Firewalling to counter volatility in global trade

Editor's note: The ongoing conflict in the Middle East has significantly impacted global markets. Zhou Hanmin, a member of the standing committee of the 14th National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body, and president of the Shanghai Public Diplomacy Association, said in an interview with the 21st Century Business Herald that China needs to prepare for rising risks in global trade. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

China needs to advance its institutional opening-up, optimize exports and introduce a law to protect its overseas investments in response to the risks posed to the global economy following the attack on Iran by the United States and Israel.

The conflict has increased the volatility in global markets, with energy and commodity prices surging sharply. The Strait of Hormuz is a vital artery for the global energy trade. The dampening effect of the deteriorating situation in the Middle East on trade and investment sentiment has already become evident.

Uncontrollability and uncertainty have become the new normal for global growth. Currently, trade protectionism is still running rampant, and the investment sector faces risks from supply chain restructuring and volatile markets. The global economy and trade will likely encounter more uncertainties and risks this year that were unprecedented before.

China has been the world's largest trading country in goods for nine consecutive years. The country should take advantage of its stability to offset the impact of the volatile international situation. To stabilize its foreign trade and utilization of foreign investment, China needs to make clearer, timely and more effective strategic and institutional arrangements.

First, it should continue to advance institutional opening-up and alignment with international rules. As the world's second-largest consumer market, China's high-level opening-up is not merely about opening its market but also aligning its rules with international standards.

Since its accession to the World Trade Organization in 2001, China has consistently followed international trade and investment rules. But faced with the current changes in the world, the country also needs to actively participate in rulemaking and promote innovation in international rules for trade in goods and services and digital trade.

Second, the structure of China's foreign trade needs to be improved to increase the share of intermediate goods and high-value-added products in total exports.

In recent years, China's exports of new energy vehicles, lithium-ion batteries and photovoltaic products have enjoyed remarkable competitive advantages. In addition to these products, industrial robots and green energy equipment have also become important drivers of China's export growth.

Third, China should enact an overseas investment protection law. As its outward investment continues to expand, the country should promptly formulate such a law to protect the interests of Chinese companies operating businesses in other countries.