China economy

Trade war pushes China to go on charm offensive over free-trade credentials

Beijing will seek to outline its stance at next week’s ‘Summer Davos’

PUBLISHED : Thursday, 13 September, 2018, 10:27am
UPDATED : Thursday, 13 September, 2018, 11:29pm

Increasingly convinced that the trade war with the United States is unlikely to end soon, Beijing is stepping up its charm offensive to reassure foreign politicians and business leaders of its commitment to global free trade by opening and reforming its domestic economy.

And next week’s “Summer Davos” – or the World Economic Forum’s Twelfth Annual Meeting of the New Champions – in Tianjin will serve as the next occasion for Beijing to outline its stance.

“The Chinese government has high expectations for the conference,” Xia Qing, deputy head of the National Development and Reform Commission’s international department, said on Wednesday.

It was at the World Economic Forum at Davos in January last year that President Xi Jinping made a now-famous keynote speech defending free trade while opposing the rising tide of protectionism. Xi sought to portray China as the new leading champion of globalisation.

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“As the trade war is tending to escalate, [China] is sending strong signals that it will firmly promote globalisation, trade liberalisation, that it will support the Belt and Road Initiative and actively respond to global technological changes,” Xia said.

Premier Li Keqiang is scheduled to address the Tianjin conference on Wednesday. The more than 2,000 delegates at the three-day meeting, which begins on Tuesday, will include central bank governor Yi Gang, finance minister Liu Kun and many business leaders from China and abroad, according to the World Economic Forum.

“As the commerce ministry mentioned earlier, we do not want to fight a trade war, but we’re also not afraid of one. We’ll continue with our existing guidelines and policies and try to push cooperation with all kinds of organisations,” Xia said.

The world’s two largest economies have been engaged in a tit-for-tat trade war since early July, with both sides levying 25 per cent tariffs on US$50 billion of each other’s imports so far. US President Donald Trump said last week his administration was ready to impose tariffs on an additional US$200 billion worth of Chinese goods “very soon”, and could even sanction a further US$267 billion in Chinese goods if Beijing did not offer any trade concessions.

Bilateral negotiations in late August at the deputy minister level produced no sign that bilateral tensions would end soon.

The US trade sanctions are seen by Beijing as the biggest challenge to economic growth, putting pressure on Chinese businesses and consumers while delivering a heavy blow to domestic financial markets.

In late July, the Politburo, the country’s top decision-making body chaired by President Xi Jinping, made stabilisation of the economy the government’s key priority. The government has boosted infrastructure spending and loosened monetary conditions in an effort to prevent a large drop in economic growth.

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US-China trade tensions and the country’s economic restructuring will also be discussed at two other conferences – hosted by the China Development Forum and the Chinese Economists 50 Forum – to be held in Beijing ahead of Summer Davos.

Tianjin and Dalian, the two Chinese port cities that have hosted the annual Summer Davos conference on a rotating basis since 2007, have fallen on difficult economic times in recent years, as foreign direct investment and exports have been hit hard and domestic investment has slowed due to the government programme to reduce risky, off-balance-sheet lending.

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Tianjin, about 100km east of Beijing, reported a 3.4 per cent rise in local GDP in the first half of this year, the second slowest growth rate among China’s 31 provinces.

Zhao Haishan, deputy mayor of Tianjin, said the city was trying to boost foreign investment, open certain sectors wider, and seek cooperation with foreign firms in areas such as finance, information consultancy, and technological innovation.

“The ongoing economic transformation and upgrading [of Chinese industry] are making high demands on Tianjin, an old industrial base,” Zhao said.

“Through the opportunity [presented by the Summer Davos conference], [we’ll] organise scholars and entrepreneurs to deepen discussions and seek better cooperation,” he said.