Building a new pattern of integrated development of trade and investment

Currently, the international economic and trade landscape is undergoing profound changes, and the international trade system is undergoing restructuring. China's foreign trade and investment activities are facing new situations, challenges, and issues. The 2025 Central Economic Work Conference proposed to promote the integration of trade and investment, as well as the development of domestic and foreign trade. This is not only a strategic plan based on the current domestic and international situation, but also an inevitable choice to promote the high-quality development of China's open economy. Integration of trade and investment requires leveraging the synergistic effects of import and export trade and foreign investment, guiding the rational and orderly cross-border layout of industrial and supply chains, optimizing resource allocation globally, and building comprehensive competitive advantages. Enhancing the integration and mutual promotion of trade and investment is of great significance for China to accelerate the construction of a strong trading nation and promote the transformation from an "investment powerhouse" to an "investment powerhouse".

Grasp the logic of evolution and development trends

From the perspective of the development logic of global division of labor, the international understanding of trade and investment relations has undergone a profound evolution from mutual substitution to mutual promotion and complementary coexistence. The early theory of international division of labor believed that trade and investment were interdependent. In 1957, Robert Mundell proposed the trade investment substitution model. Afterwards, the product lifecycle theory further argues from a dynamic perspective that as technology matures and standardizes in the country of technological innovation, production will gradually shift to countries with lower costs through direct investment, and the final product may be exported back to the country of technological innovation in reverse. Research after the 1980s has provided a more comprehensive demonstration of the complementary and symbiotic relationship between trade and investment. One of them is vertical complementarity, where multinational corporations establish production bases in host countries through outward direct investment, import intermediate and capital goods from their home countries, process them, and then export finished products, thereby expanding two-way trade and investment flows; Another type is horizontal complementarity, which means investing in production facilities that serve the local market, thereby driving the export of production equipment, core components, and supporting services from the home country. The integration of trade and investment is a fundamental feature of current international division of labor. Under this division of labor system, multinational corporations are the main driving force for trade and investment integration. Investment driven intermediate product trade and productive service trade have become important growth engines for international trade. The global resource allocation ability, global value chain dominance, and risk resistance ability brought about by trade and investment integration have become important indicators for measuring a country's competitiveness.

From the perspective of China's current development status and trends, it is no longer passive participation in the economic globalization led by developed countries, but actively shaping a new pattern of integrated trade and investment development. From the perspective of micro entities, in the period since the reform and opening up, Chinese enterprises have mainly integrated into international division of labor through technology introduction, joint venture cooperation, order production, processing and trade. In recent years, China has continued to promote technological progress and industrial upgrading, and a number of multinational companies with global competitiveness have emerged in fields such as electronic information, engineering machinery, photovoltaic power generation, and new energy vehicles. These enterprises actively engage in technological innovation, brand building, and product research and development, accelerating their internationalization process and driving China's position in the global value chain to continue rising. Their willingness and ability to layout their industrial and supply chains across borders have also increased accordingly. From a macro perspective, in the value chain division of labor system dominated by Western multinational corporations, China mainly imports machinery and equipment, key components, intermediate products, as well as technology and intellectual property, which are processed and produced domestically before being exported. Promoting the integrated development of trade and investment will significantly change this trade model. More and more Chinese enterprises are combining import and export trade with cross-border investment, using investment layout to drive trade growth, expanding trade demand to guide investment layout optimization, and promoting the coordinated linkage between trade and investment.

Strategic considerations for responding to changes in the economic and trade landscape

Currently, competition and games among major powers are intensifying, and anti globalization and trade protectionism are clearly on the rise. China's development is facing a significant increase in risks and challenges. In this context, promoting the integrated development of trade and investment has become a strategic move to actively respond to the profound changes in the global economic and trade pattern and shape international competitive advantages.

This is the need to actively plan international space and shape a favorable external environment. At present, geopolitical conflicts are frequent in the world, especially with some countries vigorously engaging in "decoupling and disconnection", high tariff and non-tariff barriers, and global industrial and supply chains facing pressure for localization, regionalization, and short chain reconstruction. The global trade system is experiencing serious turbulence. The trade monitoring report released by the World Trade Organization shows that nearly one-fifth of imported goods worldwide have been affected by tariffs and other similar measures introduced since 2009. In this context, China actively responds to the new situation of international trade, proactively adjusts its participation in international division of labor, proposes to promote the integrated development of trade and investment, and guides the rational and orderly cross-border layout of industrial and supply chains. This means participating in the international market division of labor on a larger scale and at a deeper level, integrating and allocating resources globally, and promoting the formation of a development pattern of "global investment, global production, and global trade". This is beneficial for breaking down trade barriers, expanding two-way trade space, deepening economic and trade cooperation with other countries, achieving common development, and building an independent, controllable, safe, and efficient industrial and supply chain to better coordinate development and security.

This is necessary to enhance China's position in the global value chain and accelerate the construction of a trading powerhouse. China is the world's largest trading nation in goods, attracting foreign investment and outward investment, ranking among the top in the world. However, the overall quality and efficiency of trade and investment need to be improved. In the field of foreign trade, although the proportion of intermediate goods trade in China is relatively high, a considerable proportion is dominated by multinational corporations in China; In the field of outward investment, energy and resources and commercial and service industry investment account for a relatively high proportion, but the layout in the high-end links of the global value chain is still weak. Some enterprises still have gaps compared to international leading enterprises in terms of discourse power in trade networks and distribution channels, brand influence, cross-cultural management capabilities, and technological standard dominance. In this context, it is necessary to promote the integration of trade and investment, reshape the international division of labor pattern with multinational corporations as carriers, break down research and development, procurement, production, sales and other links, and layout them in the countries with the most cost or technological advantages. This will make trade and investment a way for multinational corporations to strengthen and collaborate in the process of global resource integration and value creation, thereby enhancing China's overall division of labor efficiency globally and promoting the extension of China's role in the global value chain towards both ends of the smile curve.

This is the need to coordinate domestic development and international cooperation, and accelerate the construction of a new development pattern. From the development experience of some developed countries, cross-border investment can achieve wealth accumulation globally, which can then feed back the domestic economy, expand domestic consumption scale, drive domestic demand growth, and achieve a virtuous interaction between domestic and international cycles. A significant feature of this model is that the total national income is often higher than the total domestic economy, reflected in the fact that the gross national income (GNI) is higher than the gross domestic product (GDP). If exports represent the 'Chinese economy', then the global production, trade, and investment network established through outward investment represents the 'Chinese economy'. The integration of trade and investment can promote the coordinated development of the "Chinese economy" and the "Chinese people's economy", requiring both GDP and GNI. It not only broadens the development space, but also promotes the transformation of China's economy from low-cost factor driven to high value-added innovation driven, helping to build a new development pattern with domestic circulation as the mainstay and domestic and international dual circulation mutually promoting each other.

Clarify key tasks and take practical measures

The period of the 15th Five Year Plan is a crucial period for consolidating the foundation and making comprehensive efforts to achieve socialist modernization. Looking towards the future, we need to fully leverage the role of trade and investment integration in driving import and export trade, strengthening global resource allocation, and integrating value chains. This will promote the development of international division of labor towards a more proactive, higher-level, and optimal structure, providing strong impetus for expanding the space for two-way investment cooperation and accelerating the construction of a strong trading nation.

One is to build a globally competitive integrated business entity for trade and investment. Cultivate world-class multinational corporations, focus on enhancing international business capabilities, support enterprises to actively engage in international trade and investment in areas with foundation and advantages, establish independent brands and marketing networks, promote enterprises to layout production and manufacturing centers, research and development centers, design centers, and regional headquarters globally, and integrate and utilize global resources. In the fields of advantageous manufacturing and emerging digital industries, support leading enterprises to develop into chain owners of the global value chain, and enhance their leadership in the industrial and supply chains. Support the international development of small and medium-sized enterprises, leverage their expertise and flexible management advantages in segmented tracks, and deeply integrate into the global value chain.

The second is to promote the mutual traction and coordinated development of trade and investment. We need to break the traditional model of trade and investment fighting on their own, orderly promote the layout of overseas investment, and form a new model of using overseas investment to leverage import and export trade, and using import and export trade demand to guide investment flow. According to the change of import and export trade flow, we should guide foreign investment, encourage enterprises to invest in the markets of ASEAN and other neighboring countries, and jointly build the "the Belt and Road" countries, guide enterprises to take investment as the guide, localize new technologies, new formats, and new business models, build production bases and marketing networks overseas, and continue to drive the export of high-end intermediate products, complete sets of equipment, and technical services in China. In addition, it is necessary to build an efficient overseas comprehensive service system, integrate customs clearance, logistics, finance, legal, consulting and other full chain services, promote digital upgrading, create a one-stop platform, and provide escort for enterprises going global.

The third is to deepen institutional opening up and build institutional guarantees for the integration of trade and investment. Granting greater reform autonomy to pilot free trade zones and enhancing the level of trade and investment liberalization and facilitation. Continue to promote the construction of Hainan Free Trade Port, adhere to openness and empowerment, actively connect with international high standard economic and trade rules, and build the pilot free trade zone and Hainan Free Trade Port into innovative highlands for promoting the integrated development of trade and investment. Give full play to the role of overseas economic and trade cooperation parks, establish a cooperation mechanism with domestic open development platforms, and create a strategic pivot connecting domestic and international markets. Vigorously implement the "same line, same standard, same quality" project, and break through the bottlenecks in supervision, standards, certification, and other aspects of domestic and foreign markets. Strengthen the market-oriented reform of factors, promote the orderly cross-border flow of high-end factors such as finance, talent, and data, and enhance the global resource allocation capability of multinational corporations. We will coordinate development and security, enhance the resilience and risk resistance of the industrial chain through diversified layout, independent and controllable key core technologies, and strengthened strategic reserves. We will establish a comprehensive risk warning mechanism, strengthen monitoring and coordinated response to external risk challenges, and provide institutional support for promoting the integrated development of trade and investment.