'Bold experimentation, bold breakthroughs, and independent reform'

Editor's note:

"Nobody wins in a trade war," warned UN Secretary-General Antonio Guterres. Two weeks after the US slashed unreasonably high tariffs on China, Zhou Hanmin, president of the Shanghai Public Diplomacy Association and also a member of the Standing Committee of the 14th National Committee of the Chinese People's Political Consultative Conference, held an exclusive interview with Shanghai Observer, a major Chinese news portal, discussing the US tariff polices and China's response. This is the second part of the translated interview.

"The Chinese people have a good habit – learning from history, learning from conflict, learning to swim in the open sea."

Q: Historically, this isn't the first time China has faced encirclement and suppression. In the 1980s and 1990s, there were similar experiences. You lived through that period – how did we get through it?

A: The Chinese people have a good habit – learning from history, learning from conflict, learning to swim in the open sea. We must not hope for instant success. Back then, it took us 15 years and 5 months to join the WTO. We negotiated while learning, drawing from the world's civilizational achievements. Some had feared that joining the WTO meant "the wolves are coming." But as it turned out, the WTO was not a wolf – it was an opportunity we had to seize upon. Today, we still need to drive deeper reform with greater openness, showing the world that a responsible major power will make greater contributions to global development.

At the same time, we must do our utmost to find the greatest possibilities to de-escalate this trade and tariff war. This will benefit not just the Chinese and American people, but the world economy and global peace.

"Ultimately, the China-US contest will be one of legislative strength."

Q: When it comes to countermeasures, what else can be done aside from tariffs?

A: It's important to legislate reciprocal measures on a legal foundation. Ultimately, the China-US contest will be one of legislative strength.

On April 17, the US Trade Representative's Office (USTR), under a presidential executive order, took major actions against China's shipping, logistics and shipbuilding sectors, including non-discriminatory service fees on Chinese shipping operators and restrictions on certain maritime services. This is the latest and most severe act of economic bullying. It shows that drafting or amending legislation to counter unfair trade practices is urgent and necessary.

One key concern is that the US tariffs imposed on us have never been reduced. What worries us most is that these measures may be codified into law. That's the trap we must proactively break. First, we need in-depth research. Section 301 of the US Trade Act of 1974 has three categories of provisions used to justify tariffs on China. There's also the 1962 Trade Expansion Act, the 1977 International Emergency Economic Powers Act, and (President Joe) Biden's CHIPS and Science Act – all worth close monitoring. We must use primary sources, study thoroughly, and develop targeted and practical countermeasures.

On this basis, I strongly advocate that we strengthen legislation in response to the current US unfair trade practices. This will ensure our countermeasures have legal backing and are strictly enforced. At the same time, we must forge new paths – by strengthening friendly exchanges with other countries.

"In 1990, Pudong's GDP was only 6 billion yuan (US$820 million). By 2024, it had reached 1.78 trillion."

Q: Shanghai has been on the front line in the trade war. The major national strategies it carries often serve to explore new paths for the country or even "share the nation's burdens." April 18 marks the 35th anniversary of the development and opening-up of Pudong. Back then, this initiative began under pressure and sanctions from abroad. What should we do next? What can we do?

A: On April 18, 1990, the CPC Central Committee and the State Council officially announced the development and opening-up of Pudong. A few months earlier, Comrade Deng Xiaoping spent the Spring Festival in Shanghai and clearly stated, "Shanghai is our trump card." I participated in the early-stage research on Pudong as early as in 1987, so I deeply understand this.

In 1990, Pudong's GDP was only 6 billion yuan (US$820 million). By 2024, it had reached 1.78 trillion. We made full use of reform and opening-up, our key move, and played the "trump card" well, making Pudong a banner of China's high-level opening.

What is a trump card? What is a banner? It boils down to this: "bold experimentation, bold breakthroughs, and independent reform." The same holds true today. Looking across the country, no other city is stacked with as many national strategies as Shanghai – Pilot Free Trade Zone, Lingang Special Area, Pudong Pioneer Area, the leading position in Yangtze River Delta integration, the Hongqiao International Open Hub, the Belt and Road Initiative's gateway … Now is the time to unleash the combined effects of all these national strategies and generate multiplier effects, not just simple addition.

"They raise tariffs in leaps and bounds; we reform in leaps and bounds."

Q: How should we understand "multiplier effects?"

A: We should seize this rare opportunity and quickly implement the things Pudong and the free trade zone have long wanted to do but haven't started yet. We must pursue "leapfrogging reform" instead of step-by-step progress – because our opponents aren't playing by the rules. Since they break conventions, we must "use their spear to attack their shield." They raise tariffs in leaps and bounds; we reform in leaps and bounds. This isn't about following their pace – it's about proactively reforming and opening up on our own terms and taking control of our rhythm.

"If we apply tariff exemptions for certain imported products in the free trade zone and ensure a robust pilot mechanism, it's entirely feasible and flexible."

Q: What are the measures we can implement immediately?

A: For instance, some foreign companies have suggested implementing certain tariff exemption measures in the Shanghai Free Trade Zone. If we apply tariff exemptions for certain imported products in the FTZ and ensure a robust pilot mechanism, it's entirely feasible and flexible. If we can accomplish these difficult tasks, it will not only morally defeat our opponents but also inspire the world.

At the same time, we must strengthen domestic circulation. Take the Yangtze River Delta integration strategy – the 15th Five-Year Plan must include a unified plan for the Delta, a single "blueprint," not a "jigsaw puzzle."

If done right, we have a great potential for growth. Right now, the Yangtze River Delta has achieved a "4-hour industrial and supply chain" for new-energy vehicles. Cities with capabilities in chip production, high-end design, energy, die-casting processes, and whole-vehicle manufacturing are all within four hours of access to each other. This is one of the world's most exemplary high-end industrial and supply chains. How did it come about? Not from meetings – but from the decisive role of the market in resource allocation. That's truly remarkable.

"No matter what, policymaking must not miss the time window."

Q: You've repeatedly emphasized "acceleration." People also feel that many reforms in recent years have entered deep waters and seem to be slower than expected.

A: No matter what, policymaking must not miss the time window. These windows often last only a moment.

Let me give another example: negative lists for foreign investment access. China's first negative list was launched in 2014 in the Shanghai FTZ. Since then, eight editions have been released. The number of restricted items has been reduced from 190 to just 27. Right now, if a new negative list applicable across the country's FTZs were released – even if it cuts just two or three more items – it would send a huge signal of encouragement to the world and a major boost to FTZ development.

"Over 53 percent of China's foreign trade import and export volume depends on private enterprises."

Q: Let's talk more about micro-level entities. Foreign trade companies are facing serious challenges right now. There's been a push to transform exports into domestic sales. How much can this help under the current circumstances?

A: Transforming exports into domestic sales is more of a buffering transition during tough times – and it requires comprehensive support from all sectors.

Over 53 percent of China's foreign trade import and export volume depends on private enterprises. Shanghai needs to roll out a series of innovative and practical new trade policies to attract headquarters of foreign trade companies from across the country.

At the same time, we need to help these companies prosper. For instance, by making the digital transformation of e-commerce platforms more effective, and by integrating foreign trade enterprises into the domestic platform economy, so that we can truly connect domestic and international markets. This is something we've been striving to achieve for many years.

"Moving forward, we should further open up sectors like education and health care to meet people's growing demand for international schools and advanced medical institutions."

Q: So it's about doing everything possible to create the right environment?

A: Shanghai already has many advantages that can help enterprises with core competitiveness gain the upper hand.

For example, since 2017 Shanghai has released eight consecutive editions of its business environment optimization action plan, with requirements already exceeding the standards set by the World Bank. Another example is that Shanghai's level of internationalization has been globally recognized. Moving forward, we should further open up sectors like education and health care to meet people's growing demand for international schools and advanced medical institutions.