Efficient economy through diplomacy

Looking at the broader picture, China has to deepen the comprehensive trade and economic relations with European countries, strengthen economic ties with the US by expediting the Bilateral Investment Treaty negotiations, and increase its financing pledges to African and Latin American countries. And concluding a comprehensive free trade agreement with the Gulf Cooperation Council, in order to consolidate economic relations with Arab states, should be a top priority for Beijing.

Organizationally, China should focus on increasing its say in the International Monetary Fund, World Bank and the World Trade Organization, and ensure the Asian Infrastructure Investment Bank, BRICS New Development Bank and the Silk Road Fund function properly.

While pursuing the above goals, China could begin experimenting with the yuan－using it to settle cross-border trade deals with certain countries. This is important because, considering the sensitiveness and complication of the yuan's internationalization, its process should be proportional to the trade and investment volume, not time-bound.

China's economy is transforming from an investment-driven to an entrepreneur-driven model, and the private sector is playing an increasingly important role in external economic activities. So it's safe to say the success of China's economic diplomacy will owe a lot to the performance of the private sector.

In an effort to encourage and help private organizations and individuals to make China's economic diplomacy a success, the government could invite the private sector to take part in people-to-people exchanges and conduct joint research.

Also, the government could initiate some programs on the basis of the 13th Five-Year Plan to provide preferential loan rates or overseas investment tax deduction to private sector companies. And China's embassies and government-affiliated organizations could play a supporting role by providing information on other countries' investment environment and law to help Chinese companies expand their businesses.

The author is a Harvard University visiting scholar and research fellow and director of Division of American Economic Studies at the Institute of American Studies, China Institutes of Contemporary International Relations.