Chinese President Promises Greater Trade Openness
At the Boao Forum for Asia in Hainan Province, China on Tuesday, Chinese President Xi Jinping pledged that China will continue to open its economy and urged "dialogue rather than confrontation" amid the recent rise in economic tensions between the US and China.
“The Cold War mentality and zero-sum game are increasingly obsolete,” said Xi, “Only by adhering to peaceful development and working together can we truly achieve win-win results.”
Xi emphasized that “China’s door of opening up will not be closed and will only open up even wider,” reiterating the official promises to expand imports and to narrow China’s trade surplus.
Particularly, the Chinese president mentioned that China will lower import tariffs on products including cars by the end of the year, as well as give foreigners greater access to the country’s financial markets.
China reported a global trade surplus of $423 billion last year, and about two-thirds of that are with the US. It, along with alleged intellectual property theft, is the major consideration behind the US government’s recent plan to impose new tariffs against China.
This is not the first time that Xi’s government vows to give greater foreign access to China’s financial, auto, and manufacturing industry. Last November, China said it would ease and eventually remove limits on foreign ownership of banks and other financial firms, but financial firms have not received details about the implementation of the plan, according to the report of the New York Times.
Nonetheless, it is Chinese president’s first major attempt to address important concerns of the current US administration over the US-China economic relations, including trade deficit, protection of intellectual property, and most importantly, a more transparent, rule-based environment for foreign investment. Analysts believe such an effort could play positive roles in relieving the recent US-China tension, as well as rebuilding the market confidence globally which has been significantly damaged due to the increasing fear about a US-China trade war.
“He said ‘lower’ auto import tariffs, which is the opposite of the trend in recent weeks from both US and China in ‘raising’ tariffs. The reduction in trade tensions is good for global trade,” said Sean Yokota, Head of Asia Strategy at SEB, Singapore.
“His speech is very broad and we view it as a declaration. It will be very interesting to see how it will be implemented. It will not have a direct market effect, but it could help to lower the temperature of the ‘trade war’.” Said David Qu, China Market Economist at ANZ, Shanghai.
On Sunday, April 8, US President Trump predicted China would ultimately make major concessions to the US. He wrote on Twitter: “…China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property.”
Trump administration officials have said back-channel communications were continuing. However, no formal meetings have been scheduled between top US and Chinese officials so far.