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6.3 Professor Zhang Yansheng, General Secretary

of the Academic Committee, National Development and Reform Commission: Replacing the Old

with the New, the Dangers and Opportunities Coexist in Constructing the Open Economy

I am going to talk about three issues.

Firstly, we have not completed the expected targets and missions in the past three years in foreign trade and economic cooperation. What does it reveal? In my opinion, the past 35 years have passed, the new 35 years are coming, and we are paying the debts of the transition. As a matter of fact, it is a period of adjustment until 2020; therefore, the quality of adjustment will decide whether foreign trade can play the role of the engine in the coming 35 years. The sooner to exit the small countries' mode of export-oriented economy in the past 35 years, the better result can be achieved from the big countries' mode of open economy in the new 35 years. In the past, we talked too much about speed and growth. In the future, we should talk more about quality and efficiency of growth. In addition, foreign trade and economy of China need to be transformed from domestic vision to global vision. Short-term stability is important; however, the medium-term structure adjustment and longterm mode transformation are more important.

Secondly, low or negative growth of processing trade will probably continue in the next few years, and the growth of general trade will be difficult. The cultivation of the new trade structure is not in a short term but in a medium and long term. Therefore, the trade policy aimed at growth is wrong, which may delay the adjustment of structure and the transformation of economic development. The foreign enterprises are also faced with the transition from speed to quality and efficiency.

Thirdly, foreign exchange reserve declining may become a long-term trend, and double surplus change also will be a long-term trend. We can no longer expect it to maintain old normal growth, regardless of foreign trade, foreign capital, and foreign exchange. We must adapt to the coming 35 years the new normal, which is the basis of competition. Mode, principle, and policy will all change completely.

How will the finance and taxation policy affect foreign trade and economy? OEM, low-end, and simple imitation mode will exit, and middle-high-end modes and innovative mode will enter, which cannot be solved by the market or enterprises. We need fiscal and taxation policy. It must be admitted that the government should have worked better in this part. We should pay attention to this point while talking about tax cuts.

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