19 July 2019
Chinese President Xi Jinping has pledged to further open up the economy. Photo: Reuters
Chinese President Xi Jinping has pledged to further open up the economy. Photo: Reuters

Xi’s Boao pledges: for Trump or China’s long-term benefit?

In an apparent bid to defuse growing trade tensions with the United States, Chinese President Xi Jinping has unveiled a set of measures largely addressing US President Donald Trump’s complaints.

In a speech at the Boao Forum on Tuesday, Xi pledged to further open up the domestic market by relaxing limits to foreign ownership in areas such as banking and securities.

Restrictions on foreign investment in manufacturing industries  – cars, in particular – will also be eased.

China will create a more favorable investment environment and enhance its alignment with international rules, the Chinese leader said.

A new state agency will be created to improve the protection of intellectual property rights.

China will take the initiative to import more to address the trade imbalance issue. Tariff on car imports, for example, will be substantially lowered.

Xi also promised to step up his country’s progress in joining the World Trade Organization’s government procurement agreement.

Trump must have been given a heads-up on Xi’s concessions. He tweeted on Sunday that he and the Chinese leader “will always be friends, no matter what happens with our dispute on trade”.

Trump also predicted that “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. Great future for both countries!”

Generally speaking, Xi’s new measures address the major complaints made by the Trump administration regarding US-China trade relations so the chance of a trade war between the world’s two largest economies appears to have been greatly reduced.

But if we see Beijing as caving in to Washington pressure, such a perception may not be entirely correct.

Liu He, a top economic policy adviser to President Xi, said as early as January, in a speech at the World Economic Forum in Davos, that China would launch new and more forceful measures to mark the 40th anniversary of the country’s opening-up policy. The measures may exceed the expectations of its global peers.

So it appears the new measures Xi announced at Boao have long been planned, and China is set to implement them for its own long-term benefit, and not just because Trump wants them.

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Hong Kong Economic Journal columnist

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