Chinese President Xi Jinping on Tuesday announced plans to allow foreign companies greater access to China’s financial and manufacturing sectors and to reduce China’s 25% tariff on imported automobiles.
“In a world aspiring for peace and development, the Cold War and zero-sum mentality look even more out of place,” said Xi during a 40-minute speech to business leaders on the island of Hainan. “Putting oneself on a pedestal or trying to immunize oneself from adverse developments will get nowhere.”
Xi stated that China “does not seek [a] trade surplus” and has been a victim of unfair trade penalties. Xi urged “developed countries” to relax export controls on China and expressed a desire to “reinforce cooperation within the G-20, APEC, and other multilateral frameworks.”
Among policies that will be implemented “sooner rather than later,” said Xi, include: increased imports, improved protection of intellectual property, increased transparency for foreign investors, and increased foreign-equity caps in the banking, securities, and insurance industries.
Xi’s speech, which lacked mention of the US or President Trump, comes amid trade tensions that have disrupted markets and fueled worries about a trade war between the US and China.
President Trump has implemented tariffs on key Chinese exports and threatened to tax an additional $150 billion in Chinese goods to decrease our trade deficit with Beijing and to punish China for intellectual property theft. China responded to these offenses by announcing new tariffs on over 230 American products including fruit, pork, and Boeing.
“President Xi was trying to strike a balance,” says US Chamber of Commerce Vice President Myron Brilliant. “[He] spoke in terms of China’s own need and commitment for market reform and liberalization, but no doubt he was also sending a signal to the US government that he wants there to be cooperation and dialogue, not conflict and a trade war.”
Others worry that Xi’s failure to provide a timeline means the proposals he suggested will never be implemented.
“This speech did not represent a major shift in Chinese policy and it is likely the US-China trade dispute will require more negotiation,” warns JP Morgan market strategist Chaoping Zhu.
As noted by the Wall Street Journal, Xi’s policy speech was delivered on the 40th anniversary of market reforms that allowed China to become “the world’s factory floor” and “second-largest economy and biggest trading nation.”
Xi’s speech was delivered the same day China filed a complaint with the World Trade Organization over President Trump’s tariffs on steel and aluminum.
Editor’s note: Trump’s negotiating tactics are beginning to cause some movement, but this is not over by any means. China has many generations of good negotiators.