China International Import Expo

Xi Jinping makes fresh promises to open China’s economy and boost imports

  • Xi says China has made long-term commitment to buy US$30 trillion worth of goods and US$10 trillion worth of services in next 15 years
  • Xi backs globalisation and attacks unilateralism, but he does not single out US or Donald Trump
PUBLISHED : Monday, 05 November, 2018, 1:29pm
UPDATED : Thursday, 08 November, 2018, 3:53pm

Chinese President Xi Jinping made fresh promises on Monday to open China’s economy to the outside world, including lowering import tariffs and broadening market access, and voiced support for economic globalisation as the country is locked in a trade war with the US.

In his keynote address to the inaugural China International Import Expo, an event created by Beijing to signal its intentions to increase its business with the rest of the world, Xi said China’s promise to buy more products and services from abroad is “not a temporary arrangement but a long-term consideration” and that the fair would become an annual event.

China’s total purchase of foreign goods would amount to US$30 trillion over the next 15 years, while its purchase of services would reach US$10 trillion in the same period, Xi said.

In addition, China would open up its lucrative domestic health care and education sectors, financial services, telecoms and mining, to foreign investors, Xi said. Its free-trade port on tropical island Hainan would speed up the process, while Shanghai would have greater autonomy for “free trade” trials, he said.

Xi also announced that a “tech board” would be established in Shanghai to rival Hong Kong and the Nasdaq so that China’s start-ups can raise funds from the capital market more easily.

While Xi did not directly mention the US or President Donald Trump at any point in his 35-minute speech, the trade war set the stage. In contrast to Trump’s “America first” policy and threats to undo the multilateral trade system, Xi on Monday tried to position China as an open economy and as an ardent defender of free trade.

The speech came weeks before Xi is due to meet Trump in Buenos Aires after the G20 leaders summit, which may offer a chance for Beijing and Washington to narrow their differences.

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics who is attending the expo in Shanghai, said Xi’s promises of “non-discriminative investment polices”, intellectual property rights protection and import duty cuts pointed to a potential easing of tensions between China and the US.

As it happened: Xi promises greater opening of China's economy, pushes for global trade

“Many of the items that he [Xi] touched upon could serve as a very positive signal when he meets Trump at the G20 meeting in Buenos Aires. There is goodwill on both sides that we can de-escalate this terrible friction we have that can only hurt both of our countries,” Schott said.

Compared to his speech seven months ago at the annual Boao Forum in Hainan, Xi offered more specifics on Monday.

“Foreign ownership caps in education and health care, where China has a huge supply gap, will be relaxed,” Xi said.

He also said China would treat foreign firms fairly – protecting the business interests of overseas firms doing business in the country and punishing those who infringe on their legal interests, especially theft of intellectual property rights.

Niels Christiansen, chief executive of Danish toymaker Lego, said the Chinese president’s speech was important in light of “challenges to global trade”.

“I have never heard him being so clear on … say, talking about IPR very sincerely and actually acting on that. I think that’s some of the strongest I’ve heard. Very clear message,” Christiansen said.

Xi also responded to complaints about China’s business environment.

China takes aim at critics with import expo as US officials stay away

“All countries should make efforts to improve their own business environment and to solve their own problems,” he said. “Please don’t always beautify your own and point fingers at others – please don’t always shine a spotlight to examine others but not yourself.”

The Chinese leader also tried to boost confidence in the country’s economic health, saying people should be “optimistic” about growth prospects and comparing China’s economy to an ocean that can weather storms.

But the promises were restricted to import duties, market access and minor free-trade trials, and Xi steered clear of thorny issues such as China’s economic model, the role of state-owned enterprises, or internet censorship.

George Magnus, a research associate at the China Centre at Oxford University, said Xi may find it hard to sell his narrative that it is an open economy with a free-trade spirit to the US and other major trading partners because “there’s a change of attitude [about China] really”.

Washington now considers that “it’s time to take more seriously the role of China not just as a feisty competitor but as an adversary in things that are existential like technology and military”, he said.

While Xi and Trump may take the chance when they meet in Argentina to agree that “let’s not escalate things any more for the moment”, it would not be able to address these “very deep roots” underlying the trade row, Magnus said.

“President Xi Jinping's speech is very much in the spirit of his Davos World Economic Forum speech last year and his Boao Forum speech in April,” said David Shambaugh, a professor of political science and international affairs at George Washington University.

“In each he sings the praises of globalization and commits China to further economic opening ... but much remains to be done to reduce domestic barriers to foreign firms and level the playing field,” he said.

“On balance, this is a positive speech, but we always have to wait to see if the policy implementation matches Chinese leaders' oral commitments.”

Trump-Xi talks at G20 ‘unlikely to produce breakthroughs’

The US has called China a non-market economy, alleged that Beijing is engaging in a series of “unfair” trade practices and has taken advantage of the global trading system at the expense of other countries.

Senior US government delegates did not attend the import expo, while the other members of the G7 – Britain, Germany, France, Italy, Canada and Japan – were not represented by state leaders.

Xi used the event, which Beijing sees as one of its four major diplomatic occasions this year, to defend the government’s position that China is a true believer in economic globalisation and a defender of global trade.

“All the wise acknowledge that economic globalisation is a great, irreversible historic trend,” Xi said. “It is a historic trend because its development won’t be swayed by human will. All countries should stick to policies to open up and oppose protectionism and unilateralism.

“We need cooperation, not confrontation; we need win-win, not a one-sided win,” Xi said. “The winner-takes-all mentality will only lead to a dead end.”

Xi Jinping set to sell International Import Expo as symbol of China’s openness and globalisation

Xi said China supported the “necessary reforms” of the World Trade Organisation, calling for joint efforts to defend multilateral trade.

He added that China would always be “the promoter of global mutual opening-up, the stable energy source for world economic growth, a dynamic market for all countries to grow their businesses, and an active contributor to global governance reform”.

Additional reporting by Amanda Lee and Jun Mai