President Xi Jinping announced economic reforms which may allow him to cast China as a champion of free trade and globalization (South China Morning Post) a week after U.S. President Donald J. Trump launched bilateral trade sanctions on Beijing in what has fast turned in to tit-for-tat set of tariff threats which risks a trade war (The Economist).
Speaking at Asia’s answer to the World Economic Forum on April 10, Xi said China would open its car industry to greater foreign competition and liberalize laws on intellectual property which Washington has long said prejudice U.S. companies.
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“The cold war mentality and zero-sum game are more and more old-fashioned and outdated. Isolationism will only hit walls,” Xi told a largely foreign audience at the Boao Forum for Asia in Hainan, an island in south China (SCMP).
Without mentioning Trump, Xi said China would work to address several of the issues raised by the American leader, including protecting foreign companies’ intellectual property rights, doing away with foreign equity stake caps in financial and insurance institutions, and easing tariffs on imported cars (SCMP).
The latest moves are part of what appears to be a sophisticated strategy in which China has deliberately targeted its proposed tariff response to goods from U.S. states which voted for Trump. It has also objected to the World Trade Organization (WTO) over tariffs on steel, aluminum, and other goods proposed by Trump – allowing it to be seen to work on a multi-lateral way through the relevant dispute-resolution organizations rather than the more direct bilateral approach favored by Trump.
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In response, Hong Kong stocks climbed the most in nearly a month, with the China Enterprises Index up 2.1 percent and the Hang Seng Index up 1.7 percent. A financial analyst at JP Morgan, an investment bank, said Xi’s announcements could help relieve global trade tensions but that the U.S.-China trade standoff would require more negotiations.
Beijing has previously promised to open up its huge domestic market and reform certain sectors of its economy following criticism from foreign companies operating in China with restrictions. Commenting on Xi’s speech, Germany’s ambassador to China Michael Clauss said Beijing was still heavily restricting the flow of foreign investment. “We hope this time we will actually see some meaningful implementation,” Clauss said (SCMP).