mr. Xi built a case that China should have a greater formal role in guiding the world economy. He gave his endorsement to the 2015 Paris agreement on carbon emissions, calling on countries to “stick to it instead of walking away from it.”

Mr. Trump has called climate change a hoax, fueling speculation that he might pull the U.S. out of the accord.

Some in the audience questioned the readiness of China to adopt the leadership role that Mr. Xi was viewed as mapping out.

“In these times of a lack of leadership, particularly in Europe, it was quite impressive,” said Werner Hoyer, president of the European Investment Bank, which is owned by the 28 member states of the European Union.

But when asked if he thought that China’s institutions were ready to take on the leadership of the world economy, Mr. Hoyer said: “Not yet.”

Mr. Xi’s legitimacy at home depends in large measure on his ability to manage a continued slowdown in China’s own economy while continuing to assert Chinese territorial claims despite U.S. opposition.

Mr. Xi said China’s economy has entered a “new normal” of slower but more sustainable growth. Household consumption and services have become new growth drivers for the economy, Mr. Xi said.

He said China’s economy grew at 6.7% last year, within the range of between 6.5% and 7% targeted for 2016.

Still, that growth came through easy credit and other stimulus that revved up industries and the property market, contributing to overcapacity and soaring house prices. Mr. Xi acknowledged those headwinds. China’s leadership has made fending off asset bubbles a key economic task for 2017.

Write to Stephen Fidler at stephen.fidler@wsj.com, Te-Ping Chen at te-ping.chen@wsj.com and Lingling Wei at lingling.wei@wsj.com

 

At Davos, a clarion call by world leaders, including Xi Jinping and Joe Biden, to defend global order

Biden pulls no punches as he warns against protectionism and Russia’s shenanigans

DAVOS (SWITZERLAND) – With the clock ticking down on his last 48 hours in office, US Vice-President Joe Biden delivered a rallying call to government and business leaders here in Davos to keep up their fight to defend the liberal global economic and political order that has come under pressure from populist challengers in recent months.

Leaders in Western countries, led by the United States, had to defend the liberal global order that their forefathers had shown “foresight, audacity and big-heartedness” in building. Institutions and initiatives such as the United Nations, Nato, the European Union, the Marshall Plan and Bretton Woods had helped secure the decades of peace and prosperity that the world has enjoyed, he told his audience at the World Economic Forum (WEF).

Urging leaders not to lose sight of the years of effort it took to build these institutions and foster the community of values that underpinned them, he added that leaders in the West “could not wait for others to write the future they want to see”.

They should reject the impulse to “hunker down, shut the gates, build walls, exit at this moment”, in the face of challenges thrown up by globalisation, from growing income inequalities to a deepening sense of insecurity among voters that the system would deliver on the promise of better lives for their children, he said.

Mr Biden and Mr Xi meeting on the sidelines of the WEF in Davos. Mr Biden chose to deliver his last official speech in Davos, while Mr Xi was the first president from China to address the forum. Both men gave a robust defence of an open, liberal worl
Mr Biden and Mr Xi meeting on the sidelines of the WEF in Davos. Mr Biden chose to deliver his last official speech in Davos, while Mr Xi was the first president from China to address the forum. Both men gave a robust defence of an open, liberal world order against the backdrop of a possible hunkering down by the US under a Trump administration. PHOTO: XINHUA

Noting the unease felt around the world following recent events, he addressed the Republican elephant that has been hanging about the WEF’s cavernous Congress Hall for the past two days. Although he insisted his remarks were not directed at the incoming Donald Trump administration – mention of which prompted a loud boo from someone in the crowd – he set out in plain terms what he thought the world wanted to see from an American leadership.

As is his style, he did not mince his words. He pointedly called out Russian President Vladimir Putin, who, he said, “has a different vision of the future”. He charged that Mr Putin was behind cyber attacks and misinformation to influence electoral outcomes in Western democracies, including the recent US elections. He said the Russian leader also aimed to undermine Western alliances like Nato, seeking instead to build a world divided into spheres of influence where regional players, like Russia, would hold sway. The US, for its part, had stood for an international order where countries were free to decide their own futures and associate with others as they saw fit. “That was our position, is our position, and should be our position,” Mr Biden asserted, noting that he had chosen to deliver his last speech in Davos, in much the same vein as he had set out the Obama administration’s foreign policy agenda in Europe, in a speech in Munich, soon after taking office eight years ago.

BEAR ON THE PROWL

Under President Putin, Russia is working with every tool available to them to whittle away at the edges of the European project, test the fault lines of Western nations and return to a politics defined by spheres of influence… With many countries in Europe slated to hold elections this year, we should expect further attempts by Russia to meddle in the democratic process. It will occur again, I promise you. And again the purpose is clear: to collapse the liberal international order.

US VICE-PRESIDENT JOE BIDEN

TACKLING PROBLEMS HEAD-ON

There is no point in blaming economic globalisation for the world’s problems because that is simply not the case… And that will not help to solve the problems… The history of mankind has shown us that problems are not to be feared. What should concern us is the refusal to face up to the problems.

CHINESE PRESIDENT XI JINPING

These were welcome words for the crowd gathered in this Swiss Alpine resort for the annual WEF meeting, who gave him a standing ovation. There was a note of wistfulness about the passing of the baton to a new team in the US whose commitment to the liberal order seems in doubt, following recent remarks by incoming president Trump, who has called Nato “obsolete” and the EU a “vehicle for Germany”. Just as disconcertingly for observers in Asia, he has said he was ready to bargain with Beijing over the US’ one-China policy, and also seemed headed for a confrontation with China over trade.

Against this backdrop, it was little wonder that, a day earlier, delegates here had clung to the words of Chinese President Xi Jinping, who hit all the right notes in voicing his support for the liberal economic order.

In a speech on Tuesday, Mr Xi rejected protectionism, urged against a “trade war in which there are no winners”, and pledged that China would keep its economy open to the world.

It was pointless blaming globalisation for economic challenges, he said, as this was “not the case, and would not solve the problems”. He also likened protectionism to shutting oneself in a dark room, which might keep out the wind and the rain but also block out the sunshine.

He went on to outline China’s proposals for collaborative projects, from its much vaunted One-Belt-One-Road initiative to foster trade links between Asia and the West, to long overdue structural reforms to “Western- centred” international institutions.

Mr Xi made history by being the first president of China to address the WEF, which rolled out the red carpet for him. He was given top billing for a keynote address on Day One of the week-long conference. He later also witnessed the signing of a “strategic partnership” between China’s National Development and Reform Commission and the WEF to deepen their collaboration over the next 10 years.

Responding to Mr Xi, WEF founder and executive chairman Klaus Schwab hailed his address as a “very important speech at a historic time”. He welcomed China’s efforts to support, as well as reform, the present institutional system and be a “driving force in the world for globalisation”.

Mr Schwab’s sentiments seemed to be shared by delegates, many of whom appeared delighted at the Chinese leader’s robust defence of globalisation at a time when some of its usual champions in Washington and the West seem to have lost faith in the project.

There have been, after all, many calls from these quarters for China to pitch in to uphold the rules-based system that has enabled it to make such rapid progress through international trade and economic co-operation.

The irony, however, of the liberal capitalist order being given a much-needed booster shot by the leader of a nominally Communist state, once itself deeply suspicious about signing up to it, was not lost on delegates.

In discussions afterwards, there were some sceptical voices raised about what a “globalisation with Chinese characteristics” might entail for the world.

Which explains why Mr Biden’s farewell speech was such a hit with the crowd yesterday.

With a new US leader waiting to be sworn in tomorrow, just as proceedings here will be winding down, many remain deeply unsure if the clock was not also winding down on the globalisation project they have long supported, and benefited from.

A version of this article appeared in the print edition of The Straits Times on January 19, 2017, with the headline ‘A clarion call to defend the liberal global order’.

XI JINPING’S DAVOS SPEECH SHOWED THE WORLD HAS TURNED UPSIDE DOWN

China is looking to position itself as the guarantor of global trade after Donald Trump’s election.

What a difference a decade can make. China went from being lambasted for being an irresponsible stakeholder in the mid-2000s, to now being seen as the linchpin of global economic stability. This reality set in for many on Tuesday as China’s President Xi Jinping took the stage to deliver a staunch defense of economic globalization, and international cooperation on issues that threaten global prosperity and growth.

Contrast these remarks to the outbursts from President-elect of the United States Donald Trump about the unfair advantages built into the global economy’s rules of the game—rules that have paved the way for the U.S.’s rise to the top—and we are all left scratching our heads.

If Xi’s opening address to Davos’s exclusive club of the economic and political elite is any indication of what is to come in 2017, China could be the most powerful voice heralding the social and economic benefits of globalization, inviting countries to join free trade pacts that it hosts and organizes, and investing into developing countries to gain market access.

That’s right; China, a developing country with swathes of rudimentary territory and hundreds of millions of people still living in poverty, is championing economic globalization. Clearly, we are living in an upside-down world.

In his Davos keynote, President Xi rejected the notion that “outside forces” or economic globalization were to blame for the world’s socioeconomic ills. Likely responding to Trump and the European populist rhetoric that has monopolized headlines for the past several months, Xi took aim at ongoing conflict, geopolitical instability, the rise of terrorism and refugee crises as the root causes of “what has gone wrong with our world.”

Unsaid was a point Chinese officials have made before; that it was sustained American intervention in the Middle East’s political history, most notably in Iraq in 2003, that brought on this regional instability and spillover to chaos we see today.

Xi also hinted at previous U.S. follies of “chasing reckless profits” and poor financial market regulations that ushered in the onset of the 2008 global financial crisis. Xi praised G20 initiatives that improve global economic governance of financial flows and banking regulations, but he and other world leaders ought to be rightly worried about Trump’s likelihood of tearing down the Dodd-Frank financial regulations that had put stronger oversight on American banks and investment firms.

It was New York that was the epicenter of the international financial crisis, but its fallout was far more felt in Athens, Madrid and Dublin.

From finance to trade, it appears Trump’s America will no longer play the role of enforcing the liberal rules and norms the country once coveted and benefited from. Instead, it is Xi’s China that is promising to expand the One Belt One Road (OBOR) initiative to link Asia to Europe and Africa using land, air, and sea. The OBOR is reminiscent of the U.S.’s own Marshall Plan for Europe : Xi heralded it as an ambitious foreign aid program that will bring investment, economic growth, and open trade routes for developing markets. Xi declared that China is open to trade and welcomes the world to take advantage of its market, the largest developing economy in the world, just at a time when the US is expected to raise protectionist barriers and breakdown free trade agreements.

Where the United States once claimed itself to be the center of research and development, technological innovation and intellectual property, Xi noted how China is encouraging domestic consumption and savings, growing its service sector to diversify from manufacturing, and is investing in and promoting green technologies.

Xi rejected the idea that economic globalization brought all ills, pointing to advances made in productivity, technology, and scientific advancements. He did not deny that there will be inequality, since the “ world cake ” cannot be made bigger, but that countries need to cushion against the negative impact. But, Xi reminded us that the world may be on the cusp of new technological changes from artificial intelligence to 3D printing and green technologies. Unlike Trump’s doom and gloom rhetoric about the world, Xi shared some much needed optimism and hope that was well-received by the forum in the Swiss ski resort town.

To ward against another 1930s-like depression of beggar-thy-neighbor policies, U.S. presidents have used monetary policy to shore up global trade. To prevent an exodus of capital from already hurting emerging market economies to the United States, Federal Reserve Chair Janet Yellen has been cautious about increasing interest rates; a monetary policy decision that Trump has railed against. Where the U.S. dollar had been the currency used to shore up world trade, the greenback clearly does not have the domestic political backing it once had. Yet it was Xi who promised not to devalue the Chinese renminbi so as to not cause a currency war.

Trump’s America seems more like the irresponsible and bystander state and China appears more like the guarantor and bulwark of global economic stability through a shared vision of increased economic cooperation and commitment to inclusive growth. Perhaps next year the annual World Economic Forum ought to be held at China’s Yabuli Ski Resort instead, confirming that the world is truly upside-down.

Bessma Momani is professor at the Balsillie School of International Affairs and the University of Waterloo and senior fellow at the Centre for International Governance and Innovation and the Brookings Institution.

President Xi’s speech to Davos in full

Opening Plenary with Xi Jinping, President of the People's Republic of China in Davos, January 17, 2017. Copyright by World Economic Forum / Valeriano Di Domenico

I’m delighted to come to beautiful Davos. Though just a small town in the Alps, Davos is an important window for taking the pulse of the global economy. People from around the world come here to exchange ideas and insights, which broaden their vision. This makes the WEF annual meeting a cost-effective brainstorming event, which I would call “Schwab economics”.

“It was the best of times, it was the worst of times.” These are the words used by the English writer Charles Dickens to describe the world after the Industrial Revolution. Today, we also live in a world of contradictions. On the one hand, with growing material wealth and advances in science and technology, human civilization has developed as never before. On the other hand, frequent regional conflicts, global challenges like terrorism and refugees, as well as poverty, unemployment and widening income gap have all added to the uncertainties of the world.

Many people feel bewildered and wonder: What has gone wrong with the world?

To answer this question, one must first track the source of the problem. Some blame economic globalization for the chaos in the world. Economic globalization was once viewed as the treasure cave found by Ali Baba in The Arabian Nights, but it has now become the Pandora’s box in the eyes of many. The international community finds itself in a heated debate on economic globalization.

Today, I wish to address the global economy in the context of economic globalization.

The point I want to make is that many of the problems troubling the world are not caused by economic globalization. For instance, the refugee waves from the Middle East and North Africa in recent years have become a global concern. Several million people have been displaced, and some small children lost their lives while crossing the rough sea. This is indeed heartbreaking. It is war, conflict and regional turbulence that have created this problem, and its solution lies in making peace, promoting reconciliation and restoring stability. The international financial crisis is another example. It is not an inevitable outcome of economic globalization; rather, it is the consequence of excessive chase of profit by financial capital and grave failure of financial regulation. Just blaming economic globalization for the world’s problems is inconsistent with reality, and it will not help solve the problems.

From the historical perspective, economic globalization resulted from growing social productivity, and is a natural outcome of scientific and technological progress, not something created by any individuals or any countries. Economic globalization has powered global growth and facilitated movement of goods and capital, advances in science, technology and civilization, and interactions among peoples.

But we should also recognize that economic globalization is a double-edged sword. When the global economy is under downward pressure, it is hard to make the cake of global economy bigger. It may even shrink, which will strain the relations between growth and distribution, between capital and labor, and between efficiency and equity. Both developed and developing countries have felt the punch. Voices against globalization have laid bare pitfalls in the process of economic globalization that we need to take seriously.

As a line in an old Chinese poem goes, “Honey melons hang on bitter vines; sweet dates grow on thistles and thorns.” In a philosophical sense, nothing is perfect in the world. One would fail to see the full picture if he claims something is perfect because of its merits, or if he views something as useless just because of its defects. It is true that economic globalization has created new problems, but this is no justification to write economic globalization off completely. Rather, we should adapt to and guide economic globalization, cushion its negative impact, and deliver its benefits to all countries and all nations.

There was a time when China also had doubts about economic globalization, and was not sure whether it should join the World Trade Organization. But we came to the conclusion that integration into the global economy is a historical trend. To grow its economy, China must have the courage to swim in the vast ocean of the global market. If one is always afraid of bracing the storm and exploring the new world, he will sooner or later get drowned in the ocean. Therefore, China took a brave step to embrace the global market. We have had our fair share of choking in the water and encountered whirlpools and choppy waves, but we have learned how to swim in this process. It has proved to be a right strategic choice.

Whether you like it or not, the global economy is the big ocean that you cannot escape from. Any attempt to cut off the flow of capital, technologies, products, industries and people between economies, and channel the waters in the ocean back into isolated lakes and creeks is simply not possible. Indeed, it runs counter to the historical trend.

Opening Plenary with Xi Jinping, President of the People's Republic of China in Davos, January 17, 2017. Copyright by World Economic Forum / Valeriano Di Domenico

Image: Valeriano Di Domenico

The history of mankind tells us that problems are not to be feared. What should concern us is refusing to face up to problems and not knowing what to do about them. In the face of both opportunities and challenges of economic globalization, the right thing to do is to seize every opportunity, jointly meet challenges and chart the right course for economic globalization.

At the APEC Economic Leaders’ Meeting in late 2016, I spoke about the necessity to make the process of economic globalization more invigorated, more inclusive and more sustainable. We should act pro-actively and manage economic globalization as appropriate so as to release its positive impact and rebalance the process of economic globalization. We should follow the general trend, proceed from our respective national conditions and embark on the right pathway of integrating into economic globalization with the right pace. We should strike a balance between efficiency and equity to ensure that different countries, different social strata and different groups of people all share in the benefits of economic globalization. The people of all countries expect nothing less from us, and this is our unshirkable responsibility as leaders of our times.

Ladies and Gentlemen,
Dear Friends,

At present, the most pressing task before us is to steer the global economy out of difficulty. The global economy has remained sluggish for quite some time. The gap between the poor and the rich and between the South and the North is widening. The root cause is that the three critical issues in the economic sphere have not been effectively addressed.

First, lack of robust driving forces for global growth makes it difficult to sustain the steady growth of the global economy. The growth of the global economy is now at its slowest pace in seven years. Growth of global trade has been slower than global GDP growth. Short-term policy stimuli are ineffective. Fundamental structural reform is just unfolding. The global economy is now in a period of moving toward new growth drivers, and the role of traditional engines to drive growth has weakened. Despite the emergence of new technologies such as artificial intelligence and 3-D printing, new sources of growth are yet to emerge. A new path for the global economy remains elusive.

Second, inadequate global economic governance makes it difficult to adapt to new developments in the global economy. Madame Christine Lagarde recently told me that emerging markets and developing countries already contribute to 80 percent of the growth of the global economy. The global economic landscape has changed profoundly in the past few decades. However, the global governance system has not embraced those new changes and is therefore inadequate in terms of representation and inclusiveness. The global industrial landscape is changing and new industrial chains, value chains and supply chains are taking shape. However, trade and investment rules have not kept pace with these developments, resulting in acute problems such as closed mechanisms and fragmentation of rules. The global financial market needs to be more resilient against risks, but the global financial governance mechanism fails to meet the new requirement and is thus unable to effectively resolve problems such as frequent international financial market volatility and the build-up of asset bubbles.

Third, uneven global development makes it difficult to meet people’s expectations for better lives. Dr. Schwab has observed in his book The Fourth Industrial Revolution that this round of industrial revolution will produce extensive and far-reaching impacts such as growing inequality, particularly the possible widening gap between return on capital and return on labor. The richest one percent of the world’s population own more wealth than the remaining 99 percent. Inequality in income distribution and uneven development space are worrying. Over 700 million people in the world are still living in extreme poverty. For many families, to have warm houses, enough food and secure jobs is still a distant dream. This is the biggest challenge facing the world today. It is also what is behind the social turmoil in some countries.

All this shows that there are indeed problems with world economic growth, governance and development models, and they must be resolved. The founder of the Red Cross Henry Dunant once said, “Our real enemy is not the neighboring country; it is hunger, poverty, ignorance, superstition and prejudice.” We need to have the vision to dissect these problems; more importantly, we need to have the courage to take actions to address them.

First, we should develop a dynamic, innovation-driven growth model. The fundamental issue plaguing the global economy is the lack of driving force for growth.Innovation is the primary force guiding development. Unlike the previous industrial revolutions, the fourth industrial revolution is unfolding at an exponential rather than linear pace. We need to relentlessly pursue innovation. Only with the courage to innovate and reform can we remove bottlenecks blocking global growth and development.

With this in mind, G-20 leaders reached an important consensus at the Hangzhou Summit, which is to take innovation as a key driver and foster new driving force of growth for both individual countries and the global economy. We should develop a new development philosophy and rise above the debate about whether there should be more fiscal stimulus or more monetary easing. We should adopt a multipronged approach to address both the symptoms and the underlying problems. We should adopt new policy instruments and advance structural reform to create more space for growth and sustain its momentum. We should develop new growth models and seize opportunities presented by the new round of industrial revolution and digital economy. We should meet the challenges of climate change and aging population. We should address the negative impact of IT application and automation on jobs. When cultivating new industries and new forms models of business models, we should create new jobs and restore confidence and hope to our peoples.

Second, we should pursue a well-coordinated and inter-connected approach to develop a model of open and win-win cooperation. Today, mankind has become a close-knit community of shared future. Countries have extensive converging interests and are mutually dependent. All countries enjoy the right to development. At the same time, they should view their own interests in a broader context and refrain from pursuing them at the expense of others.

We should commit ourselves to growing an open global economy to share opportunities and interests through opening-up and achieve win-win outcomes. One should not just retreat to the harbor when encountering a storm, for this will never get us to the other shore of the ocean. We must redouble efforts to develop global connectivity to enable all countries to achieve inter-connected growth and share prosperity. We must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening-up and say no to protectionism. Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war.

Third, we should develop a model of fair and equitable governance in keeping with the trend of the times. As the Chinese saying goes, people with petty shrewdness attend to trivial matters, while people with vision attend to governance of institutions. There is a growing call from the international community for reforming the global economic governance system, which is a pressing task for us. Only when it adapts to new dynamics in the international economic architecture can the global governance system sustain global growth.

Countries, big or small, strong or weak, rich or poor, are all equal members of the international community. As such, they are entitled to participate in decision-making, enjoy rights and fulfill obligations on an equal basis. Emerging markets and developing countries deserve greater representation and voice. The 2010 IMF quota reform has entered into force, and its momentum should be sustained. We should adhere to multilateralism to uphold the authority and efficacy of multilateral institutions. We should honor promises and abide by rules. One should not select or bend rules as he sees fit. The Paris Agreement is a hard-won achievement which is in keeping with the underlying trend of global development. All signatories should stick to it instead of walking away from it as this is a responsibility we must assume for future generations.

Fourth, we should develop a balanced, equitable and inclusive development model. As the Chinese saying goes, “A just cause should be pursued for common good.”Development is ultimately for the people. To achieve more balanced development and ensure that the people have equal access to opportunities and share in the benefits of development, it is crucial to have a sound development philosophy and model and make development equitable, effective and balanced.

Opening Plenary with Xi Jinping, President of the People's Republic of China in Davos, January 17, 2017. Copyright by World Economic Forum / Valeriano Di Domenico

Image: Valeriano Di Domenico

We should foster a culture that values diligence, frugality and enterprise and respects the fruits of hard work of all. Priority should be given to addressing poverty, unemployment, the widening income gap and the concerns of the disadvantaged to promote social equity and justice. It is important to protect the environment while pursuing economic and social progress so as to achieve harmony between man and nature and between man and society. The 2030 Agenda for Sustainable Development should be implemented to realize balanced development across the world.

A Chinese adage reads, “Victory is ensured when people pool their strength; success is secured when people put their heads together.” As long as we keep to the goal of building a community of shared future for mankind and work hand in hand to fulfill our responsibilities and overcome difficulties, we will be able to create a better world and deliver better lives for our peoples.

Ladies and Gentlemen,
Dear Friends,

China has become the world’s second largest economy thanks to 38 years of reform and opening-up. A right path leads to a bright future. China has come this far because the Chinese people have, under the leadership of the Communist Party of China, blazed a development path that suits China’s actual conditions.

This is a path based on China’s realities. China has in the past years succeeded in embarking on a development path that suits itself by drawing on both the wisdom of its civilization and the practices of other countries in both East and West. In exploring this path, China refuses to stay insensitive to the changing times or to blindly follow in others’ footsteps. All roads lead to Rome. No country should view its own development path as the only viable one, still less should it impose its own development path on others.

This is a path that puts people’s interests first. China follows a people-oriented development philosophy and is committed to bettering the lives of its people. Development is of the people, by the people and for the people. China pursues the goal of common prosperity. We have taken major steps to alleviate poverty and lifted over 700 million people out of poverty, and good progress is being made in our efforts to finish building a society of initial prosperity in all respects.

This is a path of pursuing reform and innovation. China has tackled difficulties and met challenges on its way forward through reform. China has demonstrated its courage to take on difficult issues, navigate treacherous rapids and remove institutional hurdles standing in the way of development. These efforts have enabled us to unleash productivity and social vitality. Building on progress of 30-odd years of reform, we have introduced more than 1,200 reform measures over the past four years, injecting powerful impetus into China’s development.

This is a path of pursuing common development through opening-up. China is committed to a fundamental policy of opening-up and pursues a win-win opening-up strategy. China’s development is both domestic and external oriented; while developing itself, China also shares more of its development outcomes with other countries and peoples.

China’s outstanding development achievements and the vastly improved living standards of the Chinese people are a blessing to both China and the world. Such achievements in development over the past decades owe themselves to the hard work and perseverance of the Chinese people, a quality that has defined the Chinese nation for several thousand years. We Chinese know only too well that there is no such thing as a free lunch in the world. For a big country with over 1.3 billion people, development can be achieved only with the dedication and tireless efforts of its own people. We cannot expect others to deliver development to China, and no one is in a position to do so. When assessing China’s development, one should not only see what benefits the Chinese people have gained, but also how much hard effort they have put in, not just what achievements China has made, but also what contribution China has made to the world. Then one will reach a balanced conclusion about China’s development.

Between 1950 and 2016, despite its modest level of development and living standard, China provided more than 400 billion yuan of foreign assistance, undertook over 5,000 foreign assistance projects, including nearly 3,000 complete projects, and held over 11,000 training workshops in China for over 260,000 personnel from other developing countries. Since it launched reform and opening-up, China has attracted over $1.7 trillion of foreign investment and made over $1.2 trillion of direct outbound investment, making huge contribution to global economic development. In the years following the outbreak of the international financial crisis, China contributed to over 30 percent of global growth every year on average. All these figures are among the highest in the world.

The figures speak for themselves. China’s development is an opportunity for the world; China has not only benefited from economic globalization but also contributed to it. Rapid growth in China has been a sustained, powerful engine for global economic stability and expansion. The inter-connected development of China and a large number of other countries has made the world economy more balanced. China’s remarkable achievement in poverty reduction has contributed to more inclusive global growth. And China’s continuous progress in reform and opening-up has lent much momentum to an open world economy.

We Chinese know only too well what it takes to achieve prosperity, so we applaud the achievements made by others and wish them a better future. We are not jealous of others’ success; and we will not complain about others who have benefited so much from the great opportunities presented by China’s development. We will open our arms to the people of other countries and welcome them aboard the express train of China’s development.

Ladies and Gentlemen,
Dear Friends,

I know you are all closely following China’s economic development, and let me give you an update on the state of China’s economy. China’s economy has entered what we call a new normal, in which major changes are taking place in terms of growth rate, development model, economic structure and drivers of growth. But the economic fundamentals sustaining sound development remain unchanged.

Despite a sluggish global economy, China’s economy is expected to grow by 6.7 percent in 2016, still one of the highest in the world. China’s economy is far bigger in size than in the past, and it now generates more output than it did with double-digit growth in the past. Household consumption and the services sector have become the main drivers of growth. In the first three quarters of 2016, added value of the tertiary industry took up 52.8 percent of the GDP and domestic consumption contributed to 71 percent of economic growth. Household income and employment have steadily risen, while per unit GDP energy consumption continues to drop. Our efforts to pursue green development are paying off.

The Chinese economy faces downward pressure and many difficulties, including acute mismatch between excess capacity and an upgrading demand structure, lack of internal driving force for growth, accumulation of financial risks, and growing challenges in certain regions. We see these as temporary hardships that occur on the way forward. And the measures we have taken to address these problems are producing good results. We are firm in our resolve to forge ahead. China is the world’s largest developing country with over 1.3 billion people, and their living standards are not yet high. But this reality also means China has enormous potential and space for development. Guided by the vision of innovative, coordinated, green, open and shared development, we will adapt to the new normal, stay ahead of the curve, and make coordinated efforts to maintain steady growth, accelerate reform, adjust economic structure, improve people’s living standards and fend off risks. With these efforts, we aim to achieve medium-high rate of growth and upgrade the economy to higher end of the value chain.

China will strive to enhance the performance of economic growth. We will pursue supply-side structural reform as the general goal, shift the growth model and upgrade the economic structure. We will continue to cut overcapacity, reduce inventory, deleverage financing, reduce cost and strengthen weak links. We will foster new drivers of growth, develop an advanced manufacturing sector and upgrade the real economy. We will implement the Internet Plus action plan to boost effective demand and better meet the individualized and diverse needs of consumers. And we will do more to protect the ecosystem.

China will boost market vitality to add new impetus to growth. We will intensify reform efforts in priority areas and key links and enable the market to play a decisive role in resources allocation. Innovation will continue to feature prominently on our growth agenda. In pursuing the strategy of innovation-driven development, we will bolster the strategic emerging industries, apply new technologies and foster new business models to upgrade traditional industries; and we will boost new drivers of growth and revitalize traditional ones.

China will foster an enabling and orderly environment for investment. We will expand market access for foreign investors, build high-standard pilot free trade zones, strengthen protection of property rights, and level the playing field to make China’s market more transparent and better regulated. In the coming five years, China is expected to import $8 trillion of goods, attract $600 billion of foreign investment and make $750 billion of outbound investment. Chinese tourists will make 700 million overseas visits. All this will create a bigger market, more capital, more products and more business opportunities for other countries. China’s development will continue to offer opportunities to business communities in other countries. China will keep its door wide open and not close it. An open door allows both other countries to access the Chinese market and China itself to integrate with the world. And we hope that other countries will also keep their door open to Chinese investors and keep the playing field level for us.

China will vigorously foster an external environment of opening-up for common development. We will advance the building of the Free Trade Area of the Asia Pacific and negotiations of the Regional Comprehensive Economic Partnership to form a global network of free trade arrangements. China stands for concluding open, transparent and win-win regional free trade arrangements and opposes forming exclusive groups that are fragmented in nature. China has no intention to boost its trade competitiveness by devaluing the RMB, still less will it launch a currency war.

Over three years ago, I put forward the “Belt and Road” initiative. Since then, over 100 countries and international organizations have given warm responses and support to the initiative. More than 40 countries and international organizations have signed cooperation agreements with China, and our circle of friends along the “Belt and Road” is growing bigger. Chinese companies have made over $50 billion of investment and launched a number of major projects in the countries along the routes, spurring the economic development of these countries and creating many local jobs. The “Belt and Road” initiative originated in China, but it has delivered benefits well beyond its borders.

In May this year, China will host in Beijing the Belt and Road Forum for International Cooperation, which aims to discuss ways to boost cooperation, build cooperation platforms and share cooperation outcomes. The forum will also explore ways to address problems facing global and regional economy, create fresh energy for pursuing inter-connected development and make the “Belt and Road” initiative deliver greater benefits to people of countries involved.

Ladies and Gentlemen,
Dear Friends,

World history shows that the road of human civilization has never been a smooth one, and that mankind has made progress by surmounting difficulties. No difficulty, however daunting, will stop mankind from advancing. When encountering difficulties, we should not complain about ourselves, blame others, lose confidence or run away from responsibilities. We should join hands and rise to the challenge. History is created by the brave. Let us boost confidence, take actions and march arm-in-arm toward a bright future.

Thank you.

Link: https://www.weforum.org/agenda/2017/01/full-text-of-xi-jinping-keynote-at-the-world-economic-forum

Time: Introduction to the Bretton Woods System
Tuesday, Oct. 21, 2008

Bretton Woods System

Since the end of World War II, the U.S. dollar has enjoyed a unique and powerful position in international trade. But perhaps no more.

Before boarding a plane on Saturday to meet President George W. Bush, French President Nicolas Sarkozy proclaimed, “Europe wants it. Europe demands it. Europe will get it.” The “it” here is global financial reform, and evidently Sarkozy won’t have to wait long. Just hours after their closed-door meeting had finished, Bush and Sarkozy, along with European Commission President Jose Manuel Barroso, issued a joint statement announcing that a summit would be held next month to devise what Barroso calls a “new global financial order.”

The old global financial order is, well, old. Established in 1944 and named after the New Hampshire town where the agreements were drawn up, the Bretton Woods system created an international basis for exchanging one currency for another. It also led to the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, now known as the World Bank. The former was designed to monitor exchange rates and lend reserve currencies to nations with trade deficits, the latter to provide underdeveloped nations with needed capital — although each institution’s role has changed over time. Each of the 44 nations who joined the discussions contributed a membership fee, of sorts, to fund these institutions; the amount of each contribution designated a country’s economic ability and dictated its number of votes.

In an effort to free international trade and fund postwar reconstruction, the member states agreed to fix their exchange rates by tying their currencies to the U.S. dollar. American politicians, meanwhile, assured the rest of the world that its currency was dependable by linking the U.S. dollar to gold; $1 equaled 35 oz. of bullion. Nations also agreed to buy and sell U.S. dollars to keep their currencies within 1% of the fixed rate. And thus the golden age of the U.S. dollar began.

For his part, legendary British economist John Maynard Keynes, who drafted much of the plan, called it “the exact opposite of the gold standard,” saying the negotiated monetary system would be whatever the controlling nations wished to make of it. Keynes had even gone so far as to propose a single, global currency that wouldn’t be tied to either gold or politics. (He lost that argument).

Though it came on the heels of the Great Depression and the beginning of the end of World War II, the Bretton Woods system addressed global ills that began as early as the first World War, when governments (including the U.S.) began controlling imports and exports to offset wartime blockades. This, in turn, led to the manipulation of currencies to shape foreign trade. Currency warfare and restrictive market practices helped spark the devaluation, deflation and depression that defined the economy of the 1930s.

The Bretton Woods system itself collapsed in 1971, when President Richard Nixon severed the link between the dollar and gold — a decision made to prevent a run on Fort Knox, which contained only a third of the gold bullion necessary to cover the amount of dollars in foreign hands. By 1973, most major world economies had allowed their currencies to float freely against the dollar. It was a rocky transition, characterized by plummeting stock prices, skyrocketing oil prices, bank failures and inflation.

It seems the East Coast might yet again be the backdrop for a massive overhaul of the world’s financial playbook. U.N. Secretary-General Ban Ki-moon publicly backed calls for a summit before the new year, saying the agency’s headquarters in New York — the very “symbol of multilateralism” — should play host. Sarkozy concurred, but for different reasons: “Insofar as the crisis began in New York,” he said, “then the global solution must be found to this crisis in New York.”

Economist: What was decided at the Bretton Goods Summit?

The Economist explains

Explaining the world, daily

The Economist explains

What was decided at the Bretton Woods summit

ON JULY 1ST 1944 the rich world’s finance experts convened in a hotel in the New Hampshire mountains to discuss the post-war monetary system. The Bretton Woods system that emerged from the conference saw the creation of two global institutions that still play important roles today, the International Monetary Fund (IMF) and the World Bank. It also instituted a fixed exchange-rate system that lasted until the early 1970s. A key motivation for participants at the conference was a sense that the inter-war financial system had been chaotic, seeing the collapse of the gold standard, the Great Depression and the rise of protectionism. Henry Morgenthau, America’s Treasury secretary, declared that the conference should “do away with the economic evils—the competitive devaluation and destructive impediments to trade—which preceded the present war.” But the conference had to bridge a tricky transatlantic divide. Its intellectual leader was John Maynard Keynes, the British economist, but the financial power belonged to Harry Dexter White, acting as American President Roosevelt’s representative.

The strain of maintaining fixed exchange rates had proved too much for countries in the past, especially when their trade accounts fell into deficit. The role of the IMF was designed to deal with this problem, by acting as an international lender of last resort. But while White, as the representative of a creditor nation (and one with a trade surplus), wanted all the burden of adjustment to fall on the debtors, Keynes wanted constraints on the creditors as well. He wanted an international balance-of-payments clearing mechanism based, not on the dollar, but a new currency called bancor. White worried that America would end up being paid for its exports in “funny money”; Keynes lost the argument. Ironically enough, now that America is a net debtor, White’s administrative successors have called for creditors to bear part of the adjustment when trade balances get out of line.

The Bretton Woods exchange-rate system saw all currencies linked to the dollar, and the dollar linked to gold. To prevent speculation against currency pegs, capital flows were severely restricted. This system was accompanied by more than two decades of rapid economic growth, and a relative paucity of financial crises. But in the end it proved too inflexible to deal with the rising economic power of Germany and Japan, and America’s reluctance to adjust its domestic economic policy to maintain the gold peg. President Nixon abandoned the link to gold in 1971 and the fixed exchange-rate system disintegrated.

Both the IMF and World Bank survived. But each has fierce critics, not least for their perceived domination by the rich world. The IMF has been criticised for the conditions it attaches to loans, which have been seen as too focused on austerity and the rights of creditors and too little concerned with the welfare of the poor. The World Bank, which has mainly focused on loans to developing countries, has been criticised for failing to pay sufficient attention to the social and environmental consequences of the projects it funds. It is hard to believe that either institution will be around in another 70 years’ time unless they change to reflect the growing power of emerging markets, particularly China.

Dig deeper:
The IMF suggests new rules for broke countries(June 2014)
Congress’s failure to support the IMF is shameful(March 2014)
The history of Britain’s relationship with the IMF is unusual

Economist: Beyond Bretton Woods 2

The global monetary system

Beyond Bretton Woods 2

Is there a better way to organise the world’s currencies?

WHEN the leaders of the Group of Twenty (G20) countries meet in Seoul on November 11th and 12th, there will be plenty of backstage finger-pointing about the world’s currency tensions. American officials blame China’s refusal to allow the yuan to rise faster. The Chinese retort that the biggest source of distortion in the global economy is America’s ultra-loose monetary policy—reinforced by the Federal Reserve’s decision on November 3rd to restart “quantitative easing”, or printing money to buy government bonds (see article). Other emerging economies cry that they are innocent victims, as their currencies are forced up by foreign capital flooding into their markets and away from low yields elsewhere.

These quarrels signify a problem that is more than superficial. The underlying truth is that no one is happy with today’s international monetary system—the set of rules, norms and institutions that govern the world’s currencies and the flow of capital across borders.

There are three broad complaints. The first concerns the dominance of the dollar as a reserve currency and America’s management of it. The bulk of foreign-exchange transactions and reserves are in dollars, even though the United States accounts for only 24% of global GDP (see chart 1). A disproportionate share of world trade is conducted in dollars. To many people the supremacy of the greenback in commerce, commodity pricing and official reserves cannot be sensible. Not only does it fail to reflect the realities of the world economy; it leaves others vulnerable to America’s domestic monetary policy.

The second criticism is that the system has fostered the creation of vast foreign-exchange reserves, particularly by emerging economies. Global reserves have risen from $1.3 trillion (5% of world GDP) in 1995 to $8.4 trillion (14%) today. Emerging economies hold two-thirds of the total. Most of their hoard has been accumulated in the past ten years (see chart 2).

These huge reserves offend economic logic, since they mean poor countries, which should have abundant investment opportunities of their own, are lending cheaply to richer ones, mainly America. Such lending helped precipitate the financial crisis by pushing down America’s long-term interest rates. Today, with Americans saving rather than spending, they represent additional thrift at a time when the world needs more demand.

The third complaint is about the scale and volatility of capital flows. Financial crises have become more frequent in the past three decades. Many politicians argue that a financial system in which emerging economies can suffer floods of foreign capital (as now) or sudden droughts (as in 1997-98 and 2008) cannot be the best basis for long-term growth.

France, which assumes the chairmanship of the G20 after the Seoul summit, thinks the world can do better. Nicolas Sarkozy, the country’s president, wants to put international monetary reform at the top of the group’s agenda for the next year. He wants a debate “without taboos” on how to improve an outdated system.

Such a debate has in fact been going on sporadically for decades. Ever since the post-war Bretton Woods system of fixed but adjustable exchange rates fell apart in the 1970s, academics have offered Utopian blueprints for a new version. The question is: what improvements are feasible?

The shape of any monetary system is constrained by what is often called the “trilemma” of international economics. If capital can flow across borders, countries must choose between fixing their currencies and controlling their domestic monetary conditions. They cannot do both. Under the classical 19th-century gold standard, capital flows were mostly unfettered and currencies were tied to gold. The system collapsed largely because it allowed governments no domestic monetary flexibility. In the Bretton Woods regime currencies were pegged to the dollar, which in turn was tied to gold. Capital mobility was limited, so that countries had control over their own monetary conditions. The system collapsed in 1971, mainly because America would not subordinate its domestic policies to the gold link.

Today’s system has no tie to gold or any other anchor, and contains a variety of exchange-rate regimes and capital controls. Most rich countries’ currencies float more or less freely—although the creation of the euro was plainly a step in the opposite direction. Capital controls were lifted three decades ago and financial markets are highly integrated.

Broadly, emerging economies are also seeing a freer flow of capital, thanks to globalisation as much as to the removal of restrictions. Net private flows to these economies are likely to reach $340 billion this year, up from $81 billion a decade ago. On paper, their currency regimes are also becoming more flexible. About 40% of them officially float their currencies, up from less than 20% 15 years ago. But most of these floats are heavily managed. Countries are loth to let their currencies move freely. When capital pours in, central banks buy foreign exchange to stem their rise.

They do this in part because governments do not want their exchange rates to soar suddenly, crippling exporters. Many of them are worried about level as well as speed: they want export-led growth—and an undervalued currency to encourage it.

Just as important are the scars left by the financial crises of the late 1990s. Foreign money fled, setting off deep recessions. Governments in many emerging economies concluded that in an era of financial globalisation safety lay in piling up huge reserves. That logic was reinforced in the crisis of 2008, when countries with lots of reserves, such as China or Brazil, fared better than those with less in hand. Even with reserves worth 25% of GDP, South Korea had to turn to the Fed for an emergency liquidity line of dollars.

This experience is forcing a rethink of what makes a “safe” level of reserves. Economists used to argue that developing countries needed foreign exchange mainly for emergency imports and short-term debt payments. A popular rule of thumb in the 1990s was that countries should be able to cover a year’s worth of debt obligations. Today’s total far exceeds that.

Among emerging economies, China plays by far the most influential role in the global monetary system. It is the biggest of them, and its currency is in effect tied to the dollar. The yuan is widely held to be undervalued, though it has risen faster in real than in nominal terms (see article). And because China limits capital flows more extensively and successfully than others, it has been able to keep the yuan cheap without stoking consumer-price inflation.

China alone explains a large fraction of the global build-up of reserves (see chart 3). Its behaviour also affects others. Many other emerging economies, especially in Asia, are reluctant to risk their competitiveness by letting their currencies rise by much. As a result many of the world’s most vibrant economies in effect shadow the dollar, in an arrangement that has been dubbed “Bretton Woods 2”.

History lessons

The similarities between this quasi-dollar standard and the original Bretton Woods system mean that many of today’s problems have historical parallels. Barry Eichengreen of the University of California, Berkeley, explores these in “Exorbitant Privilege”, a forthcoming book about the past and future of the international monetary system.

Consider, for instance, the tension between emerging economies’ demand for reserves and their fear that the main reserve currency, the dollar, may lose value—a dilemma first noted in 1947 by Robert Triffin, a Belgian economist. When the world relies on a single reserve currency, Triffin argued, that currency’s home country must issue lots of assets (usually government bonds) to lubricate global commerce and meet the demand for reserves. But the more bonds it issues, the less likely it will be to honour its debts. In the end, the world’s insatiable demand for the “risk-free” reserve asset will make that asset anything but risk-free. As an illustration of the modern thirst for dollars, the IMF reckons that at the current rate of accumulation global reserves would rise from 60% of American GDP today to 200% in 2020 and nearly 700% in 2035.

If those reserves were, as today, held largely in Treasury bonds, America would struggle to sustain the burden. Unless it offset its Treasury liabilities to the rest of the world by acquiring foreign assets, it would find itself ever deeper in debt to foreigners. Triffin’s suggested solution was to create an artificial reserve asset, tied to a basket of commodities. John Maynard Keynes had made a similar proposal a few years before, calling his asset “Bancor”. Keynes’s idea was squashed by the Americans, who stood to lose from it. Triffin’s was also ignored for 20 years.

But in 1969, as the strains between America’s budget deficit and the dollar’s gold peg emerged, an artificial reserve asset was created: the Special Drawing Right (SDR), run by the IMF. An SDR’s value is based on a basket of the dollar, euro, pound and yen. The IMF’s members agree on periodic allocations of SDRs, which countries can convert into other currencies if need be. However, use of SDRs has never really taken off. They make up less than 5% of global reserves and there are no private securities in SDRs.

Some would like that to change. Zhou Xiaochuan, the governor of China’s central bank, caused a stir in March 2009 when he argued that the SDR should become a true global reserve asset to replace the dollar. Mr Sarkozy seems to think similarly, calling for a multilateral approach to the monetary system. If commodities were priced in SDRs, the argument goes, their prices would be less volatile. And if countries held their reserves in SDRs, they would escape the Triffin dilemma.

For SDRs to play this role, however, they would have to be much more plentiful. The IMF agreed on a $250 billion allocation among measures to fight the financial crisis, but global reserves are rising by about $700 billion a year. Even if there were lots more SDRs it is not clear why governments would want to hold them. The appeal of the dollar is that it is supported by the most liquid capital markets in the world. Few countries are likely to use SDRs much until there are deep private markets in SDR-denominated assets.

Only if the IMF evolved into a global central bank able to issue them at speed could SDRs truly become a central reserve asset. This is highly unlikely. As Mr Eichengreen writes: “No global government… means no global central bank, which means no global currency. Full stop.”

Nor is it clear that the SDR is really needed as an alternative to the dollar. The euro is a better candidate. This year’s fiscal crises notwithstanding, countries could shift more reserves into euros if America mismanaged its finances or if they feared it would. This could happen fast. Mr Eichengreen points out that the dollar had no international role in 1914 but had overtaken sterling in governments’ reserves by 1925.

Alternatively, China could create a rival to the dollar if it let the yuan be used in transactions abroad. China has taken some baby steps in this direction, for instance by allowing firms to issue yuan-denominated bonds in Hong Kong. However, an international currency would demand far bigger changes. Some observers argue that China’s championing of the SDR is a means to this end: if the yuan, for instance, became part of the SDR basket, foreigners could have exposure to yuan assets.

More likely, China is looking for a way to offload some of the currency risk in its stash of dollars. As the yuan appreciates against the dollar (as it surely will) those reserves will be worth less. If China could swap dollars for SDRs, some exchange-rate risk would be shifted to the other members of the IMF. A similar idea in the 1970s foundered because the IMF’s members could not agree on who would bear the currency risk. America refused then and surely would now.

Rather than try to create a global reserve asset, reformers might achieve more by reducing the demand for reserves. This could be done by improving countries’ access to funds in a crisis. Here the G20 has made a lot of progress under South Korea’s leadership. The IMF’s lending facilities have been overhauled, so that well-governed countries can get unlimited funds for two years.

Overcome your reserve

So far only a few emerging economies, such as Mexico and Poland, have signed up, not least because of the stigma attached to any hint of a loan from the IMF. Perhaps others could be persuaded to join (best of all, in a large group). Reviving and institutionalising the swap arrangements between the Fed and emerging economies set up temporarily during the financial crisis might also reduce the demand for reserves as insurance. Also, regional efforts to pool reserves could be strengthened.

However, even if they have access to emergency money, governments will still want to hoard reserves if they are determined to hold their currencies down. That is why many reformers think the international monetary system needs sanctions, imposed by the IMF or the World Trade Organisation (WTO), against countries that “manipulate” their currencies or run persistent surpluses.

This is another idea with a history. Along with Bancor, Keynes wanted countries with excessive surpluses to be fined, not least because of what happened during the Depression, when currency wars and gold-hoarding made the world’s troubles worse. The idea went nowhere because America, then a surplus economy, called the shots at the Bretton Woods conference in 1944. The same forces are evident today—except that America, as a deficit country, is on the other side of the argument. Like America in the 1940s, China would never agree to reforms that penalised surplus countries.

Such rules would probably be unenforceable anyway. Harsh penalties in international economic agreements are rarely effective: remember Europe’s Stability and Growth Pact? Modest co-operation has better prospects. Just as the Plaza Accord in 1985 was designed to weaken the dollar and narrow America’s current-account deficit, so the G20 could develop a plan for rebalancing the world economy, perhaps with target ranges for current-account balances and real exchange rates. These would be supported by peer pressure rather than explicit sanctions.

A rebalancing plan, which included faster real appreciation of the yuan, would remove many of the tensions in the monetary system. But shifting the resources of China and other surplus countries from exports to consumption will take time.

Meanwhile, capital flows into emerging markets are likely to surge much faster. This is partly due to America’s quantitative easing: cheap money will encourage investors to seek higher yields where they can find them. It is also partly due to the growth gap between vibrant emerging economies and stagnant rich ones. And it reflects the under-representation of emerging-market assets in investors’ portfolios.

For the past decade emerging economies have responded to these surges largely by amassing reserves. They need other options. One, adopted by Brazil, South Korea, Thailand and others, and endorsed by the IMF, is to impose or increase taxes and regulations to slow down inflows. Some academics have suggested drawing up a list of permissible devices, much as the WTO has a list of legitimate trade barriers.

This is a sensible plan, but it has its limits. Capital-inflow controls can temporarily stem a flood of foreign cash. However, experience, notably Chile’s in the 1990s, suggests that controls alter the composition but not the amount of foreign capital; and they do not work indefinitely. As trade links become stronger, finance will surely become more integrated too.

Other tools are available. Tighter fiscal policy in emerging economies, for instance, could lessen the chance of overheating. Stricter domestic financial regulation would reduce the chances of a credit binge. Countries from Singapore to Israel have been adding, or tightening, prudential rules such as maximum loan-to-value ratios on mortgages.

But greater currency flexibility will also be needed. The trilemma of international economics dictates it: if capital is mobile, currency rigidity will eventually lead to asset bubbles and inflation. Unless countries are willing to live with such booms—and the busts that follow—Bretton Woods 2 will have to evolve into a system that mirrors the rich world’s, with integrated capital markets and floating currencies.

Although the direction is clear, the pace is not. The pressure of capital flows will depend on the prospects for rich economies, particularly America’s, as well as the actions of the Fed. Emerging economies’ willingness to allow their currencies to move will depend on what China does—and China, because its capital controls are more extensive and effective than others’, can last with a currency peg for longest.

If America’s economy recovers and its medium-term fiscal outlook improves, the pace at which capital shifts to the emerging world will slow. If China makes its currency more flexible and its capital account more open in good time, the international monetary system will be better able to cope with continued financial globalisation and a wide growth gap between rich and emerging markets. But if the world’s biggest economy stagnates and the second-biggest keeps its currency cheap and its capital account closed, a rigid monetary system will eventually buckle.

#Discussion on World Order# Martin Wolf: The long and painful journey to world disorder

In a long commentary on the Financial Times, Martin Wolf argues that we are now living “in an era of strident nationalism and xenophobia”.  The world does not look hopeful with the rise of nationalist strongmen leaders such as Trump, Le Pen, Putin and Xi Jinping.  If anything can be learned from history,

The contemporary global economic and political system originated as a reaction against the disasters of the first half of the 20th century. The latter, in turn, were caused by the unprecedented, but highly uneven, economic progress of the 19th century.

The transformational forces unleashed by industrialisation stimulated class conflict, nationalism and imperialism. Between 1914 and 1918, industrialised warfare and the Bolshevik revolution ensued. The attempted restoration of the pre-first world war liberal order in the 1920s ended with the Great Depression, the triumph of Adolf Hitler and the Japanese militarism of the 1930s. This then created the conditions for the catastrophic slaughter of the second world war, to be followed by the communist revolution in China. In the aftermath of the second world war, the world was divided between two camps: liberal democracy and communism. The US, the world’s dominant economic power, led the former and the Soviet Union the latter. With US encouragement, the empires controlled by enfeebled European states disintegrated, creating a host of new countries in what was called the “third world”.

Contemplating the ruins of European civilisation and the threat from communist totalitarianism, the US, the world’s most prosperous economy and militarily powerful country, used not only its wealth but also its example of democratic self-government, to create, inspire and underpin a transatlantic west. In so doing, its leaders consciously learnt from the disastrous political and economic mistakes their predecessors made after its entry into the first world war in 1917. Domestically, the countries of this new west emerged from the second world war with a commitment to full employment and some form of welfare state. Internationally, a new set of institutions — the International Monetary Fund, the World Bank, the General Agreement on Tariffs and Trade (ancestor of today’s World Trade Organisation) and the Organisation for European Economic Co-operation (the instrument of the Marshall Plan, later renamed the Organisation for Economic Co-operation and Development) — oversaw the reconstruction of Europe and promoted global economic development. Nato, the core of the western security system, was founded in 1949. The Treaty of Rome, which established the European Economic Community, forefather of the EU, was signed in 1957. This creative activity came partly in response to immediate pressures, notably the postwar European economic misery and the threat from Stalin’s Soviet Union. But it also reflected a vision of a more co-operative world.

 

Donald Trump and the New Economic Order

ECONOMICS

Photo of Michael Spence

MICHAEL SPENCE

https://www.project-syndicate.org/commentary/nationalist-approach-to-economic-policy-by-michael-spence-2016-11
Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Academic Board Chairman of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

Donald Trump and the New Economic Order

HONG KONG – Since the end of World War II, the hierarchy of economic priorities has been relatively clear. At the top was creating an open, innovative, and dynamic market-driven global economy, in which all countries can (in principal) thrive and grow. Coming in second – one might even say a distant second – was generating vigorous, sustainable, and inclusive national growth patterns. No more.

In fact, a reversal seems to be underway. Achieving strong inclusive national-level growth to revive a declining middle class, kick-start stagnant incomes, and curtail high youth unemployment is now taking precedence. Mutually beneficial international arrangements governing flows of goods, capital, technology, and people (the four key flows in the global economy) are appropriate only when they reinforce – or, at least, don’t undermine – progress on meeting the highest priority.

This reversal became apparent in June, when Britons – including those who benefit significantly from the existing open economic and financial system – voted to leave the European Union, based on what might be called the sovereignty principle. EU institutions were perceived to be undermining Britain’s capacity to boost its own economy, regulate immigration, and control its destiny.

A similar view has been animating nationalist and populist political movements across Europe, many of which believe that supra-national arrangements should come second to domestic prosperity. The EU – which actually does, in its current configuration, leave its member governments short of policy tools to meet their citizens’ evolving needs – is an easy target.

But even without such institutional arrangements, there is a sense that emphasizing international markets and linkages can hamper a country’s capacity to advance its own interests. Donald Trump’s victory in the United States’ presidential election made that abundantly clear.

In keeping with Trump’s main campaign slogan, “Make America Great Again,” it was his “America first” comments that were most revealing. While Trump might pursue mutually beneficial bilateral agreements, one can expect that they will be subordinated to domestic priorities, especially distributional aims, and supported only insofar as they are consistent with these priorities.

Developed-country voters’ frustration with the old market-driven global economic architecture is not unfounded. That order did allow powerful forces, at times beyond the control of elected officials and policymakers, to shape national economies. It may be true that some of that order’s elites chose to ignore the adverse distributional and employment-related consequences of the old order, while reaping the benefits. But it is also true that the old order, taken as sacrosanct, hampered elites’ capacity to address such problems, even if they tried.

This was not always the case. In the wake of WWII, the US, motivated partly by the Cold War, helped to create the old order by facilitating economic recovery in the West and, over time, creating growth opportunities for developing countries. For 30 years or so, the distributional aspects of the global growth patterns that these efforts underpinned were positive, both for individual countries and for the world as a whole. Compared with anything that came before, the post-war order was a boon for inclusiveness.

But nothing lasts forever. As inequality across countries has declined, inequality within countries has surged – to the point that the reversal of priorities was probably inevitable. Now that the reversal has arrived, so have the consequences. While it is difficult to say precisely what those will be, some seem fairly clear.

For starters, the US will be more reluctant to absorb a disproportionate share of the cost of providing global public goods. While other countries will eventually pick up the slack, there will be a transition period of unknown duration, during which the supply of such goods may decline, potentially undermining stability. For example, the terms of engagement in NATO are likely to be renegotiated.

Multilateralism – long enabled by the same sort of asymmetric contribution, though typically proportionate to countries’ income and wealth – will also lose steam, as the trend toward bilateral and regional trade and investment agreements accelerates. Trump is likely to be a leading proponent of this tack; in fact, even regional trade deals may be ruled out, as his opposition to ratifying the 12-country Trans-Pacific Partnership suggests.

This creates an opportunity for China to lead the establishment of a trade pact for Asia – an opportunity that Chinese leaders are already set to seize. In conjunction with its “one belt, one road” strategy and its creation of the Asian Infrastructure Investment Bank, China’s influence in the region will expand significantly as a result.

Meanwhile, for developing countries that lack China’s economic might, the trend away from multilateralism could hurt. Whereas poor and less-developed countries found opportunities to grow and prosper under the old order, they will struggle to negotiate effectively on a bilateral basis. The hope is that the world will recognize its collective interest in keeping development pathways open for poorer countries, both for these countries’ benefit and for the sake of international peace and security.

Beyond trade, technology is another powerful global force that is likely to be treated differently in the new order, becoming subject to more national-level regulations. Cyber threats will all but require some regulations and will demand evolving policy interventions. But other threats – for example, the fake news that has proliferated in the West (and, in particular, in the US during the presidential campaign) – may also call for a more hands-on approach. And the adoption of work-displacing digital technologies may need to be paced, so that the economy’s structural adjustment can keep up.

The new emphasis on national interests clearly has costs and risks. But it may also bring important benefits. A global economic order sitting atop a crumbling foundation – in terms of democratic support and national political and social cohesion – is not stable. As long as people’s identities are mainly organized, as they are now, around citizenship in nation-states, a country-first approach may be the most effective. Like it or not, we are about to find out.

http://prosyn.org/MOaIJ6n

© 1995-2017 Project Syndicate

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See also:

Brexit, Trump and a new economic order

 

淮安市盐化工有限公司诉股东淮安石油支公司缴足欠缴出资因其不是已足额出资的股东主体不合格被驳回起诉案

 

「案情」

原告:淮安市盐化工有限公司。

被告:江苏省淮安石油支公司(以下称淮安石油支公司)。

原告淮安市盐化工有限公司系被告江苏省淮安石油支公司与汪兆云两股东共同投资设立。1996年4月4日,淮安石油支公司与汪兆云订立了淮安市盐化工有限公司章程,章程规定:淮安石油支公司以货币形式出资668300元,占公司注册资本的51%;汪兆云以实物和非专利技术出资631729元,占公司注册资本的49%。此后,淮安石油支公司实际缴纳出资308300元,欠缴出资额36万元。汪兆云实际足额缴纳了出资。同年6月3日,淮安市盐化工有限公司取得公司法人营业执照。1998年4月11日,淮安石油支公司与汪兆云协商要求转让出资未果。此后,淮安市盐化工有限公司实际由汪兆云单方经营,因资金缺乏,无法正常生产,汪兆云以代理董事长名义多次提出召开董事会,要求被告继续缴足出资,遭被告拒绝。1998年5月28日,汪兆云遂以淮安市盐化工有限公司名义向淮安市人民法院提起诉讼,要求被告承担出资未到位的违约责任。

原告诉称:被告淮安石油支公司在1996年4月4日与个人股东汪兆云订立协议,共同投资成立淮安市盐化工有限公司,同年6月3日经淮安市工商行政管理局予以核准登记注册。依有限公司章程规定,被告应出资的注册资金为668300元,而被告仅在1996年4月和8月两次共投入资金308300元,至今仍欠缴原告注册资金36万元。被告的违约行为使原告经营十分困难,给原告造成了极大的经济损失。请求法院依法责令被告履行法定出资义务,缴足出资,承担延迟出资利息和本案全部诉讼费用。

被告淮安石油支公司答辩称:原告淮安市盐化工有限公司不具备本案的诉讼主体资格,我公司不应向原告承担违约责任。

「审判」

淮安市人民法院经审查认为:原告淮安市盐化工有限公司与被告江苏省淮安石油支公司系公司与股东关系。被告出资不到位,其违约行为直接侵害的是已足额缴纳出资的股东的合法权益,故要求被告履行缴足出资额义务的权利,应由已足额出资的股东行使,原告主体资格不符合法律规定。在审理中,本院已明确告知原告无诉权,原告仍坚持以淮安市盐化工有限公司名义起诉本案被告,本院不予支持。依据《中华人民共和国民事诉讼法》第一百零八条第一项、《中华人民共和国公司法》第二十五条第二款和最高人民法院《关于适用〈中华人民共和国民事诉讼法〉若干问题的意见》第一百三十九条的规定,该院于1998年6月25日裁定如下:

        驳回原告淮安市盐化工有限公司的起诉。

一审裁定后,淮安市盐化工有限公司不服,向江苏省淮阴市中级人民法院提起上诉称:被上诉人是上诉人淮安市盐化工有限公司的股东,其出资不到位不仅侵害了其他股东的权益,亦侵害了上诉人的资产完整权和经营权,故我公司作为已具有法人资格的有限责任公司享有追究股东投资差额到位的诉讼权利。请求依法撤销一审裁定,确认上诉人对被上诉人有追缴未到位注册资金的诉权。

被上诉人淮安石油支公司未作书面答辩。

淮阴市中级人民法院经审查认为:上诉人淮安市盐化工有限公司以淮安石油支公司欠缴其注册资金36万元的违约行为给其造成损失为理由,诉请原审人民法院判令淮安石油支公司履行出资义务。而淮安市盐化工有限公司是由淮安石油支公司参股设立的公司法人,股东欠缴出资,应对已足额缴付出资的股东承担违约责任。公司注册设立时,所有股东认缴的出资额应足额到位。如股东虚假出资或抽逃出资,可由公司行政管理机关或司法机关责令改正并追究法律责任,但不发生侵犯公司资产完整权及经营权的法律后果,故淮安市盐化工有限公司以诉讼方式要求股东缴足认缴股金无法律依据。上诉人的上诉理由不能成立,不予采纳。原审裁定并无不当,应予维持。根据《中华人民共和国民事诉讼法》第一百五十四条之规定,该院于1998年9月2日裁定如下:

驳回上诉,维持原裁定。

「评析」

本案争议的焦点是有限责任公司对没有足额缴纳公司章程中规定的所认缴的出资的股东有无诉权的问题。

按照我国公司法对设立有限责任公司的有关规定,股东的出资方式和出资额应在公司章程中载明,股东出资是公司设立的必备条件之一,属于公司成立之前的一种设立行为。足额缴纳出资是股东的首要义务。我国公司法采用资本确定原则,强调注册资本足额真实,注册资本必须在公司成立时全部缴足。公司法第二十五条第一款规定:“股东应当足额缴纳公司章程中规定的各自所认缴的出资额。股东以货币出资的,应当将货币出资足额存入准备设立的有限责任公司在银行开设的临时帐户”;该条第二款又规定:“股东不按照前款规定缴纳所认缴的出资,应当向已足额缴纳出资的股东承担违约责任”。据此,本案中淮安石油支公司未足额缴纳公司章程中规定的其所认缴的出资额,应当向已足额缴纳出资的股东即汪兆云承担违约责任,而不是向有限责任公司承担责任。股东出资行为作为公司设立过程中的民事法律行为,如虚假出资或出资不到位都有可能导致公司不能成立,因此,应负出资义务的股东的相对人是已足额出资的股东,而不是之后成立的有限责任公司。一、二审法院以原告诉讼主体不合格为理由,裁定驳回原告起诉,是正确的。

 

Link: http://www.110.com/falv/falvanli/jingjifaanli/gsfal/2010/0723/169200.html

Economist: China’s Foreign Policy and International Economic Order

Foreign policy

Our bulldozers, our rules

China’s foreign policy could reshape a good part of the world economy

THE first revival of the Silk Road—a vast and ancient network of trade routes linking China’s merchants with those of Central Asia, the Middle East, Africa and Europe—took place in the seventh century, after war had made it unusable for hundreds of years. Xi Jinping, China’s president, looks back on that era as a golden age, a time of Pax Sinica, when Chinese luxuries were coveted across the globe and the Silk Road was a conduit for diplomacy and economic expansion. The term itself was coined by a German geographer in the 19th century, but China has adopted it with relish. Mr Xi wants a revival of the Silk Road and the glory that went with it.

This time cranes and construction crews are replacing caravans and camels. In April a Chinese shipping company, Cosco, took a 67% stake in Greece’s second-largest port, Piraeus, from which Chinese firms are building a high-speed rail network linking the city to Hungary and eventually Germany. In July work is due to start on the third stage of a Chinese-designed nuclear reactor in Pakistan, where China recently announced it would finance a big new highway and put $2 billion into a coal mine in the Thar desert. In the first five months of this year, more than half of China’s contracts overseas were signed with nations along the Silk Road—a first in the country’s modern history.

Politicians have been almost as busy in the builders’ wake. In June Mr Xi visited Serbia and Poland, scattering projects along the way, before heading to Uzbekistan. Last week Russia’s president, Vladimir Putin, made a brief visit to Beijing; he, Mr Xi and Mongolia’s leader promised to link their infrastructure plans with the new Silk Road. At the time, finance ministers from almost 60 countries were holding the first annual meeting in Beijing of an institution set up to finance some of these projects, the Asian Infrastructure Investment Bank (AIIB). Like a steam train pulling noisily out of a station, China’s biggest foreign-economic policy is slowly gathering speed.

Chinese officials call that policy “One Belt, One Road”, though they often eviscerate its exotic appeal to foreigners by using the unlovely acronym OBOR. Confusingly, the road refers to ancient maritime routes between China and Europe, while the belt describes the Silk Road’s better-known trails overland (see map). OBOR puzzles many Western policymakers because it is amorphous—it has no official list of member countries, though the rough count is 60—and because most of the projects that sport the label would probably have been built anyway. But OBOR matters for three big reasons.

First, the projects are vast. Official figures say there are 900 deals under way, worth $890 billion, such as a gas pipeline from the Bay of Bengal through Myanmar to south-west China and a rail link between Beijing and Duisburg, a transport hub in Germany. China says it will invest a cumulative $4 trillion in OBOR countries, though it does not say by when. Its officials tetchily reject comparison with the Marshall Plan which, they say, was a means of rewarding America’s friends and excluding its enemies after the second world war. OBOR, they boast, is open to all. But, for what it is worth, the Marshall Plan amounted to $130 billion in current dollars.

Next, OBOR matters because it is important to Mr Xi. In 2014 the foreign minister, Wang Yi, singled out OBOR as the most important feature of the president’s foreign policy. Mr Xi’s chief foreign adviser, Yang Jiechi, has tied OBOR to China’s much-touted aims of becoming a “moderately well-off society” by 2020 and a “strong, prosperous” one by mid-century.

Mr Xi seems to see the new Silk Road as a way of extending China’s commercial tentacles and soft power. It also plays a role in his broader foreign-policy thinking. The president has endorsed his predecessors’ view that China faces a “period of strategic opportunity” up to 2020, meaning it can take advantage of a mostly benign security environment to achieve its aim of strengthening its global power without causing conflict. OBOR, officials believe, is a good way of packaging such a strategy. It also fits with Mr Xi’s “Chinese dream” of recreating a great past. It is not too much to say that he expects to be judged as a leader partly on how well he fulfils OBOR’s goals.

Third, OBOR matters because it is a challenge to the United States and its traditional way of thinking about world trade. In that view, there are two main trading blocs, the trans-Atlantic one and the trans-Pacific one, with Europe in the first, Asia in the second and America the focal point of each. Two proposed regional trade deals, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, embody this approach. But OBOR treats Asia and Europe as a single space, and China, not the United States, is its focal point.

Mr Xi first spoke of a new Silk Road during a visit to Kazakhstan in 2013, a year after he took power. The first contracts bearing OBOR’s name—about 300 of them, including a huge hydropower plant in Pakistan—followed in 2014, though many of those deals were already well advanced. The past two years have seen a frenzy of institution-building. Mr Xi has set up a “small leading group” to oversee OBOR. This is an informal high-level body linking government and party organisations. Its boss is Zhang Gaoli, who is a member of the Politburo Standing Committee, the party’s innermost circle. It also includes the leadership’s chief spin doctor and a deputy prime minister responsible for foreign trade. All the main bits of the bureaucracy have been corralled into OBOR.

A financial structure to support it has also taken shape. In 2015 the central bank transferred $82 billion to three state-owned “policy banks” for OBOR projects. China’s sovereign wealth fund backed a new Silk Road Fund worth $40 billion and the government set up the AIIB with $100 billion of initial capital. The bank is not formally part of OBOR but the loans approved at its first general meeting—roads in Pakistan, Tajikistan and Uzbekistan, for example—are all in Silk Road countries.

Now the rest of the Chinese state is mobilising. Two-thirds of China’s provinces have emphasised the importance of OBOR for their development. For example, Fuzhou, the capital of coastal Fujian province, has told its companies to “start businesses in the countries and regions along the maritime Silk Road”; it has set up a free-trade zone to attract firms from such countries in South-East Asia. Many big state-owned enterprises (SOEs) have an OBOR department, if only in the hope of getting money for their projects.

As a result, China’s foreign direct investment (FDI) is increasingly going along the Silk Road. In 2015, by official reckoning, its FDI in OBOR countries rose twice as fast as the increase in total FDI. Last year 44% of China’s new engineering projects were signed with OBOR countries. In the first five months of 2016, the share was 52%.

China’s approach to investment seems to be changing, too. Its OBOR contracts are now more likely to involve Chinese firms managing the infrastructure they build, rather than (as in the past) building them and simply handing them over. In theory, this should give China an interest in working for the long term in Silk Road countries.

Yet while OBOR gathers momentum it is also encountering problems. These are especially glaring in South-East Asia. China is planning a 3,000km (1,900-mile) high-speed rail line from Kunming, in its south-west, to Singapore. But in June talks with Thailand over its section of the line broke down; the Thais said they would build only part of the project, and would finance it themselves. There have been many other such failures.

Also worrying are signs that there are not yet enough viable projects for the vast sums being earmarked. The Silk Road Fund was set up to invest in infrastructure abroad. But two of its first investments were in initial public offerings by Chinese firms in Hong Kong.

Problems have arisen too with OBOR’s leadership. Mr Zhang, the most senior person in charge, is thought to be out of favour after blotting his copybook in March by saying that the economy had had “a tremendous start” to 2016. This contradicted the views of people close to Mr Xi who argue that a slowdown is necessary.

The travails of the European Union—and especially of Britain, which has claimed to be enjoying a “golden age” of relations with China—might make Chinese leaders nervous about Europe’s willingness to support OBOR, though it might also in the long run make it easier for China to exploit rivalry between European countries when doing deals with them.

More broadly, China has many competing bureaucratic interests at stake in the Silk Road project. Reconciling them will be tough. OBOR is supposed to extend Chinese commercial influence, reduce the Chinese economy’s dependence on investment in infrastructure at home and export a little of China’s vast excess capacity in steel and cement. Tensions between these aims are inevitable. Should China give priority to underperforming provinces or underperforming SOEs? Can it help poor western provinces while reducing its spending on domestic infrastructure?

Ready or not, here they come

All that said, there are reasons for thinking the new Silk Road will be paved, albeit not with gold. Most important, Asia needs new infrastructure—about $770 billion a year of it until 2020, according to the Asian Development Bank. This demand should eventually ease today’s worries about a lack of projects. Bert Hofman, the World Bank’s chief in Beijing, adds that individual countries will benefit more if they align their plans with one other and with China. It does not pay to plan and build separately.

Next, China needs OBOR. At home, its businesses are being squeezed by rising costs and growing demands that they pay more attention to protecting the environment. It makes sense for them to shift some manufacturing overseas—as long as the infrastructure is there.

Lastly, Xi Jinping needs it. He has made OBOR such a central part of his foreign policy and has gone to such lengths to swing the bureaucracy behind the project that it is too late to step back now.

None of this means the new Silk Road will be efficient, nor does it mean China’s plans will always be welcome in countries suspicious of its expanding reach. But the building blocks are in place. The first projects are up and running. OBOR is already beginning to challenge the notion of Europe and Asia existing side by side as different trading blocs.

Two Economist Reports on FIE Law in China

Business in China

Mixed messages

A missed opportunity to improve the environment for foreign companies in China

LI KEQIANG, China’s prime minister, made a big promise to the world’s leading businessmen at the World Economic Forum’s annual gathering in Davos in January 2015. It was that China would introduce a new legal regime for foreign investment that would “treat Chinese and foreign companies as equals”. Its government has duly unveiled a set of revisions to its foreign-investment laws that come into force on October 1st. The standing committee of the National People’s Congress adopted the laws earlier this month and bureaucrats have drafted detailed rules.

The revisions, and the extent to which they fulfil Mr Li’s grand pledge, are an important indicator of how serious the government is about pursuing other initiatives to liberalise rules on foreign investment. China is currently negotiating a bilateral investment treaty (BIT) with the United States. American businesses hope it will lead to greater market access. A BIT with Europe is scheduled to follow.

How, then, do the changes measure up? On the face of it, they involve a welcome shift away from the current regime, which obliges foreign firms to win numerous approvals and is both burdensome and often influenced by domestic politics. The new framework pursues efficiency. Instead of demanding approvals, it seeks to usher in a simpler, registration-based system. Whereas the current approach is based on a long list of strategic industries in which foreign investment is either restricted or off-limits, the overhaul promises to replace it with a relatively short “negative list” of forbidden investments in areas such as defence and media. According to some, such as Hogan Lovells, a law firm, the reforms herald a sea-change in China’s foreign direct investment (FDI) regime.

Yet the revisions leave intact much that is wrong. China has kept a complex set of rules restricting inflows for decades. As well as the long-standing practice of deeming many industries strategic, the government still requires foreign firms to form joint ventures with Chinese companies and to hand over intellectual property via technology transfers. Repatriation of profits is tightly controlled. And because the approvals-based approach is likely to persist, despite official promises, every foreign investment is subject to the vagaries and corruption that comes with a one-party, highly bureaucratic state.

Most glaringly, there is nothing in the new changes that genuinely places foreign firms on an equal legal footing with local ones. The EU Chamber of Commerce in China dismissed the new reforms as “not bold enough”. It issued a thinly veiled warning that the EU may make it harder for Chinese to invest in Europe.

Another big omission is the government’s failure to tackle the problem of offshore legal structures known as variable interest entities (VIEs). Foreign investment is banned in Chinese internet companies, but by getting foreigners to put money into VIEs to which the Chinese firm promises to pay dividends, many firms have got around this ban. A proper reform would have ended the ambiguity surrounding these vehicles. It was not forthcoming.

The tape is red

There are already signs of bureaucratic resistance even to the government’s modest revisions. It is questionable, for example, whether officials will accept the shift from an approvals-based scheme to a registration system. Bureaucrats at the top economic planning agency, the National Development and Reform Commission, are said to reject the idea that the approvals-based system is coming to an end. They say the new rules are just a modification of the existing approach to foreign investment.

Meanwhile, multinationals are no longer clamouring to put money into China’s slowing economy. FDI has been flooding into the Middle Kingdom for two decades. Inbound direct investment reached a peak of nearly $300 billion in 2013 but has cooled off since. Foreign inflows are slowing just as Chinese outward investments are skyrocketing (see chart). It seems exactly the right moment to roll out the welcome mat, but the changes going into effect fall well short of what multinationals had hoped for. As Jake Parker of the US China Business Council, a lobby group for big American firms, points out, Chinese leaders have talked about lots of reforms but “the lack of implementation has created uncertainty about the policy direction and undermined confidence.”

Foreign firms in China

You’re still welcome

The country’s leaders seek to reassure nervous foreign businesses

THE bosses of foreign firms with operations in China grumble that their lives have got harder of late. China used to be a frontier market offering endless double-digit growth. Officials put out the welcome mat, and were open to wining and dining. Regulators were no more bothersome than in other emerging markets.

Now, growth is slowing: official data released this week confirm that the economy grew by 7.4% last year, the slowest rate in 24 years. A crackdown on official corruption has made it impossible to win friends in government. And antitrust authorities have taken a tough line with foreign carmakers, drugmakers and other firms that had hoped their guanxi (connections) offered them protection. Many foreign bosses are now convinced that the golden age for multinationals in China is over.

That may explain the charm offensive the government launched this week. The prime minister, Li Keqiang, led a delegation of Chinese worthies to the World Economic Forum’s meeting in Davos, Switzerland. He promised the assembled global business elite his country would “treat Chinese and foreign companies as equals” and “rigorously reject protectionism”.

Ahead of his speech the government unveiled a dramatic proposal to ease its restrictions on foreign investment. Over the past two decades, China has maintained a highly restrictive, complex set of rules on how foreigners can invest on the mainland. In the many industries deemed “strategic”, for example, they must invest only through a joint venture and must transfer technology to the local partner. Flows of funds in and out of the country are also tightly controlled.

The draft reforms, which are now open for comment, include scrapping almost all of these cumbersome controls. Foreign firms would supposedly be treated the same way as national ones. The clunky system of case-by-case approvals will be replaced by a simpler “negative list”: if your industry is not on it, you do not need permission to invest. Daniel Roules of the Shanghai office of Squire Patton Boggs, an American law firm, believes the new law—if and when it comes into force—could usher in a significant and welcome change in the climate for foreign firms.

Mr Li is also pushing for bilateral investment treaties with the United States and the European Union, which could further reassure foreign investors worried about putting more money into China. His boss, Xi Jinping, agreed a sweeping free-trade agreement with Australia on the heels of the recent G20 summit in Brisbane. This provisional deal, which must now be ratified, goes much further than previous accords in opening up China’s service industries to foreign investment.

Taken together, say optimists, there could yet be another golden age for foreign direct investment (FDI) into China. A recent report by King & Wood Mallesons, China’s biggest law firm, forecasts that FDI could reach $188 billion in 2020, up from about $120 billion last year.

Nevertheless, foreign businesspeople should not break out the champagne yet. The proposed reforms are a strong signal that foreign money will continue to be welcome in China. However, they may do nothing to help foreign-owned firms compete on equal terms with politically well-connected domestic ones, to end the subsidies lavished on state-backed enterprises, or to rein in regulators keen on bashing outsiders. The areas of business most tempting for foreigners, such as finance and the internet, will still have restrictions on foreign ownership. If China’s leaders were to take on all these distortions, then they would get a far warmer round of applause at their next Davos appearance.