China hit the international headlines in 2008 with unexpected regularity, with the Olympics, the tragic earthquake in Sichuan, snowstorms in February, contaminated milk powder and record greenhouse emissions. At the beginning of the year, the two main public events on the leadership’s agenda were the Olympics and the official celebrations this month of thirty years of what the Chinese call gaige kaifang, or “reform and opening up”. This refers to a shift in policy two years after Mao Zedong’s death, which set the People’s Republic (PRC) on a road both of domestic reform, in particular the gradual marketisation of the economy, and of re-engagement with the global economy after the isolation of the Mao years.

Since then, major flows of foreign investment and technology, from the US, Europe, Japan, Hong Kong and overseas Chinese, have played an important role in the astounding economic growth of recent years. But dissenting voices in China are pointing to growing income disparities, and the tragic environmental cost of this growth. Others argue that China is too dependent on the global economy, and that more should be done to promote domestic innovation and competitiveness, views which are likely to be strengthened further by the increasingly apparent impact on the Chinese economy of the current global financial turmoil. At the thirtieth anniversary of reform and opening up, it is worth asking about the prospects for the openness of the Chinese economy.

Since the 1990s, China has become increasingly integral to economic globalisation. This close link between China’s development and the global economy acts as an incentive for continued openness when times are good, but may lead to pressure for more autonomous development when the impact of events such as the current financial tsunami raise questions over whether the Chinese economy is too open. It is clear, though, that there are no serious voices pushing for closing off the Chinese economy to the world. The issue here is of one of degree only.

Economically, China is very different from thirty years ago. Strongly dependant on exports, as well as fixed-asset investment for its growth, China is now among the more open economies internationally, with trade equivalent to around 70% of GDP and growing (much higher than both Japan and the US). Foreign investment also continues to rise, and is about ten times that enjoyed by India. Capital is plentiful and technology substantially improved, though China still seeks to import technology in key areas like environmental and hi-tech industries and would like to develop more technology itself.

The PRC’s accession to the WTO in 2001 took the economy’s openness to an unprecedented level, and made the long-term market environment more predictable and stable, for both foreign and domestic companies. But it also led to leveling of the regulatory playing field between domestic and foreign companies, removing some of the major benefits foreign companies used to enjoy, thus creating the impression of a tougher environment for foreign businesses.

The question of China’s openness has become part of its wider diplomacy with the US and EU – both of whom have lobbied for greater openness, and with other global players with whom China is strengthening ties, for example to improve its access to commodities. The current financial crisis, with its roots in the US and parts of northern Europe, should spur continued Chinese commercial diversification, and the fastest growth is likely in its business with the Middle East and the rest of Asia. With government encouragement, the major Chinese enterprises are looking to “go out”, or invest overseas, a trend which itself requires continued openness in the world economy, as well as political acceptance of an increased global economic role for China.

Within China, there are also regional factors at play. The size and diversity of the Chinese economy means that fast-growing interior provinces and cities, such as Chongqing, are lapping up foreign investment in the way that Shanghai was over ten years ago. This leaves plenty of trade and investment options for international businesses prepared to go off the beaten track to find them.

Domestic politics will also have an impact on the authorities’ views towards economic openness. This includes the increase in what has been called “economic nationalism” – the desire to protect and nurture national champions has been seen in the public responses to the recent bid by Coca-cola to take over China’s largest domestic fruit juice producer Huiyuan. At the same time, local businesses, whether state or private-owned, enjoy growing domestic political clout.

What about the impact of the financial crisis? It looks as if this crisis will suggest to China’s leadership that they should not be too economically linked to the US in the future, though China needs an early resolution to the current problems and is being careful not to add to them by rocking the boat. In due course it will also be less likely that the US’s (previous) neo-liberal model will be adopted by Beijing, as US government and business had been pushing for some time. One longer-term consequence will be to reinforce a wider Chinese international policy objective, the emergence of a multipolar world, in this case in the economic and financial fields.

China’s important international economic role, combined with the impact of WTO accession and the cumulative effect of reforms over the past decades, perhaps means that the main trend over the next five years will be for China increasingly to resemble other established markets.

Overall, the cautious and consensual style of China’s leadership makes radical policy shifts unlikely, and consequently economic openness in China should be maintained. But the growing strength of Chinese companies will contribute to a more competitive environment for foreign businesses, and domestic political and economic pressures may prompt some slight tightening, especially in strategic sectors. Given the concessions made for WTO entry, substantial further opening is anyway unlikely. The openness of China’s economy may already have reached its peak.